The Lifetime Customer Value Concept

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6 Reasons Why The Lifetime Customer Value Concept Will Multiply Your Business Results


Most of you know our two overriding business philosophies:

1. Continually innovate your product or service – plus your entire business operation.

2. Market continuously and relentlessly with powerful direct-response strategies.

These are the two driving forces that will turn your business into an outstanding success, keep it at the top of your field, and make it almost totally immune from recession.

Additionally, if you have a product of service that genuinely benefits your customers or clients in some way – if you offer a better service, or better product, or something new, or if you’ve found a way to improve in some way whatever it is you sell.

I believe you have a ‘duty’ to make it available to as many people who could benefit from it as possible.

If you don’t, aren’t you to a greater or lessor degree denying them the opportunity to make their lives better, easier, healthier, wealthier, more fun, more fulfilling?

The Lifetime Customer Value (LCV) concept provides you with an opportunity to reach the far larger number of customers or clients that could benefit from what you sell.  And enables you to skyrocket your business growth and bottom line profit revenues too.

Here Are Six Reasons Why

  • It allows you to faster and more effectively attract high volumes of new customers or clients to your business.

  • It gives you the marketing and financial scope to figuratively take your prospects by the hand, introduce them to the benefits and advantages of what you sell, and help them make a wise buying decision.

  • It gives prospects an opportunity to make their first purchase from you considerably more easily than they would be able to under a ‘normal’ buyer/seller environment.

  • It is the foundations of building longterm relationships with your customers or clients – the secret to optimising your success in any business.

  • It provides you with the leverage to generate up to ten times the amount of profit for every marketing pound you invest.

  • It gives you the selling power to dominate your market and position your business as the leader in your field.

What Is The Lifetime Customer Value Of Your Business?

The correct way to calculate your business’s profit and growth potential is to take the selling price of what you sell, subtract the cost price, deduct a percentage for overheads, allow a percentage for marketing, and you’ve got the profit figure, right?

Plus the amount you can afford to market with, right?


This is the biggest mistake you can make when it comes to recognising and releasing your business’s true potential.

The five questions you should ask to discover what your business is really capable of – the five I’ll ask you to calculate now are (without VAT):

  1. What does it cost you to acquire a new customer or client? (In other words, if you run adverse that £1,000 each, and you acquired four new customers every time you ran the ad, it costs you £250 to acquire each new customer).

  2. What is the value of your average sale?

  3. What is the gross margin of that sale?

  4. How long does your average customer of client keep buying from you – the ‘lifetime’ relationship?

  5. Therefore, what is the ‘lifetime value’ of your average customer or client? (the gross margin of your average sale X the length of your average business relationship).

These are questions I find 95% of business owners never ask.  Because they don’t understand or have never looked at their business this way.

Amazing New Profit-Earning Potential!

A client in the managed IT service industry consulted with me last week and they wanted to know how to best grow their business.

They felt that they delivered a better service and had more reliable and efficient products compared to their competition but was worried that they were being under cut by price which was losing them potential clients.

So I asked them the question ‘How much is a client worth to you?”

They didn’t know, so after a little probing on my part, I discovered that over the past 5 years they had only ever lost 1 client.  (Which is a fitting tribute in itself that they do offer a better service than the competition).

Within 30-minutes, we calculated their LCV and was able to devise a much more compelling offer which gave them much more leverage over their competition.

What About Your Business?

Answer the five questions above as accurately as possible to figure out your LCV and use it to help you stand out from the competition, position you as the expert and have an offer they couldn’t refuse.

Hope you enjoyed this weeks blog.  

Got any questions? Let me know in the comments below.

Keep Learning, Keep Selling, Keep Growing.

Talk Soon,
James Michaels




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