There are A LOT of marketing and sales missteps we can make, but I’ve realized every one of them is made for the same reason.
It’s why most advertising sucks.
Why business owners think marketing is such a big expense.
Why messages don’t resonate with prospects.
Why lackluster employees are tolerated or poorly trained.
Why a prospect or customer would have a negative experience in a business, or at least why there may be no real attempt to fix it.
These things happen when we don’t understand the lifetime value of a client or customer: what it is (to the penny) and how to increase it.
First, here’s a basic way to determine what it is: average transaction size multiplied by average purchase frequency multiplied by how long they stay with you as a customer, on average.
So if you owned a restaurant, you’d figure your average bill is something like $18 if you factor in individual diners vs. families.
Your average customer comes in, if you had to be honest with yourself, once every month, factoring in a few regulars vs. a lot of really sporadic diners. But all in all, people keep coming back for an average of 8 years.
$18 per month x 96 months = $1,728.
If you could see every customer who walked into your restaurant as a stack dollar bills, 1,728 high and realized that everything you did wrong potentially took 1 or 2 or 15 dollars off that stack, you might look at customers differently.
But you might also ask some really important questions, such as:
- How can we get more of these stacks in here?
- What’s preventing more stacks from getting in here?
- How can we make these stacks taller?
- Why aren’t these stacks taller in the first place?
In business, whatever your purpose or goal – selfish or philanthropic – requires revenue. Chill out.
And I’ll add that feeding and clothing kids in Southeast Asia is a lot easier to do when you aren’t worried getting your own bills paid.
So what happens as you start thinking about this customer value increasing or decreasing? A lot.
You start thinking about ways to advertise better, causing you to educate yourself on the subject.
You craft better, more resonant, more action oriented messages.
You train your staff to be amazing.
And while you can’t avoid every customer from having a negative experience, you minimize them, and fix them in big ways that turn into more favorable attention as they tell all their friends (or other influencers) what you did to make things up to them.
LET’S TALK! In the comments below, tell me: Did you know about lifetime client/customer value? Are you confident you know how much your clients or customers are worth? (You don’t have to share exact figures.) What was your big takeaway from this post? I also welcome your questions and other comments.