I have noticed recently a very disturbing trend that is occurring within the small business community. Owners are looking at their primary revenue source in a financially damaging way. One of the largest mistakes that can be made concerning your customers is not looking past the first time sale. Most companies view their customers as a one-time purchaser and do not consider their lifetime or residual value to the company.

Do you know what an average customer is really worth to your business? By calculating your customers lifetime value, will allow you to answer that question.

However, allow me to demonstrate how powerful looking at the lifetime value is compared to the one-time sale mentality. The ever so important part is the back-end sales opportunity. The back-end sale is typically highly more profitable than the first sale. The back-end is so vital to every business.

Companies will create marketing programs based around attracting new clients only, and completely disregard marketing back to their existing customers. In fact, most companies don’t even keep track of who their clients are. This is such a huge mistake. When you look at your prospects and customers as a lifetime sale instead of a single sale, you can find significant additional profits never before realized.

Until and unless you can identify how much back-end business you can expect, you won't know how profitable or unprofitable an advertisement, special sale, customer discount or promotion really can be.

If you induce those new customers to purchase a similar product or service from you within 45 days, you double the value of the customer, and all of a sudden you're far into profit instead of maybe a loss. Motivate them to come back once every three months and repeat the average transaction and you've set up an annuity for your business.

The same dynamics apply to your salespeople. If a salesperson costs you $2,500 a month in base salary and all they sell each month is $2,500 in new business, it sounds unprofitable.

Yet, if the new customers generate repeat business or, if you develop a back-end that converts normally one-shot sales into repeat customers, you accrue fabulous future income even if your salesperson loses you money at first.

If every month you bring in 20 customers who initially spend $100, and you get them to instead spend $100 every three months, soon you'll have 600 people spending $100 every three months. That's $60,000.

Another part of back-end dynamics is harvesting the "residual value" of a customer. This takes a lot of thought, experimentation, and carefully documented analysis.

Look for logical product or service extensions to offer your customers. Experiment with salesmen "locking clients into" an ongoing purchasing commitment.

If you are basically a one-product or one-service only company, seek out other company’s products or services to offer your customers as your back-end. Be open-minded about other products, services and companies that might fit, based on either demographics or areas of interest.

Religiously work the back-end over and over again!

Ironically, most businesses rarely try to resell their current or previous customers. You should do it constantly and consistently.

This lifetime value is the same information used by manufacturers in determining to purchase a piece of equipment. Up front, they may not cover costs but over the lifetime of the equipment, the return justifies the investment. Such should be the same thinking about marketing.

Most importantly I can only recommend to you, that you continue to do some form of marketing every day. Remember you are losing clients every day through normal attrition. You can never stop all marketing efforts if you plan on continuing your business.