Daniel Tardy: License To Sell

How much is a new customer worth?

Posted in Business, Selling by elephanthunters on June 29, 2009

We often spend too much or too little on prospecting, canvasing and lead generating because we lack confidence in exactly how much a new customer is worth.  When loading up for a big fishing trip how much do you spend on bait?

If we know the monetary value of a new customer then anything spent less than that amount on ‘bait’ yields a return.

There’s not a perfect way to determine this but you can get close with this formula:

Year X Net Profit – Year Y Net Profit  (Where Y = X – 1 Year) / # of new accounts opened between Year Y and X = Value of new account.

This assumes your business model has a residual customer base.  If your customers are single transactions only then the math is much easier.  Just divide annual net sales by annual transactions.

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