hot tub sale $5,000 Total chemical sales (avg. $15/month) $1,260 Total spa cover sales ($160 every 3-5 years) $320 Average parts sale over the life of the spa $300 Sub-Total $6,880 Word-of-mouth referral 1 referral for every one customer Total Lifetime Revenues $13,760 Average Gross Margin 30% Lifetime Gross Margin $4,128     In our hypothetical examples the cost of a new customer acquisition is around $300 and the lifetime gross margin of a customer is $4,128.   Now ask yourself how much are you willing to invest, per customer, to grow your business. If you are grossing $4,128 per customer would you be willing to spend more than $300 to acquire a new customer?   I hope so!   Dont Skimp When It Comes to Investing Your Marketing Dollars   Time and time again I see most small business owners, in general, under-invest in marketing. Why? Because, invariably they dont understand the lifetime value of a customer!   This is a big mistake that many owners make. I understand that the percentage of marketing dollars spent varies from industry to industry; however, did you know that the majority of best practice small businesses invest up to 10% or more of the total revenue on marketing?   These are the most successful small businesses. Why? Because they have taken the time to compute the lifetime value of their customers and realize that its one of the best investments they can make with their money.   A Customer Service Breakthrough   Determining the lifetime value of a customer for the first time usually shocks many small business owners. If the value of one customer is so high, do you think this would change how you treat each customer?   Would you be willing to go the extra mile to make that customer happy? I suggest you put the lifetime value of a customer figure on your wall for you and your employees to see. Let it be a constant reminder of how important each and every customer is to your