How to measure the true value of a customer?

A relatively simple way of measuring the value of a customer could be expressed as a function of:

1. Revenue Generated: How much money the customer is paying you.

2. Cost to Acquire: What it cost you to get the customer to start paying you.

3. Cost to Serve: What it costs you to ensure that the customer continues to pay you.

when customer starts ignnoring your mistakes and still being loyal with the company

actually it varies if you want to measure it in financial terms so the amount of money a customer spends in buying your product.

It could be done by measuring return of customer (ROC).  I am saying ROC because customers are a more valuable metric than just money and return on investment (ROI) is a tangible and valid metric, measuring the value a business creates from capital. In order to measure true value of a customer (ROC) will be good. So here are some steps to try and get this measurement as easily as possible.

1. Track customer interactions

Firstly, customer tracking forms the foundation. The tracking of customer interactions must start from the very first contact, whether that’s a general enquiry into a contact centre or a purchase from an online website. Every touch-point that a customer hits through their journey must be tracked helping to create the single customer view (SCV). Responses to advertising, direct marketing campaigns and to any form of sales activities should also form part of this, as will contact with call centers both in and outbound.

2. Allocate current costs

The next stage is to work out and then allocate costs from marketing campaigns to all customers making purchases and those who make enquiries. After all, it is important to know how long the period from initial enquiry through to sale is and what the purchase pathway was; this is a metric used in the model for ROC. It will enable marketers to show whether or not multiple approaches move the customer along the buying process or not and then plan accordingly. This requires a knowledge of which marketing method actually influenced the call-to-action of the customer. Did the customer respond to a piece of direct mail, did they see an advert in a trade magazine, were they watching CNN and caught a TV advert in the break or did they receive a sales call? Different techniques are available to marketers depending on how they sell their product to their audience.

3. Allocate future revenue

The final stage is the revenue allocation. By the time this stage is reached, it is far more plain sailing. There’s an accounting function that will allow the revenue generated from each customer to be unearthed. But one of the tougher areas is how the allocation of future marketing costs and revenues is identified. It could be down to historical data based on response rates, to project what similar marketing activities will generate in future campaigns.

1. Frequency to come of customer.

2. Satisfaction level.

3. Service quality.

4. Cost and profit

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The true value of customer can be measured in so many ways but the perfect point is the customer satisfaction and his profitablity which he receive from our products.

True value is hard to measure ,but if you mean financial value or profit value  it usually relates to net profit gained per period from this customer. Net and not gross.

True value of a customer is gauged by the quantum of business generated by the customer or thru the customer as referal over a fixed period.

- The period that he has been a customer

- Revenue generated

- Revenue to be generated

- His rol of reselling your products through his network

- Loyalty