The one number that decides every marketing decision

Almost every marketing argument I sit in is unresolvable for the same reason. The people arguing do not know what a customer is worth, so there is no way to say whether anything is expensive.

Is R400 a lot for a lead? There is no answer to that question. There is only an answer to whether R400 is a lot for a lead in a business where a customer is worth R2,000, and a different answer in a business where a customer is worth R80,000.

What is the number?

What a customer is worth to you, over the whole time they stay, after the cost of serving them.

Not revenue. Not the first invoice. What is left, across the relationship. For a business with repeat purchase, that is considerably more than a single sale. For a business selling one thing once, it is less than the sticker price, because delivering it costs something.

How do you work it out without a data project?

Badly, on purpose, this week.

Take last year. How many customers did you serve, what did they pay you in total, and roughly what did it cost you to deliver. Divide. That gives you an average customer worth, and it will be wrong in the third digit and right in the order of magnitude, which is all you need to start making decisions that are currently being made on feel.

If you have repeat business, add one more question: how many times does a typical customer come back before they stop. Multiply. Now you have a lifetime figure, still rough, still far better than nothing.

The businesses that refuse to do this until they can do it precisely spend years making decisions with no number at all, which is simply less explicit about the guessing.

What does the number unlock?

Every other question, immediately.

1. 01

   The input

   What a customer is worth

2. 02

   The ceiling

   What you can pay to acquire one

3. 03

   The target

   What a lead is worth, at your close rate

4. 04

   The verdict

   Whether any channel is working

Each step follows from the one before it. Without the first, none of the others have an answer, which is why marketing arguments in businesses that lack it tend to be settled by whoever is most senior rather than by evidence.

If a customer is worth R20,000 and you close one in four qualified leads, a qualified lead is worth R5,000 to you. Suddenly R400 is a bargain, and the correct response to a channel producing leads at that price is to find out how much more of it you can buy rather than to complain about the cost.

Reverse the numbers and the same channel is a slow way to lose money, and no amount of optimisation will save it.

Why do so few businesses have it?

Because it sits between two departments and belongs to neither.

Finance knows revenue and cost but does not think in customers. Marketing thinks in customers but does not hold the margin. In a small business both of those are the owner, who has the information and has never assembled it because nothing forced the question.

The forcing function is usually a decision about spending money, which is exactly when you least want to be working it out for the first time.

What does it change about how you buy marketing?

It changes the conversation from cost to arithmetic.

A supplier who asks what a customer is worth in the first meeting is working out whether they can produce a return. A supplier who never asks is selling activity, and the reason they do not ask is that the answer might make the engagement obviously unwise.

It is a good test to run on anyone you are considering, me included. I have talked businesses out of paying me because the arithmetic did not survive contact with the fee, and the honest version of that rule is written down in how much you should spend on Google Ads.

What is the limit of this?

It is an average, and averages hide the interesting part.

Most businesses have a segment of customers worth several times the mean, and the real strategic question is usually not how to get more customers but how to get more of those. The single number gets you to sensible decisions. Splitting it by segment is what gets you to good ones.

But you cannot split a number you have never calculated, so start with the rough one, this week, on the back of an envelope. It will change more arguments than any tool you buy this year.