Miscalculating your customer value can cost you a lot of money.

If you are overoptimistic about how many repeat business you can get from someone, you will be spending more budget that you want on acquiring that customer.

I’ve made this mistake many times. I’ve spent thousands of dollars on Facebook Ads to get potential customers, that never bothered on replying my first intro email.

We are obviously missing something here.

One approach is to reduce your marketing costs to the minimum. Write blog posts that your audience will share and reach other people for free. Reducing the CPA as much as you can, avoiding expensive locations, or expensive age groups.

The other approach is to target the whales. No matter how expensive is to reach them. You know if you can turn them into customers, they will buy your premium tier.

Both approaches are the reason why we failed to calculate the true customer value. Reducing your acquisitions costs will bring you cheap customers, and targeting for the whales will force you to have a large budget.

What’s the right angle then? Instead of thinking about your customer’s value, think about how you can provide value to the customer. Instead of expending an extra $200 on Facebook Ads, spend $129.99 on an Echo Spot and send it as a gift to one of your customers.

Spend on delight customers. Inflate your customer with value like a balloon, and this person will become more valuable. People will respond to exceptional experiences by sharing them with other people.

A high-value, hyped, super excited customer will transfer her value to another potential customer. Then instead of calculating the customer value, you can calculate the K-factor, so each additional dollar you put in your clients base will compound over time.


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Leo Celis