The Lifetime Value of a Customer in the Print Industry

The Lifetime Value of a Customer in the Print IndustryHave you ever thought of the lifetime value of a customer? Have you ever thought of why that would even be important to understand or calculate?

The lifeblood of any business is its customers. They are the purpose of our business—and any purpose other than serving your customers puts your company in a vulnerable position.

The fact is, demanding customers make us better. Their needs help bring about never-ending improvement as we make changes for their benefit.

Since customers are the purpose of our business, it’s important to understand and calculate the lifetime value of a customer.

There are many ways to look at the value of a customer—here is one way:

Calculating the Lifetime Value of a Customer in the Print Industry

Annual Revenue. Calculate the annual average revenue of each customer.

Longevity. Calculate the number of years this customer will be with your company.

Referrals. Calculate the number of people who buy print that this customer will refer you to in the future.

Referral Longevity. Calculate the number of years this referral customer will be with your company.

Here is an example:

Annual Revenue for Customer = $100,000
Longevity = 20 years
20 years x $100,000/year = $2,000,000

Average number of referrals = two
Longevity = 20 years
20 years x $100,000/year/referral x 2 referrals = $4,000,000

Current Customer Lifetime Revenue = $2,000,000
Referral Customer Lifetime Revenue = $4,000,000
Total Current and Referral Customer Revenue from one current customer = $6,000,000

Wow … $6,000,0000 of revenue over 20 years as the result of one current customer! This shows the significant revenue impact of taking care of our customers.

There are several ways you may want to use this tool:

Communication to Your Team

Take the time to talk with all of your team members about the lifetime value of your customers, whether your team members are in sales, customer service, or any other position. They probably never thought of this value before now. It will open their eyes to the importance of retaining each customer over a long period of time.

Improve Your Processes

If you develop a better understanding of the lifetime value of a customer then you will want to improve those processes that have a positive effect on the customer experience. As a result, your customer will feel more appreciated and be more likely to stick with you for the long haul.

Place the Customer First

All of us say that the customer comes first, but many of our companies could do a better job removing the roadblocks to better serve them.

Survey Your Customers

Find out what is actually important to your customers and then develop a plan to make those desires happen. In the process of surveying your customers, you will create loyal customers.

There is much value in understanding the lifetime value of a customer. It opens people’s eyes to how much keeping a customer means to a business, as well as serves as a motivator to improve the customer’s experience.

How do you calculate and use the lifetime value of a customer in your print business?

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2 replies
  1. Melissa Sienicki
    Melissa Sienicki says:

    Another great read as always, Bill. I really appreciate the way you broke down the calculations for the lifetime value of a customer, and I couldn’t agree more with the importance of surveying customers. It’s best to set up a calendar and reach out to your customers regularly. When it comes to retention, no news is not necessarily good news.

    Reply

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