Multiply Your Profits - Leverage the Lifetime Value of Each Customer

HOW ABOUT PROFITS X 3!
 
If you will really grab hold of the powerful concept of the Lifetime Value of Your Customer you can exponentially explode your profits!
 
Today, you learn how to calculate that Value and Leverage it to greater business growth.
 
“Strive to put yourself in the place of highest potential - the results will be extraordinary.”     - Dewitt Jones, Freelance Photographer National Geographic
 
An Example of Calculating & Leveraging the Lifetime Value of Customers
Provided below is an example of calculating and leveraging the lifetime value of a customer.  The current situation (baseline) is a customer that spends $100 per transaction, buys 10 times per year, is a customer for 1 year, and has not referred any other customers (hasn’t been asked).  Case 1 - simply increased the transaction by 10%; Case 2 - also increased the frequency of purchase 10%; Case 3 - also increased the duration they remain a customer by 10%; Case 4 - also increased the number of referrals by 1; and Case 5- increased the number of referrals by 1 more.

 
Look at the bottom two rows in this table.  Do you think it is worth understanding, mastering and applying the Lifetime Value of a Customer to your business?  Note that Case 5 has an increase in profits of nearly 400% as compared to the baseline.
 
In the baseline, the typical business owner would look at the average transaction and determine that their expenditures on marketing must stay below $100 per customer to break even.  But, when you understand the true potential of the lifetime value of a customer, you can see that you could and should be willing to spend much more on marketing — because each new customer in the above example is worth $3993 to you, not just $100.
 
How to Get Your Customer To Spend More Each Time They Buy
Once your customer decides to buy from you, they have formulated some degree of trust in you.  At that point, they are primed to be offered legitimate, value-added upgrades, accessories, or combo packages (think McDonald’s value meals; or your local grocery store’s sale - “buy 2 bags of chips for $5″). 
 
By upselling each customer in a way that truly adds value to them, your profits soar.  Please hear me on this key point - make certain the customer is happy.  Don’t try to sell them something that is not right for them (they don’t need it, they can’t afford it, etc.).  Otherwise, they will resent you for the attempt.  Don’t get greedy - check your motives!
 
**Think Like a Marketer - Make Decisions Based on the Lifetime Value Concept**

DAILY PRAYER
Father, please help me to serve you with an obedient heart and to serve others with honesty, integrity, and in a way that adds legitimate value to their lives.  Let me utilize all the talents and resources you have blessed me with.  In Jesus name, Amen.
 
FREE MARKETING BOOTCAMP FOR VIRGINIA SMALL BUSINESSES –      **FREDERICKSBURG, VA - FEB. 5TH** & **PRINCE WILLIAM, VA ON FEB. 6TH**
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If you live in the Washington D.C. metro area or the Piedmont/Central Virginia areas, I invite you to attend a Strategic Sales & Marketing Optimization Bootcamp for small business owners looking to improve results and profitability in 2008.  The Bootcamp features Karl Bryan and is onTuesday, Feb. 5th from 9am-11am in Fredericksburg; and on Wednesday, Feb. 6th from 9am-11am in Prince William County. 
I met Karl Bryan from Canada at a Jay Abraham seminar in Los Angeles.   I was impressed by the commitment he had to small business and especially his ability to provide inexpensive marketing solutions for small business.  Karl and his team educate small business owners on how to transform their business and achieve profound results via powerful inexpensive marketing strategies.  Core Impact is endorsing this Bootcamp at no charge as an opportunity for our valued clients and those of you receiving The Weekly Trio.

Seating is limited and events fill up quickly when Karl presents.  I urge you to register online and secure your seat to avoid disappointment - www.FREEMarketingBootcamps.com
 
I’m sure you noticed that in the Lifetime Value example, what really accelerated the growth of profits was when referrals were provided and those referrals became customers.  Next week we will take a look at that key marketing strategy to achieve massive business growth.
 
Grace and peace multiplied to you,

Michael Stay