What is a customer worth?

Many make the mistake of valuing the success of a direct mail program on just the initial sales it generates, neglecting the fact that for most businesses, that customer is likely to return and continue to purchase later.

A retail store that keeps meticulous records has shared some data with us.

  • Their average purchase is about $40.
  • Their average customer shops about 5 times in a year.
  • Their average customer is with them about 4 ½ years.

Therefore, a new customer walking in their door would be worth about $900 in sales to them.
Using the same calculations, what are your customers worth to you?