Lifetime Value: Starbucks Case Study

This is a very powerful info graphic from KSS, which describes how lifetime value can be calculated and used in order to determine the appropriate level of customer acquisition (or retention) costs.

Its a mystery to me why companies frequently but so much effort into customer acquisition and so little into retention. Apart from the actual costs involved a retained customer has the potential of becoming an advocate for your product or service. The lifetime value of an advocate is hard to calculate, but it is always positive!!

While the example is consumer related (Starbucks) the same techniques can be used on a B2B basis too.

You should also think about lifetime value when you are considering recruitment costs as opposed to salary increases (or other value added packages).

Its maybe harder to calculate the lifetime value, as opposed to the short term costs, but even the attempt gets your mindset in the right place!

Good luck.

 

 

Lifetime Value

Calculating Lifetime Value

 

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