The lifetime value of a customer.

Appreciating the lifetime value of a customer is key to both understanding the importance of marketing and how crucial it is to provide both top notch products and superb customer service.

First of all it's always more profitable to retain a customer because it's estimated that it costs three to four times as much to get a new customer than it does to retain a current one. 

You'll still always be wanting to add new customers though, both to grow your business and to counteract attrition of your current customer base.

You can estimate the lifetime value of a customer by taking the profit from an average sale, multiplying it by the number of times a year an average customer orders, and then multiplying that by the number of years that you retain a typical customer. 

Work out the numbers for yourself. If you're in a high margin business the lifetime value of a customer can be huge. When you realize how valuable each customer is, you'll know how much you can afford to spend on marketing to "buy" a new customer. You'll also better appreciate your current customers.

You'll also know how much money you're losing every time a customer doesn't respond to your marketing. Cutting corners on your marketing can be very expensive indeed.

That's why it's so vitally important to make your website and brochures the very best they can be.