Business is all about maximizing lifetime value

The cost of acquiring a new customer or client is extremely high. Existing customers and clients know us. They know what they can count on. When they’re happy, they stick around. They buy more. They tell their friends and business associates. They become our ambassadors. The longer you can hold onto a customer or client, the more valuable they are and the more they contribute to your business and success.

For example, if someone walks into a shoe store and buys a pair of shoes, the store makes a profit. If that customer never returns, they’ve still made their profit. But if you can keep that customer coming back so that he buys two pair of shoes each year and brings his family and friends, and remains a loyal customer for three or four or five years, it really adds up.

Also, if businesses are not able to keep customers and clients, it’s a sign that they’re doing something wrong. It’s too much work to find new customers only to bring them into a situation where they disappear after their first experience with a company.

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