How much should a small business spend on marketing?

The answer to that question begins with a conversation about how much a new customer is worth to you.  As you evaluate how much can you afford to spend to acquire a new customer consider what a customer will be worth over time.  To determine the value think about the following questions:

  1. What will the average customer spend each year?
  2. How many years will the average customer continue to do business with you
  3. What is your typical gross margin

Combining these factors and applying a discount rate to adjust for inflation will give you a ball park estimate you can use to evaluate the value of a customer.    To help with you analysis we worked with Howard Cox of Somerset Advisors to develop the Lifetime Value of a Customer Worksheet.

To download a free copy, simply fill in the information below: