What is the Value of a Customer?

What is the value of a customer to your business and just how do you calculate it?stick_figure_with_abacus_400_clr_8723

It really depends upon your Business Model but let me give you an example from the Pharmacy business.

Retail Community Pharmacy Example

In my area the average customer purchased 6 prescriptions per month at an average retail value of $50. That meant that the average customer generated $300 in sales per month or approximately $3600 per year. That is a very valuable customer. And because of insurance restrictions they could only purchase a 30 day supply at each trip.  So the Sales were fairly steady and even every month.

In our Mobility business we sold high ticket power wheelchairs and scooters. Many of those customers only made one purchase every 3-4 years. Even though the average sale was about $4000 dollars the sales did not recur on a nice smooth basis. But still that customer was worth at least $4000 in sales.

Monetarily you can take your total sales and divide it by the number of active customers to determine the average sales value per customer.

But is that really what a customer is worth?

 What if you have a customer who only buys $100 per month but he is on the local chamber of commerce and refers ten customers per month to your store, what is that customer worth?

What if you have a customer who buys $50 per month from you but he happens to run the local newspaper and always mentions you in his local column every week. How much is that customer worth?

In addition, what if you actually donate $100 per month to the local Charity and the woman that runs that charity happens to be married to the Head of the local Physicians Group. What would that customer be worth to your pharmacy?

 The True Value to your Business is How many new Patients that Customer refers

You hopefully can see by now that a customer can have value without ever spending a cent in your business. And in the long run your healthcare practice requires customers to survive. Those customers need to bring in revenue but those customers need to bring in more revenue than it costs to attract them. Expensive advertising campaigns rarely result in a pharmacy receiving persistent new customers. Coupons attract coupon clippers, discounts attract bargain hunters, but engaged customers actively promoting you to their friends and family drives genuine growth based on the performance of your practice in creating value for those consumers.

Engagement Drives Profit

The Human Sigma Project explains the value of engagement. Engaged customers are not just satisfied with your service they passionately advocate for your service. Engaged customers are created by engaged employees doing a great job at providing value.

So your customer is worth exactly what you make them worth.