# Marketing Math: What’s a New Customer Really Worth?

There are two types of people: those who loved Math during high school and those who did not. Math is not an easy subject and many people feel challenged by it. Being good at Math and keeping your nerves at the same time can be an obstacle only a few can overcome. When you are a high schooler, you are not aware of the importance some subjects will have on your life. And even though some people tend to disagree with those Math teachers that tell you that Math will help you a lot, they are right. Math is found in every domain of your life, even though you may not be aware of it.

Those who study Math these days benefit from all the support offered by technological advancements. There are Math apps that solve problems for you, so it would be easier to attend Math classes and learn algorithms. But what do you do when you get hired for a marketing position and see that Math and marketing are so deeply intertwined?

Many marketing specialists are flabbergasted by the fact that Math is at the base of marketing too. Even though it may seem that there are only a few marketing principles, marketing specialists can use Math to get insights into their customers.

The marketing of a business is usually responsible for building the brand identity, raising awareness of the brand, and generating leads and customers. Marketing is not only about attracting new and new people to the brand or business. As marketing experts say, one of the goals of marketing is to make your existing pool of customers loyal.

So, there comes the question: which you invest more into? Attracting new customers or making the existing ones loyal? Which of these options will help the business or brand grow more and more? Getting to know what a new customer is worth will also help marketers calculate the costs of their marketing campaigns.

So, how could someone determine the worth of a new customer? You need to take a look at these topics.

## Average Transaction Amount

The first thing you should look into is the transaction amount. You will probably see a lot of numbers, ranging from huge to smaller ones. The marketing and sales teams should take a look into these numbers and identify which is the average transaction amount. How is this information working?

You start by analyzing the current state of the business and its relationships with customers. Besides building a close relationship with its clients, a brand is looking to increase sales. And this is what marketing specialists are trying to do. This principle can be applied to a writing service too, for example.

## Buying Frequency

There are a lot of marketing tools that offer insights into the online behavior of your customers. You can find out how much time they spend on a page if they switch between multiple tabs, or how frequently they buy from you. The Math behind marketing helps marketers understand the behavior of the customers better.

Looking into the number of orders the average customer has sent or the frequency of transactions will get you the insights you need. Depending on your business, this step is about gathering different information. If your business does not sell products for the whole year, it is clear that these numbers will seem odd. So, you could take a look at the frequency of the visits on your page or website.

## Track the Conversion Ratio

The conversion ratio can roughly be resumed to the number of visitors that were converted into new customers. However, things are not so simple as they may seem. Conversion rates can be calculated easily, although social media websites or Google Analytics may offer you the final numbers. All you need to do is to divide the number of conversions by the total number of ad interactions. And the result represents the number of people that visited your website or page and got converted.

The most important thing to keep in mind is that the conversion rate will modify and this depends on the new customers. For example, if you have an ad that promotes coupons and discounts, this will surely generate new customers. But, usually, these new customers turn out to be one-time clients that want to benefit from a promotion. If the new customer reaches your brand because it was recommended by a friend, it is more likely to become a loyal one.

## The Average Lifecycle

The average lifecycle will offer you an insight into how much a regular customer stays with your brand. Usually, it is difficult to reach a number, but with careful analysis, you could do it. The average lifecycle of a customer helps you understand the steps a customer goes through before ending up buying from you. Conversion, retention, and loyalty are the last three, the ones businesses and brands want to focus on.

## What’s a New Customer Really Worth?

So, how do you calculate the worth of a new customer? Using the numbers you have just identified. You need to multiply the buying or visiting frequency by the average transaction amount. The result gives you the worth of a new customer, which usually is higher than the costs involved in making your existing customers loyal.

Many businesses think that attracting new customers is the solution that will save their brand and enrich it. However, this is not the case as they need to invest more resources into reaching new people, attracting them to the business, and converting them into loyal customers. Knowing how much a new customer is really worth helps brands build a good marketing strategy and plan their costs efficiently.

**Author Bio:** Ashley Simmons is a professional journalist, editor, and one of the best essay writers. She has been working in a newspaper in New York City for 4 years. She is also a content writing expert in such topics as psychology, modern education, business, and marketing innovations. She is a master in her craft.

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