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Can I afford to exhibit my business at the next YORBusiness event? Here is exactly how to calculate that decision!

If you want to convert your final decision whether to exhibit at YORBusiness into a question of financial risk or reward then here is an easy and reliable formula. All you need to do is compare the cost of exhibiting to the financial value of a new client to your business as follows:


To calculate the financial value of a new client, you can use the Customer Lifetime Value (CLV) formula. CLV represents the total revenue a customer is expected to generate for your business over their entire relationship with you. Here is how you can calculate it:


1. Determine the average purchase value: Calculate the average amount of money a customer spends on each purchase. This can be done by dividing the total revenue generated from all customers by the total number of purchases.


2. Estimate the purchase frequency: Determine how often, on average, a customer makes a purchase from your business. This can be calculated by dividing the total number of purchases by the total number of customers.


3. Calculate the customer lifespan: Determine the average length of time a customer continues to purchase from your business. This can be calculated by analysing historical data or making an educated estimate based on industry benchmarks.


4. Calculate the Customer Lifetime Value (CLV): Multiply the average purchase value by the purchase frequency and then multiply the result by the customer lifespan. The formula can be represented as follows:


   CLV = Average Purchase Value x Purchase Frequency x Customer Lifespan


For example, if the average purchase value is £500, the purchase frequency is two purchases per year, and the customer lifespan is 5 years, the CLV would be:


CLV = £500 x 2 x 5 = £5,000


This means that, on average, a new client is worth £5,000 to your business over their entire relationship with you.


By calculating the CLV, you can better understand the financial value of acquiring a new client. This information can help you make informed decisions about how much time and money to invest in prospecting for new sales, as well as guide your marketing and sales strategies to maximize the value of each customer.


So, back to the original question, even if your average client purchase was £200 twice a year for 5 years that is a return of £2000 for an investment of £150.00! We will let you do the maths!

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