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Value of a Lifetime Customer

Posted: July 9, 2004

The goal of many websites is not to make just one sale to an individual, but to make several over the course of each year.

There are many techniques to improve customer communication and loyalty, but the first goal is to get the customer to your website in the first place.

This is where pay per click marketing can help you. As your website is seen when the user conducts a search, you are targeting potential customers at the search level when they are looking for products.

One of the most overlooked values in determining pay per click ROI is the value of a lifetime customer.
If you measure your pay per click ROI based only on the purchases directly from a search engine, your pay per click accounts will not get credit with these repeat customers.

If your average customer makes three purchases a year, and spends $x amount for each purchase, then to properly calculate your pay per click ROI you need to include the repeat customer values.

It is often profitable, if you have many repeat customers, to run a slightly negative or break even pay per click campaign as only the first time a customer buys from you will you be charged. If they bookmark your site and return directly to you without going through a pay per click search engine, then the initial advertising has earned you additional revenue while not being the direct referrer and being credited with the sale.

By running such campaigns, you can also afford higher bids, which in turns gives you a higher pay per click position, which then leads to more overall customers.
The more customers, the higher internet visibility you will also achieve. Some customers will tell their friends about your site, and they will go directly to your site without having gone through a pay per click search engine. Again, the initial advertising helped you recruit this customer without being the direct referrer.

Lifetime customers can dramatically increase the profitability of a website. Do not overlook recruiting lifetime customers, or getting them from a search engine to your website.

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One Response to “Value of a Lifetime Customer”

Google AdWords Seminars Coming to Detroit & Minneapolis » bgtheory.com on February 28th, 2007 7:34 pm

[...] finally getting a chance to talk in depth about split testing, profit by impression, lifetime visitor values, and quality score to audiences who are hungry for this [...]