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While preparing your mindset to go to the next level
in your business is the first step towards transforming your business into a
marketing machine, there are several other key principles which will also
impact your success. These four key factors are so important to your business
success in this new economy, that unless you build your marketing strategies
using them, you will have a 99% chance of failing. So, take your time with
these four cornerstone principles and then implement them into your business.
Key #1: Calculate The Lifetime Value of Your
Customer
When business owners hire me to help turn their
business into a money-maker, one of the first things I do is calculate the
lifetime value of their customers. The lifetime value (LTV) of a customer is
the amount of profit each customer brings to your business over the course of
their buying lifetime with your business. Now, I will show you a simple way to
calculate the LTV, but unless you keep great records you should probably hire a
bookkeeper to dig through receipts and calculate the numbers for you.
In
order to help you calculate your lifetime customer value, I will give you an
example below.
Total Amount of Customers for the year
|
100
|
Average # of purchases per customer
|
2
|
Average Purchase Amount
|
$125.00
|
(100 x 2 x $125) Total
Revenue
|
$25,000.00
|
Cost to produce each product or service (including parts &
labor)
|
$35.00
|
Total cost to produce product for the 100 customers (100 x $35)
|
$3,500.00
|
Marketing Costs for the year
|
$5,000.00
|
Total Costs
|
$8,500.00
|
Total Revenue - Costs = Gross Profit
($25,000 -
$8,500)
|
$16,500.00
|
Gross Profit
|
$16,500.00
|
Customer Lifetime Value For The Year
($16,500 / 100 customers)
|
$165.00
|
So, in this
example on average each customer represents $165 worth of profit.
|
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While preparing your mindset to go to the next level in your business is the first step towards transforming your business into a marketing machine, there are several other key principles which will also impact your success. These four key factors are so important to your business success in this new economy, that unless you build your marketing strategies using them, you will have a 99% chance of failing. So, take your time with these four cornerstone principles and then implement them into your business.
Key #1: Calculate The Lifetime Value of Your
Customer
When business owners hire me to help turn their
business into a money-maker, one of the first things I do is calculate the
lifetime value of their customers. The lifetime value (LTV) of a customer is
the amount of profit each customer brings to your business over the course of
their buying lifetime with your business. Now, I will show you a simple way to
calculate the LTV, but unless you keep great records you should probably hire a
bookkeeper to dig through receipts and calculate the numbers for you.
In
order to help you calculate your lifetime customer value, I will give you an
example below.
So, in the example I used above, when someone buys
from that business, on average they represent at least $165 in profit. However,
it doesn't have to stop there. In fact, your goal should be to increase the
lifetime value of each customer by getting them back into your business to
purchase from you more often.
The reason why the lifetime value of a customer is
so important is because it gives you an idea of how much you should invest in
marketing to get the customer in the first place. So, in the example above the
business owner knows that if he spends another $5,000 in marketing in the same
ways he's investing in marketing now, he can reasonably expect to double his
profits. Without knowing the lifetime value of his customers, he wouldn't have
the confidence to make that kind of investment in marketing.
ACCELERATION "LIVE" EVENT
Acceleration "LIVE" events are a gathering of successful 6 & 7 figure Entrepreneurs coming together to support one another in a co-operative community. The event is an intensive 3-day mastermind and learning event specifically designed for successful, purpose-driven, big-hearted and giving entrepreneurs who are... MAKING A FORTUNE BY MAKING A DIFFERENCE.
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Be sure to stay tuned for Key #2
Acceleration "LIVE" events are a gathering of successful 6 & 7 figure Entrepreneurs coming together to support one another in a co-operative community. The event is an intensive 3-day mastermind and learning event specifically designed for successful, purpose-driven, big-hearted and giving entrepreneurs who are... MAKING A FORTUNE BY MAKING A DIFFERENCE.
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