The only metric that matters to customer focused businesses – Lifetime Value

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I was recently asked by a client, “if you could only have one measure to manage your business, what would it be?”. I quickly thought about the range of metrics available to executives today: profit per customer, market share, revenue growth, customer satisfaction, new product success, share price… the list goes on.

However the one metric that always comes to mind is one that not many businesses use, lifetime value of customers, and yet it is the most powerful.

This metric provides a long term customer centered view of your business. What is the value, in profit terms, of an average customer over the potential life of your business relationship?

This is not a static number but an active one that can be used to value your business and identify opportunities to grow that number.

It’s real power however is in galvanizing everyone in a company around the importance and value of customer relationships. It proves the tangible logic for why every interaction matters and connects everyone with the ultimate customer.

Below is a video interview with one of the great practitioners of Lifetime Value, Chris Zane of Zane’s Cycles

If you are interested in seeing more from this interview series you can go to MarketCulture’s Video Library

Republished with author's permission from original post.

Christopher Brown
Chris Brown is the CEO of MarketCulture Strategies, the global leader in assessing the market-centricity of an organization and its degree of focus on customers, competitors and environmental conditions that impact business performance. MCS works closely with the C-Suite and other consulting groups to focus and adjust corporate vision and values around the right set of beliefs, behaviors and processes to engender more dynamic organizations, predictable growth, and customer lifetime value. In short we help leaders profit from increased customer focus.

1 COMMENT

  1. I agree with you that customer lifetime value is a very important metric that every business should use. Customer experience is highly important and always needs to be addressed.
    Furthermore, I think every business should be flexible and willing to change its product in favor of what its customers desire/need.

    I’ve quoted your post and translated these terms into SaaS business terminology in Totango’s blog:
    http://blog.totango.com/2011/09/customer-lifetime-value-and-customer-experience/

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