Introduction
Many businesses can describe their target customer in broad terms, but fewer understand what that customer is actually worth over time.
In this clip, Mark Jamieson and Pat Whalen discuss why customer lifetime value is such an important part of marketing strategy, and how understanding it can help businesses make smarter decisions about customer acquisition and marketing investment.
Summary
Defining a target audience is about more than identifying a general demographic such as age, location or homeownership status.
Businesses also need to understand the financial value of the customers they are trying to attract.
Customer lifetime value looks at how much a customer may spend with a business over the course of the relationship. That number can play an important role in determining how much the business should reasonably be willing to invest to acquire a new customer.
If a customer has significant long-term value, the business may be able to invest more in marketing and customer acquisition while still generating a healthy return. If the value is lower, the acquisition strategy may need to look very different.
Understanding lifetime value also supports broader brand and marketing decisions. The more clearly a business understands who its customers are, what they buy and what those relationships are worth, the more effectively it can shape its messaging, positioning and marketing strategy.
This is why customer lifetime value should not be viewed as simply a marketing metric. It is a business metric that can help inform how marketing budgets are built and evaluated.
In This Series
5 Videos- Strategy Starts with Research: Why Tactics Should Never Come First 1:26
- 2 Why Your Marketing Tactics Need to Work Together 2:23
- 3 Look Beyond Vanity Metrics: Focus on What Actually Drives Results 1:58
- 4 Brand Differentiation: How to Stand Apart in a Crowded Market 1:10
- Customer Lifetime Value: How It Should Influence Your Marketing Spend 1:18
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Key Takeaways
Full Video Transcript
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00:00:00:01 - 00:00:15:23
You and I have done this many times. If we sat down with business owners and asked about the client and sure, you know, my client is the 35 year old homeowner and it doesn't go any further than that. And it has to, you know, most businesses probably don't even understand what the lifetime value of that said client is.
00:00:16:00 - 00:00:35:18
You know, another exercise that still blows my mind to this day that we go into and we speak to homeowners, say, what is the lifetime value of client X if they buy the service or they buy this product? And nine out of ten times the answer is I don't know. And that again is about the brand. This is about the brand positions, about understanding who your clients are.
00:00:35:19 - 00:00:52:19
And when you do that, all of a sudden you start creating a message around your brand and something that you can put forward within your community, within your business community. Well, you mentioned lifetime value. And to me, that's such a critical component of everything that we're talking about today, which is really strategy. It is. And, you know, you got to know who your audience is.
00:00:52:19 - 00:01:07:22
You got to know how much they're going to spend over the course of her lifetime with you, because that will then determine how much you're willing to spend in order to acquire that new account. And these are the types of metrics that this is kind of things that we get into with people. We take kind of a business person first approach.
00:01:07:23 - 00:01:18:13
You and I are both serial entrepreneurs and have been a long time. We're not just marketing guys. So we understand the importance of those metrics. And really it is again, it's the foundation for all of their marketing strategies.
Meet the Speakers
Learn From Experienced Marketing Leaders
Our educational videos are led by experienced digital marketing professionals who work with businesses every day to solve real-world marketing challenges. Each video session is built around practical insights, proven strategies, and lessons learned through hands-on client experience.
Mark Jamieson
CEO, WSI Ottawa
Mark Jamieson is the CEO of WSI Ottawa and a digital marketing strategist with decades of experience helping organizations grow through data-driven marketing, AI adoption, search strategy, and business innovation. He regularly speaks on the future of digital marketing, AI, and business growth, helping organizations understand how emerging technologies can create measurable competitive advantages.
Pat Whalen
Partner, WSI Ottawa
Pat Whalen works closely with organizations to develop practical marketing strategies that align business objectives with measurable outcomes. With extensive experience in business development, sales strategy, and client engagement, Pat helps organizations identify opportunities for sustainable growth through strategic marketing and digital transformation.
Frequently Asked Questions
We’ve compiled answers to some of the most common questions related to this topic. These FAQs expand on the discussion and provide additional context to help you better understand the concepts covered in the video.
What is customer lifetime value?
Customer lifetime value is an estimate of the total value a customer may generate for a business over the course of the relationship.
Why is customer lifetime value important in marketing?
It helps businesses understand how valuable different customer relationships may be and can provide important context when deciding how much to spend on marketing and customer acquisition.
How does customer lifetime value affect marketing spend?
If a customer is expected to generate significant value over time, a business may be able to spend more to acquire that customer while still achieving a positive return.
Is customer lifetime value the same as the value of the first sale?
No. The first purchase is only one part of the relationship. Lifetime value considers the broader value a customer may generate through repeat purchases, additional services or an ongoing relationship.
Why do businesses often overlook customer lifetime value?
Many businesses focus heavily on individual transactions, monthly marketing costs or immediate campaign results without calculating the longer-term value of the customers those campaigns generate.
How does customer lifetime value relate to customer acquisition cost?
The two metrics should be considered together. Customer acquisition cost shows what it costs to generate a new customer, while lifetime value provides context around what that customer may ultimately be worth.
Can customer lifetime value influence which audiences a business targets?
Yes. Understanding which types of customers tend to generate greater long-term value can help businesses prioritize audiences and allocate marketing resources more strategically.
Does customer lifetime value affect brand positioning?
It can. A deeper understanding of your customers, including their value and buying behaviour, can help shape how you position the business and which customer segments you choose to prioritize.
Connect Your Marketing Budget to Customer Value
How much should you spend to acquire a new customer? The answer should not begin with an arbitrary marketing budget.
A Marketing Strategy Review can help you better understand customer value, acquisition costs and the business metrics that should guide your marketing investment.