Growth Strata•Gems Magazine Growth Strata•Gems Magazine Fall 2017 - Page 6

VALUE OF A CLIENT Joe Polish: Lifetime Value Of A Client Joe Polish is the founder of Genius Network® and GeniusX®, President of Piranha Marketing Inc., and Co-Founder of 10XTalk.com and ILoveMarketing.com, two highly popular free podcasts on iTunes. Joe’s marketing expertise has been utilized to build thousands of businesses and has generated hundreds of millions of dollars for his clients. To grow your business with free training from Joe on Business Mindset Mastery and get Joe’s new “Anatomy of a Successful Business” Info-Graphic please visit: www.GeniusNetwork.com/Value T his is likely one of the most important concepts you will ever learn in your entire business life. Have you ever sat down and tried to figure out what each Client who does business with you is worth over the lifetime of your business relationship? If you’re like most people, you might have thought about it once or twice but you never actually sat down and put a pencil to the paper to figure out exactly what each client is worth to you over the lifetime of your relationship. Well, I’m going to show you a simple way to do this, and it’s probably going to become apparent to you that each Client who enters your “funnel” is worth a lot of money-if you treat them properly! So, how can you easily calculate what an average client is worth to you over the course of a year? Easy, all you do is take your yearly net profit-NOT your yearly gross profit, and 6 | FALL 2017 you divide it by the number of Clients you did business with over the last year. So for example, if you netted $360,000 in income over the past year and you did business with 1500 Clients over the course of that year-the net value of each Client is $360,000 divided by 1500 or $240 in profit for every Client who enters your funnel. OK, you’re probably saying to yourself- “That’s nice to know, but what does it do for me?” Just hold onto your seats for one minute because I’m going to show you exactly how you can use this principle to skyrocket your business... Getting back to the example, we now know that every new client is worth $240 in profit to you, right? So how much are you willing to spend to attract new Clients to your business? Now, when I ask that question I hear a lot of answers like this - “I don’t have any extra money to put into the marketing budget” or “sending a direct mail letter is too expensive and it doesn’t work anymore” or “I just can’t get Facebook or Google AdWords to be profitable,” or “all my Clients are by referral or word-of- mouth…” Unfortunately, most who say these types of things are completely missing the point! We now know we can spend up to $240 per client without losing money. I’m not suggesting that you must spend $240 to get a client, but I would do it all day long and be as happy as a pig in mud.. (By the way, do pigs really enjoy mud? I mean it’s just an expression, but I’ve always wondered.) Anyway, back to the subject at hand... I would certainly be willing to spend $240 per client in marketing costs to get a new client in my funnel. By the way, it sometimes costs me more than $240 to get a new Client through