[Advice] How Much is a Client Worth to you, When You're Starting a Business?

Hey guys, just posted this on a forum thread over at GKIC

Gerson wrote:

"I love being a new member of GKIC, I am a young entrepreneur starting a business, is my First time and I want to know How Much is a Client Worth or Lifetime value, in order to define MA-CPS and create the marketing system. I've read Chapter 43 of No BS Ruthless Management book but I still have problems calculating it! I am making the business idea a reality, and I don't have previous clients. I really appreciate your help!"

Hey Gerson, it’s great that you’re actually taking the time to research this and find out what your lifetime value of a customer is. A lot of businesses do not do this, so hats-off to you for doing that.

But to answer your question it’s really difficult to come up with a one step formula, every business is different but what you want to figure out is, of course the initial sale like some have mentioned here in previous posts. You want to take your initial sale and then you want to find out if there’s anything you can sell them or that they typically buy, do they come back, how often they purchase, do they need other parts or other service that they might need that you can sell? Do you have a fine-tuned referral system – where you’ll know how many referrals each customer will bring you?

These are all the factors that you’re gonna have to look at to determine the lifetime value. But the most helpful thing is going to be your previous data; you need to know in the past how much that customer has been worth to you, how often they purchased, what are the things you can sell them. So you need to go through and figure that out first. And then you can calculate properly what the lifetime value would be.

But again, it’s great that just you’re doing that to begin with because it is so important to know that upfront.

Hope that helps,

- JR

JRGriggs.com || RedWallMarketing.com