What Is The Lifetime Value Of Your Client
The name says it all, and once you see how this simple concept can help you achieve your goals, you’ll wonder why so few business owners ever consider it.
Here’s what it’s all about.
The Lifetime Value Of Your Client (LTV) is the total profit produced by an average client over his/her lifetime association with you.
How does this number help you plan better? By knowing a client’s total value to your business, you can figure out how much you can afford to spend to convert a prospect to a client.
Let’s see how this works. For this example, your average new client:
- Spends $500.00 the first time he does business with you.
- Books rides with you again in two weeks
In the course of a year, he is potentially worth $13,000 to you.
He is going to be your client for 5 years (then he’ll move to Florida or something). In 5 years, he will have spent a minimum of $65,000 with you.
Next, figure out how much of that is profit to your limo business.
For this example, we’ll say 40%. This means you will make $26,000 profit on your average limousine or bus client over the next 5 years.
Hopefully, you’re starting to see how this can help you plan your marketing expenses. In fact, you could pay up to $26,000 (in this example) for each new client and still break even in 5 years. We don’t suggest that. But would you spend up to $250.00 to get $26,000 in 5 years? In fact, you don’t have to wait that long—you get a return on your investment with the first sale, enough to recover the $250.00 you spent.
Referrals add even more profit to the value of your clients. If your average client refers one new client to you, the profit from the original client doubles ($26,000 for the original client and $26,000 from the person they referred). And you didn’t have to do any advertising to get that new client.
Start calculating the lifetime value of your average client. Make increasing this value one of your goals. Some ways to do this include getting your clients to refer more often, increasing the average ticket, making repeat clients more frequent, and selling more services.
No One Cares Who You Are Until They Know How You Can Help Them
This simple idea changed my life and it can change yours too.
If you want to get people’s attention — in a few words tell them how you can help them — then they’ll want to talk with you.
Once people know how you can help them, they’ll be hungry to hear from you, eager to talk with you. Getting the conversation started is the most important step to being successful.
Without an easy way to get that initial conversation going, you’ll always be frustrated, no matter how smart or capable you are. That applies to everything from getting a response to emails, web marketing, direct marketing, and any other way you reach out to try to stimulate a response.
What is WIIFM?
Every human being is tuned into their own little radio station in their head and when confronted with a decision to make, that little voice asks “What’s In It For Me”.
ALL your marketing and advertising MUST be geared to WIIFM because they don’t care about anything else.
Pretty selfish, huh?
It’s human nature, don’t fight it – use it to your advantage.
This simple strategy will help you turn your business around and get it heading in a profitable direction almost overnight.
It requires a little extra effort on your part, but if you take action on it, you will uncover marketing opportunities and rewards that you never knew existed.
- Take a few of your best clients to coffee or lunch and ask them what they like and dislike about your limo/ car service/ bus business. Make sure they know that you want the honest truth because you value their opinion, you want to keep them as a client, and you want more clients just like them.After the meeting send a thank you letter. Make sure it’s personal. Anything less will weaken your sincerity.
- Call up some of the clients that have not made reservations in a while and take them to coffee or lunch. If they don’t want to do lunch, get information from them on the phone. Ask them why they haven’t used your services, what you can do better, and what you do well. Then ask them if it’s OK for you to send them a “special thank you for your help gift”. Send a special offer, just for them. And make sure it has real value.
If you talk with ten current and former clients and take good notes, you can use this information to improve your business, and create marketing messages that target your potential clients more effectively.
You’ll uncover many strengths and weaknesses. Some of them may shock you. Improve on your strengths, and fix your weaknesses.
I guarantee you will get very valuable and useful information from this tip, and you will get a lot of satisfaction from the smart work you will accomplish. You might even get a few unexpected referrals, or win over a disgruntled client.