Do you know how much your customers are worth?
Companies often say their customers are their most important asset. Peter Drucker, one of history’s most influential business thinkers, stated it simply, “The purpose of business is to create and keep a customer.”
The value of keeping a customer is not only their purchases today but also their purchases (and their referrals) tomorrow. As a rule, long-term customers will nine times out of ten spend more with you next year than will customers you just acquired last week.
Customer tenure is just one factor that can predict a customer's future expenditures. Armed with enough data you could predict how much your current customer base will spend with you next year and the years following that. It's like accounts receivable, only you haven't made the sale yet. By all rights, these expected future purchases are an asset of your company.
Do you measure this? At the end of this year, will you be able to take a step back and with confidence know whether you’ve increased the value of your customer base?
If not, then how are you making trade offs between the investments you make in customer acquisition and customer retention? What’s guiding your customer strategy? Going a level deeper, are you focusing your investments toward individuals most likely to build the long-term value of your company?
Bring to life the statement "customers are our most important asset," and you'll be well on your way to answering these questions and more.