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Product ID: 390360EAU
 
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Determining and Increasing Customer Profitability and Lifetime Value

OnDemand Webinar (97 minutes)

Could some of your company's best customers in terms of sales revenue actually be unprofitable? As shocking as that might sound, the answer is yes. In this OnDemand Webinar, you will learn how to calculate the annual profitability of a customer, and how to calculate and estimate the lifetime value of a customer. You will discover how to convert many unprofitable customers into profitable customers and when to fire customers who are not profitable. You will learn strategies for increasing the lifetime value of profitable customers. You will learn how increasing the lifetime value of customers can lead to larger profits and higher shareholder value.

Authors

Alan Campbell

Agenda

Determining the Annual Profitability of a Customer

• Use Activity-Based Costing to Assign Costs to Customers

• Subtract Costs From Revenues

• Compare Revenues and Profits

• The Best Customers in Terms of Sales Revenue Might Not Be Profitable

Increasing the Annual Profitability of a Customer

• Increase the Frequency of Purchases

• Increase the Average Purchase Amount

• Decrease the Non-Value-Added Costs of Serving a Customer

Calculate the Lifetime Value of a Customer

• Present Value of All Future Cash Flows Multiplied by the Retention Rate

• Include Cash Flows From Referrals

• Subtract Acquisition Cost and Retention Cost

Strategies for Increasing the Lifetime Value of a Customer

• Increase the Retention Rate

• Implement an Active Referral and Leads Program

• Add More Products (Or Services) to Sell to Customers

Increase Shareholder Value

• Customers Are Assets

• Increasing the Lifetime Value of Customers Increases the Value of a Company's Assets

• If Liabilities Remain Constant, Shareholder Value Increases