Marketing To Get New Customers vs. Lifetime Customers
Marketing to new customers can sometimes be frustrating, costly and about as understood as the tax code. Throw in the discussion of new vs. lifetime and it gets more confusing. Do you go after new clients or do you continue to focus on the ones you already have? In Why Burger Up Has Become My New Favorite Burger Place! Joel Fortner added the following comment:
So in MC Hammer fashion, I thought I would break it down to make it easier to understand. (I’m also expecting some expert input from Joel. No pressure Joel!) If you don’t know what your Customer Lifetime Value is (CLV), you don’t know if you should be spending money on new or current customers. Now, if you only have one product, it’s an easy answer. But if you have multiple items, then you need to know exactly what each customer is doing after they have become enticed by your marketing prowess.
So how do you figure out exactly what your CLV is? There is a calculation so simple even Jessica Simpson could get it:
Ok, maybe we can go with a simpler approach to it. Try this:
Average Annual Spend
x Length of Average Relationship
In other words:
x 5 Years_________________
= $500 CLV of Average Customer
Once you have your CLV, you can then decide if you need to spend more time leading your current customers through your funnel as opposed to only focusing on new customers. You see, you have a market for new customers. There’s no doubt about it. But spending some time and resources on those playing in your courtyard might be just as beneficial. You won’t know, though, until you calculate your CLV. Give it a try.
Question: How do you see this affecting your current marketing plan, even if you work for someone else?