How to Calculate Customer Value
Customers are an intangible asset for businesses
They do, however, have a value to be considered ● Customers equal sales ● They also equal return business and referrals ●This all adds up to profits for your business
1.Customers’ Annual Profit Contribution � Determine how much revenue a customer creates, as well as what expenses or costs they incur. Subtract the expenses to see what the customer means, financially, on an annual basis.
2. Determine Retention Expectations ● How long will you keep the customer ● This is just a reasonable estimate ● Determine which customers have more loyalty or are likely to be repeat customers
3. Estimate Your Retention Costs ● Some customers get discounts ● You have to market your brand (that costs money) ● Reselling efforts can get price
4. It’s Time to Do the Math ● A simple cash flow model will work
● Make sure to include operating costs and expenses, if necessary
It’s Time to Do the Math
â—? This combines the projected revenues, expenses, and continuous cash flow throughout the customer lifetime.
Now that You Know,
Go!
Once you find your most profitable customers, your focus should be on them because they are the reason for your success. www.cbs-cbs.com/ www.facebook.com/CorporateBusinessSolutions www.youtube.com/user/cbsadvisers
Click Here To know more about Customer Reviews for Corporate Business Solutions: For Reviews You can Watch the Video: https://vimeo.com/119329734