The figures in the table below are rounded to two decimal places so if you compare this with your calculator it may be fractionally different. So the real value of our customer in this example is 716 not 800 that we originally thought. The calculation of lifetime value is critical to your future success. Spend time working it out. Most businesses focus the bulk of their marketing budget and effort, often almost 100 percent of it, on obtaining new customers.
New customers are very important but existing customers are never exploited to their full potential.
I mean that the maximum amount of business that is in the customer's best interest is not extracted. As a result, the profitability on a repeat sale will frequently far outstrip the profit on an initial purchase. But even if the profit is no higher, you are missing out by not undertaking activities that allow you to receive it. Existing customers already have experience of dealing with your company. They know what they can expect and making a purchasing decision is much easier for them than for someone who has never dealt with you before.