customer value

You’ll read a lot of posts across the internet trying to help you figure out what each of your customers are worth. You’ll see articles about what a Twitter follower is worth, or what a Facebook like is worth, and to be honest, I don’t pay much attention to those. How can someone know what my Twitter followers or Facebook fans are worth?

Unless you’re in my business category, and using social media the way I use social media, there’s no possible way of knowing. And there’s no easy formula that you can use. I mean, if I have 1,000 Twitter followers and only one of them spends $1,000 with me, does that mean that each of my followers is worth $1? Hard to say.

But beyond that, I think there are some much more important questions you can ask. For instance:

“How important are each of my individual customers?”

“Which of my customers is most important?”

and even,

“How much are each of my customers worth?”

They are all different questions, which might not even have solid answers. And, is it possible to really put a dollar value on them?

Let me explain by running you through this little scenario, looking at four customers that you might have. And my definition of customer is very loose. It isn’t just someone who has spent money with you, it’s also anyone who has even thought about it; anyone who has “window shopped” or browsed.

Having said that, let’s look at four customers:

Customer 1: Recently spent $1,000 with your business.

Customer 2: Comes in every week and spends $5 each time.

Customer 3: Spent $100 one time.

Customer 4: Browses a lot but never has purchased a thing.

OK. Now it’s your turn to answer: Which of these customers is the most important one to you? Conventional wisdom might say Customer 1 because they’ve brought in the most money. But have they?

What You Don’t Know Can Hurt You

Customer 1: Doesn’t live in your area, but was on a business trip to the area, and used the opportunity to purchase something big from you. He’ll probably never be back to your area or your business.

Customer 2: An unemployed woman on a fixed income and little to spend. She might not have much, but she is loyal and spends what she can in your business. Oh, and she checks in online whenever she’s there.

Customer 3: Got a tax rebate and used a portion of it to purchase something from you. The person really isn’t even a fan of your business, but you had what she needed at the time, on sale.

Customer 4: He doesn’t really need what you offer, but likes to browse. The good news is, while he doesn’t need what you have, he has lots of friends who do, and he tells them about you all the time, both in person and via social media.

Now, ask yourself again:which of these customers is your most important? Not so easy, now is it?

The fact is, they are all important, and you should treat all of them very well. Often there are circumstances and facts that we don’t know about our customers. This means we need to get to know them better. Knowing your customers and their motivations will help you better understand their purchase habits, and more importantly, the power that they hold in bringing in revenue for you.

How well do you know your customers? Which of them is most important?