Here is the second of two posts by  Scott Howard. His  blog Collective Wisdom is an eclectic mix of information.  You never know what you will find when you drop by.  He pulled two marketing articles from his archive at my  request.  The  is the second in the second in the series.

How Much is a Customer Worth? Like everything else, it depends.  But to help you sort out the variables, I have some examples.

Fast Food Restaurant that serves breakfast, lunch and dinner.
Odds are that they have regular customers at the drive-thru every morning spending 4 bucks a day.   Perhaps they only visit 3 days a week. There’s $12 bucks a week.  Let’s say they do this 9 months each year. 39 weeks times $12 = $468.00   Do this for just 3 years and we are up to $1404.  Let’s say they grab dinner for the family twice a month at $25 bucks, or $50 a month times 36 months and we have another $1800 over three years.

Together that’s over $3200. And these are typical but conservative figures.

$10,000 for a 20 year roof.
Three neighbors also get bids when they see the quality work being done. One of them buys now, another buys in a couple of years.

Average cost was $10,000 or $30,000 total.

Coffee Shop.
Another one of those small but frequent purchases.   5 bucks times 5 days, plus bringing a friend a couple days a week and perhaps another visit with friends over the weekend and that 1 customer can be worth 50 bucks a week times 50 weeks and you’ve got a new customer value of $2500 per year!

Then let’s say this customer refers 4 friends during that first year.  Now by reaching that first customer and earning $2500 in year one, you are now earning an additional $2500 from his 4 friends for a total of $12,500 in year two!

This is how you should measure the true value of a customer!

As I read Scott’s post I couldn’t help but thik about the times  i have seen foolish small business owners argue with good customers, over small bills.  They may collect the small amount, but lose the bigger benefit of retaining a customer for life.  Sometimes, it  is better to be good then right!