Feedback Form
Home Features Mastermind Forums About Advertise Blog Network Contact Be An Author

Calculate the True Value of Your Customers

Calculate the True Value of Your Customers

The value of a customer cannot be overrated, and you shall soon understand why. The following story proves that the true value of a customer can barely ever be measured; it is always potentially huge.

A woman bought some milk at a large grocery store. When she got home she realized that it was sour and had passed its "best before" date. She went to customer service later that day to return it, and one of the representatives gave her a hard time, saying: "How do I know this is the milk you bought today! You could have switched it!" He then made her wait twenty minutes while he consulted with co-workers about what to do. Naturally, the woman was furious, and she has refused to shop at that grocery ever since.

How much money do you think the store will lose because of the defection of this one customer? Well, she spent fifty dollars per week at that grocery store. No big deal, right? Wrong. Over the course of a year - 52 weeks - that store will lose $2,600 in business, which is substantial, but it gets worse. Over ten years the store stands to lose well in excess of $26,000 in direct sales from this single dissatisfied customer.

It doesn't end there, either. If the woman is really mad (as she was in this case) she'll tell, on average, 11 other people about what happened. Once those 11 people each tell approximately five other people on average about the incident, 67 people will have heard something negative about the grocery store. That's really bad for business. Even if only 10 of those sixty-seven people don't do business with that store again (and they had the same spending level of $50 per week), over 10 years that one incident will have cost the store a quarter of a million dollars. $250,000.00 over a $.99 carton of milk and one employee's bad attitude. It makes you stop and think - doesn't it?!

Try this exercise for yourself:

To estimate the value of one of your customers, multiply their average annual expenditure by how long you would hope they'd remain your client. After that, attempt to account for the dollar value of referrals this client would provide you with over the same time period and beyond. Soon you'll be swimming in astronomical figures, and it should be clear to you that the value of a customer is always infinite and inestimable. This exercise does prove the following point though: Take every customer seriously!

1. Average annual expenditure per client $_______________

2. Average number of years a client stays x _______

3. Individual client value $_______________ (line 1 x Line 2)

4. Potential number of referrals over client's lifetime _______________

5. Total referral value $_______________ (line 3 x Line 4)

6. Actual Lifetime Value of One Client $_____________ (line 3 + Line 5)

Obviously, you can see for yourself that it pays to take every single one of your customers seriously; each of them is a potentially infinite resource. The one person you don't treat with a proper amount of respect could cost your business a lot more than you imagined. An unhappy client is like a rock hitting water: the stone hits, and a wave of unrest spreads. Invest time NOW to ensure that your clients feel well cared for and valued. They're worth it, and so is your bottom line.





Calculate the True Value of Your Customers - To learn more about this author, visit Kevin Lawrence's Website.

Like this article? Share it with your friends

Article Feedback
 Article Feedback No article feedback found.
  Leave Your Feedback
article feedback

Article Feedback
Jay Kubassek
(Jay's Full Bio: EvanCarmichael.com/jaykubassek)  In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.

 

As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)

 

Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. 

 

Jay resides in NYC with his wife Jamie, son Milo and dog Cooper.  Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website


To learn more about the Evan Elite Author Program please contact us.

About The Author


Kevin Lawrence
(Visit Kevin's Website) Kevin Lawrence is a Business Coach & Speaker, who works with Accountants & Entrepreneurs to help them create their personal version of an "Ideal Business" and achieve the balance, fulfillment and other results they desire in an "Outrageous Quality of Life". To learn more about how Coach Kevin can help you, or to book him to speak at your event, or to subscribe to Kevin's free email newsletter, visit: www.CoachKevin.com or call 604-313-2229 (1-877-564-6224 toll free in North America), or by email to Inquire@CoachKevin.com

Kevin Lawrence is a Gold author on EvanCarmichael.com
About The Author

View Author Blog
View Author Blog

View Author Video
View Author Video

Free Downloads


Kevin Lawrence's

Complete
List Of
Business-Coach
Articles

Name
Email
Author's Free Downloads
The Leader’s Edge Icon The Leader’s Edge

More Kevin Lawrence
The Most Important and Overlooked Measure of Return on Investment
Generate Client Feedback And Use It To Increase Your Profitability
Ready Aim Fire How to Professionally End Your Working Relationship with a Client
Top 12 Ways You Can OverDeliver Value To Your Clients
Ten Steps to Generate Endless Referrals Profits
The Power of Niche Marketing to Build Your Business
Do You Know What Your Customers Really Think Of You
Slash the Knot How to Uncover and Overcome Your Biggest Obstacles
How to Build Your Business with Referrals Repeat Business
Finding the Flow
Free Downloads


 
 
 


Evan Elite Authors
Casey Gollan  
Cheryl Matthynssens  
Linda Richardson  
Evan Elite Authors

Become An Author
Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details.
Become An Author

Evan's Latest Video
Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media
Evan's Latest Video

Business Opportunities
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"

How to Start An Online Business

Click Here To Learn More
Business Opportunities



Evan's Newsletter
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
Name:
Email:
Evan`s Newsletter

Free Downloads
Instant Scripts Icon Instant Scripts
Exit Interview Document Icon Exit Interview Document
Human Potential Institute Icon Human Potential Institute
Google Adwords Guide Icon Google Adwords Guide
Workplace Culture Icon Workplace Culture
Free Downloads - Complete List

Entrepreneur Tools and Guides
Guide To ERP Software / Business Management Software
Guide To ERP Software
Business Management Software
 
Top 50 SEO Posts of the Year
Top 50 SEO Posts - 2007
Top SEO Posts of the Year
 
Entrepreneur Tools and Guides

SEO For Africa
SEO For Africa
Obi Isaiah Benin City, Nigeria,
Obi Isaiah
Benin City, Nigeria
SEO For Africa

If I Were A Startup...
Chris Nguyen, 30+ national clients on $0
Chris Nguyen
30+ national clients on $0
Kerry Shapansky, $2.0 to $51 Mil in 5 years
Kerry Shapansky
$2.0 to $51 Mil in 5 years
If I Were A Startup... - Complete List

Famous Entrepreneurs
Magic Johnson, Johnson Development Corp.
Magic Johnson
Johnson Development Corp.
Gordon Moore Robert Noyce, Intel
Famous Entrepreneurs - Complete List

Entrepreneur Advice
Jack Canfield, Chicken Soup
Jack Canfield
Chicken Soup
Michael Gerber, The E Myth
Michael Gerber
The E Myth
Entrepreneur Advice - Complete List

Popular Articles
(Premium Authors)

     Change is a Conscious Mental Choice
By Bob Hooey
     Mastery can be a valid sales goal - what is your mission?
By Bob Hooey
     What do you wish for?
By Bob Hooey

Have A Suggestion?
Toronto Salsa Classes / Toronto Salsa Lessons Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
Have A Suggestion?

More Evan Carmichael
More Information