How Much Is A Customer Worth?

CalculatorWhat is the individual value of a customer and why is it so important to know?
Federal Express (FedEx) uses this information on a daily basis. If, for example:
  • A single company sends 30 packages a week at $25 each, that’s $750 a week.
  • On a yearly basis, the same company will spend $18,750 a year sending packages through FedEx.
  • If that customer is angered by just one $25 package that is late, FedEx has the potential to lose that customer (and $18, 750).
  • That’s why FedEx supervisors are authorized to grant a $100 refund on the spot, no questions asked.
  • $100 is a small price to pay to retain a customer worth thousands and thousands of dollars.
Calculating a customer’s worth helps determine how much you would be willing to spend to acquire new customers, or for that matter, how much it costs your company to lose one! To compute the value of your customers, use these simple guidelines:

Customer Worth Calculator

On average, if you continued to provide acceptable service and quality, how many years will the customer patronize your business?
How much will the customer buy in the average year (make sure you include sales increases due to growth on your part or the customer’s)? $
What is your gross margin?
Customer’s Worth: