A customer’s lifetime value is how much they are worth to your business (ie. what they will spend) over the whole period of their relationship with you.
This obviously differs significantly depending on whether you offer a one-time service (like a wedding planner), repeat service (like a hairdresser), sell a perishable product (like flowers) or sell big-ticket items (like a house).
But regardless of your offering, every customer will still have a value to you. And just because *they* might not use you again, doesn’t mean they won’t refer you to someone else —remember that.
My point: When we know what a customer is worth to our business once we can “get them in”, it helps us determine how much we’re willing to invest in attracting them to our business in the first place, and then keeping them.
▪️If you know the lifetime value of a new customer is $5000+, you suddenly might not flinch at the thought of spending $50/week on paid advertising to expose your brand to new followers.
▪️If you know a customer could continue to spend an average of $500/year with you for 10+ years, you might rethink what you invest in nurturing existing customers.
Spending money on marketing can be scary. (As a small business owner myself….sheesh — I get that.) But knowing the lifetime value of the reward for attracting more of your ideal clients / customers makes the investment feel a whole lot more sensible, responsible, and WORTH it.