How Much Is A New Client Really Worth?

Have you taken the time to calculate how much a client is really worth to you? This is a critical step before executing your marketing plan.

The reason you need to know how much a customer is worth is because it helps set a limit on how much time or effort you should be willing to put into attracting new clients. For example, if an average customer is worth $100 to you, it would be silly to use a tactic that would require hundreds of dollars (or hundreds of hours of your time) to attract a new client. You’d be losing money!

And that’s why it’s important to calculate a customer’s worth, formally known as Customer Lifetime Value. Use the following questions to help you calculate your Customer Lifetime Value. It’s important to remember that we are not thinking about one specific client, but rather the average across of all of your clients.

A. How much does your average appointment cost?
B. How many appointments on average does a client book in one year?
C. How many years on average does a person remain a client?

Your Customer Lifetime Value= (Number from A) x (Number from B) x (Number from C)

This number, your Customer Lifetime Value, is how much one customer is worth to you. Generally, if you spend less money (or the equivalent value of your time) to attract and treat a new customer, your business will make money.