(1) Are all customers created equal?
(2) what exactly is customers lifetime value?
(3)How can I use it to help my business?
It goes without saying that customers are good. Without them, your business would them, your business would be...well,not a business. But does that mean they all have equal value? Imagine there's a business called yasuiyo . Their handcrafted yo - yos are popular with a variety of customers,but they want to focus on attracting and retaining the "rights"ones. Yasuiyo - yos sorts their current customers into different types and starts evaluation each for their long term business value. While we hypothesize which yasuiyo - yos customers would be the most valuable, there's better way to do this: customers lifetime value is your chance to be all me instead of just looking at your customers' likes, wants, and needs, you can say, "what about needs? How much of my 💰 money should I spend to get theme?"
CLV helps you answer those questions by looking at the entry relationship you have with a type of customers and estimating how much that person is worth to you business. Knowing your target buyers CLV helps you grow your base of "right"customers, which helps you decide how much you're willing to spend to keep those customers coming back. So how do you figure out your customers CLV method it can get tricky and there's different ways to do it But to helps you get your feet ever - so - gently wet, we'll show you one of the simplest ways to do CLV math let's say Harry owns a 🏨 hotel called Harry home away from home to get his CLV, he needs to research how his business has performed in the past 3"past behaviour"he should look at are the annual transaction per customer, average profit per transaction,and avarge annual transaction per customer,he notes that most of his guests visit once a year to get the average profit per transaction,he looks at the average final guest bill,which is 1000 dollars per person. After subtracting experience like house keeping, Harry estimates he make a 25persent profit off each bill so that 250 dollars profit per customer. For the average number of year customers remain,( he calculates that his guests normally return at last once in the following year,meaning they stay on as customers for 2 years in row ) and plugs them in to a formula here's the formula :(Average annual transaction per customer)*(Average profit per transaction)*(Average of year customers remain) :CLV and here's how it looks with Harry info plugged in:(1)*(25 dollars)*(2):500 dollars CLV.
Now that Harry knowns his CLV is 500 dollars,he can try and improve it by keeping his current customers around longer,or use it to help him target and convert valuable potential customers, let's see how Harry might get his customers to stick around longer. After checking thing out Harry realize that giving customers more personalized attention will encourage them to return several times over the following year, he brainstorm a few ways he can do this when his clients have upcoming birthday, he'll send them an offer for a happy home away from home birthday" package that has discount on luxury suites and hotel amenities. He'll also creat a loyalty program that gives customers 25 present off stay when they make it past that crucial 2 years mark and come back to his hotel for a third year. Now let's check out how Harry came use CLV to help him convert potential customers. Harry realize he can use his 500 dollars CLV to evaluate which of his marketing effective at bringing in new customer. Right now,he has his advertising budget spilt equally between these 3 channels: bill board near the airport,Mobil ads target at vacationing families,and search engine marketing targeted at business travelers to find out which is working better for him,Harry calculates each advertising channel CLV. He start by grouping his current customers by the channel they found his trusty formula,he then calculated the CLV of each customer group which then becomes that marketing channel CLV his bill board have a 325 dollars CLV and the mobile ads a 480 CLV. But the search ads have a 750 dollars CLV which is higher than his overall CLV of 500 dollars. He should consider putting more of his ad budget into search ads targeting business travelers, Harry CLV calculated also helped him figure out the most valuable potential customers for his hotel: business travelers when he calculates his business travelers customers, CLV, he discovers that they usually stayed at his hotel more often then once a year ,so they had a higher average number of annual transaction then other guests he also Found out that they remained customers longer than the 2 to 3 year average of other guests and that they spent more then vacationing families.
So Harry should do more then just up his search ads budget. He should consider spending more marketing to business travelers in general.
So start new startup and growth you're financial freedom and independence your life.business growth mean reason customers attracted. Google, Amazon , Flipkart company customers attracted and your company growth
Now that Harry knowns his CLV is 500 dollars,he can try and improve it by keeping his current customers around longer,or use it to help him target and convert valuable potential customers, let's see how Harry might get his customers to stick around longer. After checking thing out Harry realize that giving customers more personalized attention will encourage them to return several times over the following year, he brainstorm a few ways he can do this when his clients have upcoming birthday, he'll send them an offer for a happy home away from home birthday" package that has discount on luxury suites and hotel amenities. He'll also creat a loyalty program that gives customers 25 present off stay when they make it past that crucial 2 years mark and come back to his hotel for a third year. Now let's check out how Harry came use CLV to help him convert potential customers. Harry realize he can use his 500 dollars CLV to evaluate which of his marketing effective at bringing in new customer. Right now,he has his advertising budget spilt equally between these 3 channels: bill board near the airport,Mobil ads target at vacationing families,and search engine marketing targeted at business travelers to find out which is working better for him,Harry calculates each advertising channel CLV. He start by grouping his current customers by the channel they found his trusty formula,he then calculated the CLV of each customer group which then becomes that marketing channel CLV his bill board have a 325 dollars CLV and the mobile ads a 480 CLV. But the search ads have a 750 dollars CLV which is higher than his overall CLV of 500 dollars. He should consider putting more of his ad budget into search ads targeting business travelers, Harry CLV calculated also helped him figure out the most valuable potential customers for his hotel: business travelers when he calculates his business travelers customers, CLV, he discovers that they usually stayed at his hotel more often then once a year ,so they had a higher average number of annual transaction then other guests he also Found out that they remained customers longer than the 2 to 3 year average of other guests and that they spent more then vacationing families.
So Harry should do more then just up his search ads budget. He should consider spending more marketing to business travelers in general.
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