Lesson 1 of 4
Customers are assets: lifetime value in plain numbers
What one customer is worth over time, in simple numbers
The idea
A coffee shop gives you a loyalty card: the tenth coffee is free. Why give coffee away? Because a regular who comes twice a week for three years spends hundreds. One free coffee is cheap next to that.
What a customer spends with you over the whole time they stay is called their lifetime value.
Lifetime value
What one customer is worth
Spend
A month, or per order
Time
How long they stay
Margin
The share you keep
What that number tells you
What to spend to win one
A common rule of thumb: at most a third of their lifetime value
What keeping one is worth
Every month they stay adds to it
Which customers to find more of
The ones worth most, not the most common
Finding new customers
- Ads, posts, outreach
- Months to pay back
- Starts with no trust
Keeping the ones you have
- A welcome, a check-in, a reason to come back
- Pays back at once
- Starts with trust you've already earned
Run the numbers
What one customer is worth to you
The starting numbers are only an example: a plan at $19 a month, kept for a year, at an 80% margin. Put in your own: what a customer spends a month, how many months they stay, and the share you keep after costs.
Lifetime value
$182
kept from one customer
Spend to win one, at most
$61
a common rule of thumb: a third of it
Each extra month a customer stays adds $15. Keeping them longer is often cheaper than finding new ones.
Today, with AI
Tools can now spot customers who are likely to leave, from how often they use the product or come back.
For a small business the bigger change is cheaper follow-up: a check-in or a thank-you takes seconds to draft.
What AI does well
Drafting check-ins and reasons to come back, and spotting customers who've gone quiet.
Where it goes wrong
It can't make your product worth staying for. If people leave, ask them why first.
What stays yours
Talking to the customers who left, and fixing what they tell you.
Check yourself
Do it in the studio
- 01
Run the calculator above with your own numbers: spend, months, margin.
free - 02
If you haven't yet, set your target on a number of customers, not followers, on Results → Goal.
free - 03
Write down your best customers' lifetime value, and the most you'd spend to win one more.
free - 04
Optional: Ask the CMO about this document on Marketing strategy. Which customers are worth most to us?
15 credits
Done when You know what one customer is worth to you, and the most you'd spend to win one.
Go deeper
University courses on the same topic, if you want to go further.
INSEAD
Managing Customer Value (MBA core)Planning around customers, and treating them as assets
Harvard Business School Online
Digital Marketing Strategy and AI, Module 6: Allocating Budget and Measuring SuccessSplitting a budget, customer lifetime value and measuring results