This may sound like a strange question, but believe it or not…many marketers have no idea what their customer value is. They track so many things when it comes to their marketing strategies but customer value is probably the last thing on their list. Well, if you don’t know what your customer value is, or even what that means, you may want to read what follows. This article will give you the basics on a topic that is all too often neglected by many beginning marketers.

Okay, so what is customer value? To put it simply, it’s what each customer you have is worth to you in dollars and cents during the lifetime that they are your customer. Now, in many cases, when you’re just selling one product and it’s a one shot deal, you know what your customer value is. However, if you’re running a business and not just hawking products, then customer value is a little harder to evaluate.

The best way to show you is with an example. Let’s say that you have four products that you sell. The first product is a $47 ebook. The second product is a $97 upsell for a larger package. The third product is a home study course going for $497 and the fourth product is a mentoring product that goes for $1470. Okay, the next thing you have to do is some calculations.

Now, naturally each customer in your funnel is worth at least $47 because they bought your $47 product. But how much is the average customer worth? To calculate this, we have to get the percentages for each of the upsells as far as how many are sold per 100 customers.

So, let’s say you get 80% upsell for product two, 20% upsell for product three and 5% upsell for product four. If we figure this out over 100 customers we get 100 sales at $47, 80 at $97, 20 at $497 and 5 at $1470. If we do the math, we come out to a total income earned for every 100 customers of $29,750. If we then divide that number by 100, we come out to $297.50 per customer. That means for every customer who purchases out $47 entry product, they will spend an average of $297.50.

The reason knowing this is important is because you need to know what it is costing you to get every customer you have. If it’s costing you more than $297.50, then you are losing money. Ultimately, you want your return on investment to be as high as possible. One way to increase it is by increasing your customer value, which can be done by lowering or raising certain prices in your product line. But that’s for another day.

So, do you know YOUR customer value?

To YOUR Success,

Steven Wagenheim

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