You may be extremely surprised to first learn that some marketing and advertising campaigns are considered a success if they break even. If you spend $500 on the ad placement and you get back $500 in profit, it may be a great success for your business.
WHAT? How can breaking even be considered a success?
Most business owners never put 3 seconds worth of thought into what the lifetime value of your clients may be. Lifetime value of a client is calculated by adding up the initial purchase (averaged out) of a first time buyer in your business, multiplied by the amount of times in a year they buy from you, multiplied by how many years they stay a loyal client.
For example:
A hairdresser's average first time client is worth about $25, returns 10 times per year, and on average remains a customer for 3 years.
Multiplied out, that makes each and every client worth $750 to the hairdresser. (25x10x3).
If you are a hairdresser and look at each new client as being worth $750 to you, what are you willing to do to get more clients? Would you spend $50 to make $750? I would certainly hope so. If not, let me repeat, each and every new client is worth $750 to you. Bring in 10 new clients a week and you are adding $7500 in new business a week. While you earn the money over the next few years, it is money you NEVER would have had.
Do the math in your own business, the numbers don't lie.
Now, here's the real exciting part. The key to lifetime value is to increase each number by small (or large) amounts. For example:
A hairdresser doing it the old way would see a first time client for $25, have them come in 10 times a year, and spend about 3 years as their client.
Now a hairdresser doing it the new way would see a first time client for $35 (by adding up-sells and products at the till, and making sure everyone knew about them, an extra $10 at minimum). The hairdresser would then have them come in 10 times per year (or even once a month through consistent reminders and bonuses). And have them spend 3 years as a client (or even 4 years, because if you treat them well enough, they will not leave as quickly)
Now look at the numbers, that's $1050-$1680 for every new client! (35x10x3, 35X12X4).
By putting a little more effort into getting them back more often, having them buy more while they are there and staying a loyal client longer you have almost doubled what they are going to spend with you!
All by paying attention to them and making sure they get the best services and treatment possible.
Now, how much will you spend to get a $1680 client for the first time?
Do the math and your world will quickly expand as you see the big picture.
