Are You Looking at Lifetime Value?

Are You Looking at Lifetime Value?

When it comes to your business’ long-term financial success, the initial order is nowhere near as important as their lifetime value.

However, some sales and marketing teams don’t consider the long-term financial value of their customers. Instead, they focus their efforts on the initial order.

What adverse effect can this have on your business? How can you change your sales team’s culture to consider the long-term financial implications?

Why is the Short Term Favored Over the Long Term?

One of the main reasons is that the larger the order, the more commission or company bonus people tend to receive. These individuals are mostly motivated by financial compensation and look to earn as much as possible from the current month.

While they may benefit from a quick sale, in the long term, the business may suffer. It normally happens when your sales and marketing have over promised on what your business can provide and then do not meet customer expectations. If the client has a disappointing experience, they probably will not place further orders, and your business will lose out on potentially important revenue.

Research has found that customers aren’t always motivated by price, but by the experience they receive. By providing high-quality service, customers return to a business and often spend more. It is also cheaper to sell to existing customers than it is to acquire new ones.

Prevent Overselling

Salespeople should be aware of the current abilities of the business and its costs associated to what they sell. If they don’t understand these two vital elements, there’s likely to be a scenario where they are overselling to achieve greater commissions while the business can’t fulfill the orders.

Preventing overselling can be difficult to achieve since there is a culture in a sales environment of ‘more is better.’ The focus of senior management should be towards developing an understanding that the long term plan is best for the business and all those employed by it.

It isn’t just sales and marketing that are often prone to encouraging large orders either. Senior management must also take some of the responsibility. Often, they encourage large orders to reduce costs per order. They don’t realize that in the long term, it would be cheaper to sell to many established customers with medium sized orders compared to a few with large orders who never return.

Changing the Culture

Here are some of the best ways you can start to implement an organizational culture change that will bring this about. After a few months, you should start to see a change from large orders to smaller, more frequent ones.

1. Commission for Returning Customers

Many businesses struggle when they have sales teams that are paid commission on first orders only. It encourages salespeople to concentrate on the first sale. However, if each person were rewarded for return customers, then sales people would be more focused on retaining customers and offering deals that are suited to them.

2. Assign Dedicated Salespeople

People buy from people, especially when it comes to ordering from brands they already know. So why not take advantage of this and assign a particular salesperson to each customer?

3. Set Returning Customer Targets

Monthly revenue and new customer acquisitions are common sales goals, but many businesses don’t focus on their customer retention rates. By hitting these goals, you will encourage your salespeople to concentrate on bringing existing customers back for more.

4. Reward For Lifetime Value

Reward salespeople when a customer has placed orders of a particular value over the span of their customer lifetime.


The lifetime value of your customers is an important consideration. However, many sales and marketing teams are focusing on the short-term rewards of a large order and not on the long-term potential in sales. Your primary responsibility is to change this way of thinking and develop a culture that looks at the customer as a long term investment.


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