Lifetime Value
of a Client
JOE POLISH
T
THIS IS likely one of the most important concepts you will ever
learn in your entire business life. Getting back to the example, we now know that every new Client is
worth $240 in profit to you, right?
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? So how much are you willing to spend to attract new Clients to your
business?
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?
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.
O.K., 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...
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 Client s 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 to do
so. (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 “cold” marketing techniques like mailings,
telemarketing and advertising.
But, I’m totally willing to spend up to $320 and more to secure a
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