Here’s an example of how you can use the lifetime value of your clients.  A restaurant’s regular customers would visit the restaurant every two months and spend $100 per visit.  The client is worth $600 per year and on average will be a customer for three years – thereby being worth $1800 in sales.  At a gross profit of 35% this client contributes $630 (that being the lifetime customer value) in gross profit to the business.

It would be reasonable in this situation to invest $100 to secure a client worth $630 (an outstanding return on investment in anyone’s language).  Once you know your lifetime customer value you are in a position to create the irresistible offer that will get them into your business in the first instance.

Unfortunately most businesses advertise with a marketing message that has nothing in the way of a compelling offer because the majority of business owners “don’t want to give anything away.”

Now I agree totally with this sentiment, but it means nothing if you don’t have the customer in the first place.  At best a restaurant or cafe like the one above may offer a “buy one coffee get one free.”  Not something that will excite your potential clients.

Let’s say our restaurant owner understands the value of the Lifetime Customer Value and decides to offer potential clients a really powerful offer of one free meal (including mains and dessert) for all first time customers.

Would this excite the potential clients?  You bet it would!

Now people tend to dine together so the restaurant will most likely cover costs with the initial visit.

And here is the key.

The restaurant captures the biographical data of the clients through a prize draw give way and now has the client on the database for follow up marketing – simple, powerful and profitable.

So ask yourself, what is the lifetime customer value in my business?  And what am I willing to invest to create a compelling offer to secure that lifetime customer value?

Now you may say that is all very well for a restaurant but my business is different.  Well here are some thoughts to consider.

Approach other complementary businesses to put together a bundle of offers to entice your potential clients.  For example, a builder could organise vouchers with the curtain retailer, carpet retailer and furniture store to the value of $1,000 for all quotes completed.  You have to use your imagination here.

But make sure as I mentioned earlier, to always collect the biographical information of the new client so you can add them to your customer database and love them for life!

Here’s to profitable business!

Successfully

Tony Fraser-Jones

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