Let’s start by asking the question, “Do you get a customer to make a sale today or do you make a sale to get a customer for life?” Now on a surface level that may seem a little bit confusing. But let’s think about it. Do you get a customer to ONLY make a sale today or do you make a sale today to get a customer for the rest of their life. See, the times have changed. You must change the way you view each client or customer. Don’t feast today and starve tomorrow. So, you not only want to get the customer in today but you want to make sure that if they’re coming and experiencing your product or service today for the first time that they come back to you for the rest of the time that they can get access to you, the rest of the time they live in your geographical area or the rest of the time they are in the marketplace for what you’re offering.
This called the lifetime value of a customer. See, you need to know things like how much is each customer purchased for you at one time, you need to know how often they return to purchase another item and how much do they spend over the course of their lifetime with you. If you don’t know the answers to these questions then you are at a huge disadvantage. Your success in this new economy will be all based on your ability and willingness to think and behave differently in your business.
You need to know what each customer is worth to your business. For example, if on average each customer spends $4000 over the course of their lifetime with you, how many customers would you try to get into your sales and marketing funnel? How much would you be willing to invest in marketing to get one customer if each customer is worth $4,000 to you? See, there are some companies that know lifetime value of their customer: Amazon.com, Wal-Mart, Book and CD of the Month Clubs, gyms and fitness centers, BJ’s, Costco, these are all places that know the lifetime value of their customers. Do you know the lifetime value of your customer?
Dropping Dollars To Pick Up Pennies
Sometimes, when business owners are just being exposed to educational direct response marketing, they feel that it doesn’t make sense to invest much money in on-going marketing because all they’re thinking is that they only sell a widget or service for ten to twenty dollars, so why would they spend nine or ten of those dollars to market when they could just spend one dollar and potentially still get one or two customers. Well, when you increase your marketing investment to nine or ten dollars per lead, you do it because you know that the lifetime value of a customer is $500 or $5,000.
So, now all of a sudden spending $20 – $100 dollars per customer up front begins to make sense to you.
Every day when you wake up, the goal in your business it’s to get more customers. Your number two job is to service those clients or customers in a way that makes them happy and generates more referrals. Every contact or exposure with a customer or prospect has the potential to be marketing. So you want to focus on getting the customer today to have a customer for life. And finally, you have to know how to calculate the lifetime value of your customers.
