How To Calculate & Increase Customer Lifetime Value
That it costs 5-7x more to acquire a customer than it does to retain one isn’t entirely true.
The origins of this myth can be traced back to the 1980′s when the Technical Assistance Research Project published research that stated the cost of customer acquisition vs the cost of customer retention was significantly higher.
Soon after the research was published, other institutions like the Customer Service Institute, Consumer Connections Corp., and ITEM Group all “found” similar data.
Truth is, it was mostly propaganda designed to sell high-level executives new customer loyalty programs. If you don’t believe me, try to find a single linked source that supports the 5-7x claim.
I bring this up because time & time again, I see business owners reallocating budgets based on soundbite statistics and ending up with disastrous results. If you want to see your business grow, I can not underscore the importance of analyzing your own data to establish viable benchmarks and goals enough.
In this article, I’d like to help you understand the different metrics associated with customer lifetime value, and explore how we can use this information to make more informed, data driven decisions as it relates to how we budget our marketing spend.
Even …read more
Article Curated From…: Conversion XL