One of the most important concepts you need to understand is the lifetime value of a customer. This term measures the value of a customer to your business over the long term. Rather than a onetime paycheck provided to you, the lifetime value of a customer extends over a longer period of time. You need to know this. When you do, you can see the value of placing assets, including time and money into managing that customer, or acquiring the customer at all.

Are you looking at the response ratio within your business? This is how many people respond to you marketing compared to the number of messages delivered. If so, you could be missing out how effective your marketing is. Rather, look at the actual return on your investment, the actual cost of the campaign compared to the lifetime value of the customer.

When you do this, you will see that you can spend more on promotions if they are producing the long-term reward for your business. When you look at the actual value of the customer over the lifetime, you will be able to see specific, significant business growth. Consider this. Once you know the value of a customer over the long term, it is easier to see what the actual rewards to your business that customer offers. Then, you can better see where your investment is going. In return, you may be more willing to spend a bit more on the promotion that drives that customer to you. After all, your competitors are less likely to do so.