Customer Lifetime Value - CLV
I recently heard from an old friend of mine, Mark Ellsworth, CPA and managing partner at Cain Ellswoth in Iowa. He sent me his words of wisdom - and I would like to share them with you all since they are particularly appropriate for a marketing blog:
"I always like to remember (and remind my partners and team members) the concept of customer lifetime value (CLV). The concept of CLV is simple. If you do well at taking care of a client - really taking care of them - the annual fee becomes like an annuity. Let’s say that TLC gets you at least a ten-year relationship with your client and the client pays $15,000 in annual fees. The CLV of that client is $150,000 - i.e., $15,000 x 10. Doesn’t it change our perspective about that client. Now I ask, “Is it worth doing something extra for that $150,000 client?” The most profitable clients to serve are the ones we already have. Prospects may be exciting, but “annuities” build a firm."
Thanks Mark - for this great advice. Do any of you have something to share? I would love to hear from you,