One of the critical elements of building a marketing budget is understanding what a customer is worth.  Why? Because you can't decide how much to spend to acquire that customer if you don't really know the value of that customer.

Too often business owners make the mistake of looking at what the customer is spending today and see that is the only value of the  customer. But, if you're in a business where customers come back time and time again, you need to look at the total picture to determine the complete value.

If a customer stays with you three or five years, there's going to be additional sales revenue without that sales expense. And, there's more. When the customer really knows you and loves you they are more likely to talk about you to their friends and their families. This goodwill has the potential to create multiple new opportunities.

So, as you start thinking about how much you can afford to spend to generate leads, you need to calculate the lifetime value of each customer.