Customer Lifetime Value
This is the total amount of money a customer is expected to spend at your business over the entire duration of their relationship with you. It's essentially the net present value of the customer, which is the present value of the difference between cash outflows from the company to acquire and retain the customer and cash inflows from all purchases the customer makes throughout their lifetime. Research at Harvard University shows this value to be $8,000 for a pizzeria, $332,000 for an automobile manufacturer, and over $1 billion for an airline company (Michael Hegarty, 2002).
Tracking the Customer Lifecycle
The customer lifecycle begins before the salesperson contacts the customer and continues after the order is placed, shipped, and received.
Once you understand the customer lifecycle of your target market, you have the information you need to answer the following questions:
- What attracted them to your advertising, direct mail, or other marketing efforts?
- What benefit do they want to get from your product?
- What aspect of your product gives them the confidence that they will achieve what they want?
- What marketing activities will encourage them to purchase your product in the future?
- Does the volume of customers change according to your advertising?
- How long does the awareness, education, review, purchase, and reorder cycle take?
- Does the cost of service vary depending on which salesperson made the sale?
- What is the cost of acquiring a customer through each marketing tool, sales range, customer type, and product type?
These are the things to consider to encourage, not force, a customer to purchase a product or service, ensuring the complete cycle of seller and buyer experiences is fulfilled.
Today, a meaningful review occurs during a product visit or purchase experience when a customer visits the supplier's website. The visitor may have arrived at this website while searching for a product to solve their need or through various marketing and advertising efforts.
Regardless of how the website was found, the important thing is that they found the information they were looking for.
To do this, customer communication tools must be personalized, which will be explained further below.
