“cold” marketing techniques like
mailings, telemarketing and advertising.
But, I’m totally willing to spend up to
$320 and more to secure a new client
because I know that several other things
will happen over the lifetime of my
relationship with that client.
In many of my events I’ll ask my clients
to fill out the following chart for the
“Lifetime Value of a client.” This shows
the value of a client for five years. And,
during that five-year period they refer
five prospects of which one of the
prospects becomes a Client:
“Lifetime Value of a HAPPY Client”
Let’s look at a typical loyal Client…
A . Average First Sale
$30 0
B . Number of Years Client Buys 5
C . Number of Sales Per Year 1
D. Number of Referrals Per Client
5
E. Percentage of Referrals That Become
Clients
20%
F. Gross Sales Per Year (A X C)
G . Gross Sales Over Life of Client
$30 0
$1, 50 0
H. Number of Referrals That Become
Clients (D X E)
1
I. Gross Sales for Total Referrals
(G X H) $1, 50 0
J. Total Value of Satisf ied Client
(G + I) $3,0 0 0
Now I don’t know about you, but I think
this example is very “eye opening”. That
$300 sale is worth $3,000 in sales over
a five-year period if you only make one
sale per year to that client. However, I’m
also being very conservative. I’m al so
not factoring in all the additional sales
of other products and services that you
could sell to your clients. I didn’t even
include a price increase over a five-year
period and this client still represents
$3,000 in business over a five-year
period.
In just a moment I’m going to show you
how things can get real optimistic, but
first I need to show you the Lifetime
Value of An Unhappy Customer.
“Lifetime Value of An UNHAPPY
Customer During A 5 Year Relationship”
Let’s look at a typical unhappy
or dissatisfied customer…
A. Value of a Satisfied Customer
$ 3,000
B. Studies Show That a Dissatisfied Customer
Tells 12 Prospects
12 Prospects
C. % of Negative Referrals That Don’t Become
Customers
25%
D. Lost Customers Because of Negative Referrals
(B x C)
3 Customers
E. Value of Lost Customers Because of Negative
Referrals (A x D)
$9,000
F. Total Cost of One Unhappy Customer (A x E)
$27,000
G. Total Cost of Ten Unhappy Customers (F x 10)
$270,000
To begin with, each of your Clients, on
average, should refer three new people
to you over the course of a year. There
is absolutely no marketing cost to sell
these referred clients! The only cost that
you have is the Referral Reward. If you
give your clients a “Referral Reward”
(like cash or a gift card, a certificate
for dinner at their favorite restaurant, or
even a spa treatment) every time their
referral results in a job, then you’ll only
have a cost of between $25-75 per NEW
client from referrals. I’d buy Clients all
day long for $25-75 bucks!
Second, if you provide exceptional client
service then your clients will call you
back. This is where things get exciting!
These are easy sales and they also
have zero marketing costs attached
to them.
Now, I’m overlooking one more major
profit center. If you treat your Clients
properly, they will buy not just your
main product or service, but other
complimentary products or services you
can offer as well (or any affiliate offers
you want to provide them), for the rest
of your life.
But there’s one catch:
You must pay attention to your
clients!
Don’t just “close the sale,” and never
talk to them again… and then expect
that when next year rolls around they
will still have your business card in a
safe place and just call you. Forget it,
it will rarely happen. You also won’t get
referrals from these people if you ignore
them.
So, the big question is…
“How do you communicate with your
clients enough so they don’t forget
about you??”
Here are some answers: a monthly
newsletter, a podcast, birthday and
anniversary cards, other direct mail,
email, social media engagement,
straight to voicemail broadcasts, text
messages, and more.
Be honest, don’t you enjoy it when you
get a hand written thank you card, an
anniversary gift, or Facebook message?
Don’t you feel a little special when you
can tell a company you do business
with actually cares about you? Doesn’t
it feel “relationship-forming” when you
engage with and relate to the content
that a company you do business with
publishes? Don’t you start to feel like
you have a bond with them (even though
you don’t talk with them face to face all
the time)?
Well…You’re not that much different than
your clients!
I recommend that starting this month you
either put together your own informational
and friendly client newsletter, or create
a Facebook Company Page and friend
you clients, or create a system to send
out handwritten thank you cards and
birthday cards to your clients (or all the
above),
Whichever way you decide to go, I
suggest you start immediately!
If you follow my advice and calculate
the Value of a client to YOU, then spend
some money on acquiring new Clients,
and keep in touch with them. If you
do this, I imagine you could double or
even triple your business in the next six
months. u
FALL 2017
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