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In today’s cutthroat completion, the customer is the king. He is the one, who makes or breaks a company because nowadays a consumer has so many choices that all the companies want to give their best products and services to their customers to be ahead of others. Gone are the days when there were a few companies in every field and they had monopoly in that field. Now, with almost all the economies opening with globalization, we find many companies competing with each other in the same sector. This healthy competition is good for the consumer as he is the one, who is getting benefited from it.

There should be a method to know about customer profitability. In simple terms, you get to know, which customers are benefiting your business and which are not. The best method is to know about lifetime value of a customer. Through Lifetime customer value (LCV), you can know about the profit that your business makes from the association with a particular customer.

Lifetime customer value is not just a measurement of revenue but in reality, it is a measure of customer profitability. Since, no two customers can give you same amount of profit. Lifetime customer value also gives importance to your overall association with your customers, as some relationships grow stronger with time and give more profits than others give.

The main hurdle everyone faces in implementation of this method is that it is an expensive and time-consuming exercise to collect the data of all the customers for comparisons. However, lifetime Customer Value Method gives you the opportunity to get a benefit of around 80% from the information you get about your customers from with an investment of only 20%.

To make more profit, it is beneficial for you to take some time-out for analyzing every customer’s business trend with you.

You should find out which customer or group of customers is with you for a longtime, if he buys occasionally or regularly, if he buys in bulk or in small quantities, if every time he tries to negotiate the price, or if he is very difficult to handle.

The lifetime customer value gives a chance to know about your profit-giving customers and by further improving your relationship with them; you get to earn huge profit.

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