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Discover The Power Of Your Customer Value

James Dutton      Sunday, October 1, 2017

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Discover The Power Of Your Customer Value

A very quick way to figure this is by taking your yearly or monthly sales and dividing it by the number of customers you have acquired in that same duration of time. Remember not to confuse this with sales units. You might have the same customer buy more than just once per year. You want to determine just the acquired customers or clients.

For instance, if you did $1,000,000 in gross sales last year and you had 2,000 individual customers, your average value of each customer would be $500 over just one year. Once you know this magical number you now know how much you can honestly invest in marketing to gain a new customer. You also know what you should pay a sales person in commission or the fee you should give for a referral.

Let's say you do a direct mail campaign to 10,000 people and it costs you $10,000 to put together and mail. Now let's say, you get a response of 2% or 200 people contact you from this mailing. Of the 200 people who respond, you close only 20% so, you gain just 40 new customers.

Would you consider this a successful marketing campaign?

Time and time again I speak to business owners who achieve this type of result and they decide never to do this mailing again. They consider this type of results in marketing very unsuccessful.

The fact is, in this scenario they invested only $250 to get a customer that is worth $500 to them. I would say that is a great return on investment! You could spend $450 to get a new client and in the long run it would pay off. Not only would you make an immediate return on your investment but, you would continue to make a return year after year.  We haven't even begun to look at the lifetime value of a customer.

Now, let's take this a step further and add even more value to each new customer. There are 2 more dimensions to the value of a customer. First, find out how many years a customer stays with you.

We will say for this scenario, the lifetime of a customer is ten years. So the lifetime value is actually $5,000 and well worth that $250 investment.

To take this even further let's bring up the referral value of just one customer. Let's say that over the entire ten years as a customer, your average customer or client only refers 10 other people.

This means it takes them a whole year to tell just one other person about what you do. Even at that pace, we are now able to take your average client value to truly $55,000. That's an amazing Return On Investment! Now that's an up side return! Sure hope you aren't still sad to part with that $250 for just one customer.

I also hope you have a true vision of how quickly your business can transform with just one good idea applied in the correct way. Imagine now how fast you can increase your business by only increasing one area we just talked about. At Quantum Growth Marketing we begin to work on more than one area at a time. You must know now of the exponential growth that is truly possible.

By putting together an effective referral program alone, you will create a return that will have both Madison Avenue and Wall Street eating their hearts out. Not just another “We Love Referrals!” post card but, a program that actually motivates your current customers or clients to take action. You must have a program that makes your clients hungry to tell others about you. To do that, you must start by having a product that makes your clients hungry to tell others about you. With our system, we can show you how to quickly do both.  Call Quantum Growth Marketing at 281-901-0QGM now and grow your business!

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