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[News] The Importance Of Knowing Customers Lifetime Value
Posted at: 13 April 2017

You’re most unhappy customers are your greatest source of learning - Bill Gates

 

Keeping costumers happy is important, once you know how frequently a customer use your service, you will have a better understanding on how to allocate your resources in terms of customer retention programs and other services you’ll need to keep your customers.

You will never know how to develop an optimal marketing budget unless you know what the return on your investment needs to be. This knowledge is important because it will help you make marketing decisions based on the reality of your profit.

You need to know how much to spend to acquire your costumers as long as the cost is less than the profit you make on your first sale.  For the time being, this is a shorter-term strategy and it makes sense when cash flow is still a concern.

Knowing lifetime value also lets you see how, or if, you can make your services or products cheaper or not. It will help you avoid being bankrupted when your business needs cash flow to survive.  By this you can find ways to create offers and services that drive enough profit so your business will thrive. It is the lifetime value that will determine the success of your company.

Life Time Value is the value of the customer over the Life Cycle. Repeat behavior is often used as an indicator of higher life time value and as a predictor of future repeat behavior. Repeat customers are indicators for a successful business.