Growth Strata•Gems Magazine Growth Strata•Gems Magazine Fall 2017 - Page 7

“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 | 7