Determining the Lifetime Value of Your Customers Through tracking, you’ll be able to identify where the bulk of your customers are coming from. Are you making the majority of your money the first time they buy from you? Are you making the most money the third time they buy from you? Or are you making most of your sales through a recurring 6 month billing cycle? Conversely, you can identify where in your sales process you are losing people. Where are they most likely to drop out from—after seeing your sales page, after seeing your up-sell, or after you’ve first presented them an opportunity to buy? There are so many points along the way where you could be losing your customers. When you continually tighten your weak areas, and strengthen your strong areas you’ll save and make more money.
The Lifetime Value of Each Customer When you know the lifetime value of your customer (particularly if your product is consumable), you will know how much you can spend on getting new customers. Knowing what a customer is worth to you in the long-term is a metric every company should know. Even if you have to spend more to acquire a customer than they pay you on their first purchase with you, it makes good business sense if you know you’ll make it back (and then more) down the track. Your repeat business will far outweigh your initial investment. This allows you to be far more competitive than anyone who does not know this metric for their business.