Customer Lifetime Value – Where Your Profits Really Come From

By Kenda Macdonald | Anthology

Feb 26

Here's a silly question:
How would you like to increase your profits by up to 125%?

What would you do with the extra cash?

Customer Lifetime Value is the way to go!

As small business owners, we are always on a mission to increase profits. The bottom line (no pun intended!) in all business is money - and specifically profits. The more profits we make, the better we can do our jobs, and the more people we can help.

Through all my years of helping small businesses do awesome things, I see the same problem... A misunderstanding on where the biggest profits in business come from.

So let's set that straight.

According to Bain and Co. across most industries, customer retention explained more profit than ANY other factor. Which makes sense.

But how much sense only becomes clear when you really begin to crunch the stats:
It costs 500% more to acquire new customers than it does to keep current ones. (Social Annex)

Holy cog! OK but surely the new customers will be more profitable in the long run? Nope!
The cost of bringing a new customer up to the same level of profitability as an old one is up to 16x more. (Social Annex)

And what about selling to new customers? Isn't that easier?
Well - the probability of selling to existing customers is 60 to 70 percent, compared with 5 to 20 percent for a new prospect (Marketing Metrics).

Getting the picture? Cos I'm not done yet!

Lowering your customer churn rate by 5% can increase your profitability by 25-125%. (Bain and Co.)

And that's because on average, loyal customers are worth up to 10x as much as their first purchase. (Social Annex) Not to mention that the average repeat customer spends 67% more in their 31st to 36th months of their relationship with a business than in months 0-6. (Bain and Co.)


So that long term retention really starts to pay off. But putting your foot wrong is easy, and it's going to cost you: 47% of customers would take their business to a competitor within a day of experiencing poor customer service (24/7)

One day! That's all you got.

So automating a process to keep your current customers happy becomes paramount.

So here's a question for you. Do you know your Customer Lifetime Value?

If you didn't immediately shout yes at your screen, we got some work to do 🙂 The good news is, I've got a nifty little ebook here to help with that...

What's inside?

  • Why retaining customers can be even more important than acquiring them 
  • Methods of generating repeat business and inspiring customer loyalty
  • How marketing automation software, like Infusionsoft, can help you grow repeat sales and retain customers
  • Strategies used by small business owners to keep customers coming back for more

And it's good for that.

I like it for it's 3 strategies for automating repeat sales, as well as it's 3 strategies for building customer loyalty.

But that's not my favourite bit. Nope! I like the case studies.

There are 2 real world examples in there - and one from the 2016 Small Business ICON winner.

So while you're putting this to action in your business, here are some questions about your own Customer Lifetime Value and it's strategy: 

Can you quantify it?
Do you have a plan to increase it?
What are you doing to reduce churn?
And of course, what are you going to build into your loyalty programme that ticks all the above boxes...

Get your action on - grab your free Customer Life Time Value Ebook!

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About the Author

Kenda Macdonald is an Automation Ninja. With a background in Forensic Psychology and an affinity for statistics and behaviourally intelligent automation – she’s not your average expert. She’s been living and breathing Infusionsoft since 2011 and has spent over 14 500 hours learning new ways to automate what people think is impossible. She’s a true nerd, and spends her waking hours helping businesses understand behaviour for super effective marketing, and relishes in simplifying over complicated processes for truly intelligent automated marketing. She’s the founder of Automation Ninjas - Experts in behavioural automation. Expect enthusiasm and a wealth of knowledge – not normalcy.

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(1) comment

Terrific writing on random topics. Im trying to currently
accomplish something such as what you have here except
for on
a totally different topic. Thank you for the motivation to
write better content.

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