Over the next Several Weeks we will be posting a new and different one-minute video providing business tips and instructional commentary for small business owners. These tips will range from key metrics to consider to the importance of Business and Cash Flow Forecasting.
What is the value of acquiring a new customer? We business owners need to understand the lifetime value of a new customer because it helps us make better decisions in marketing and advertising–not to mention, help with forecasting. My name is Michael Barbarita from Next Step CFO providing outsourced CFO Services with your know your numbers minute. Generally, in determining the lifetime value of a customer, you need to take the average sale per customer and add a factor for repeat business and/or referral to another customer. There are present value calculations as well. With knowledge of this metric, we can make better decisions on how aggressively we can spend on marketing and advertising. And remember, the most successful business owners know their numbers!