Why the B2B Marketer Should Focus on Lifetime Value
The B2B marketer often has a shortsighted view about objectives. And He or she may rightly be concerned with a campaign’s efficiency in generating leads or sales, and evaluate the results of each campaign in terms of the total amount of money spent and the short-term gain achieved.
Lifetime Value Not Just Immediate Profit
By contrast, the successful B2B marketer know that marketing is a long-term process. He knows that the true value of each new sale is not just the immediate profit received: It is in the lifetime value of the new customer. He also knows it costs only one-tenth to one-fifth as much to sell a product or service to an existing customer as it does to acquire a new customer. This is why progressive organizations spend so much effort on the care and feeding of the customer, and on understanding the lifetime value of each new customer.
After calculating lifetime customer value, three things should become apparent. First, because of the long-term profit potential, most organizations should be willing to increase the amount of money they are willing to spend to acquire a new customer. It isn’t just an old adage that it takes money to make money. Risk is often necessary in order to gain revenue. Second, individual customers are more important (and profitable) than most of us realize, and should be treated accordingly. A B2B marketer simply cannot gloss over or neglect loyal individual customers in an attempt to gain a bunch more of them. (Consider that you might not get any new ones with this sort of customer approach, or lack thereof). Third, and one that ties in the previous two: It is critical that you keep the customers you acquire.
Consider the Individual Customer Experience
A short example will illustrate this point. I was in Victoria BC earlier this week (after a terrific kayaking trip off Quadra Island – highly recommended). My wife and I stayed at the Delta Victoria Hotel, a really good hotel right on Victoria Harbor. Our dinner was seriously delayed. I did not have to complain to the restaurant manager (Mark) – he actually came to our table, apologized profusely and told us that the dinner (minus adult beverages and desert) was on the house. What Mark didn’t know was that I almost always do a hotel review on TripAdvisor.com and had he not intervened to make the situation right, the restaurant would have gotten a very different type of review than the glowing recommendation I actually provided and we would not have stayed at the Delta next time we are in Victoria.
Good marketers think about lifetime value, not just about how to get the most money out of each customer on every transaction. Discover more info on how to create lifetime value can be found at the Fusion Marketing Partners website.
- B2B Marketing’s Role in Driving Revenue With Integrity - September 17, 2020
- How to Build Company Value in a Down Economy - August 25, 2020
- 6 Lessons B2B Companies Can Learn from Amazon - July 6, 2020