The Ultimate Goal of Relationship Marketing

Today, I want to talk about the most important benefit of relationship marketing.

We’ve written a lot about increasing revenue, accelerating inventory turnover, and boosting customer loyalty – but this benefit is, strategically speaking, further reaching and can, over the medium to long term, radically alter your competitive position.

What is this benefit?

Increased customer lifetime value.

When you increase the total amount of gross profit you earn from the average person over the course of their life as a customer with you, then you’re in a position where you can now afford to spend more to acquire new customers.

In other words, you can market more aggressively than your competitors. You can out-bid them on ad spots and pay-per-click keywords. You can afford to pay referrers more than your competitors do, so they work for you.

As soon as we start working with a new client, we continuously measure customer lifetime value of every customer, prospect, and even suspect on their list. (We track average earnings subscriber per month as a more manageable proxy for lifetime value.) Our long-term goal is to maximise this figure.

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