how experts grow their business stop wasting marketing budget & buy customers
DESCRIPTION
The moment you understand what you can afford to spend to BUY a new customer, based on what that customer will be worth to your business, in terms of profits in transaction one, in year one, and in subsequent years, you will stop wasting money on advertising and start only investing in sales generated customer acquisition. Your waste factor will drop about 90%!TRANSCRIPT
HOW EXPERTS GROW THEIR BUSINESS Stop wasting
marketing budget & buy
customers
The moment you understand what you can afford to spend to BUY a new customer, based on what that customer will be worth to your business, in terms of profits in transaction one, in year one, and in subsequent years, you will stop wasting money on advertising and start only investing in sales generated customer acquisition. Your waste factor will drop about 90%!
Learn how much your customers
are worth to you!
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Figure out what a customer is worth to you over a
purchasing lifetime – the total, aggregate profit that
each customer can generate for you, minus all
advertising, marketing and service expenses!
If you are a bean counter, the exercise is technically known as reckoning an individual customer’s
“marginal net worth”
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If you haven’t calculated your marginal net
worth yet, here are the steps to
follow:
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• Step 1: Calculate your
average sale and your
average profit per sale.
• Step 2: Compute how much
additional profit a customer
is worth to you by determining
how many times he or she
comes back. Be conservative.
• Step 3: Compute precisely
what a customer costs by
dividing your marketing budget
by the number of customers it
produces.
• Step 4: Compute the cost of
a prospect the same way.
• Step 5: Compute how many
sales you get for so many
prospects (that’s the percentage
of prospects who become
customers).
• Step 6: Compute the
marginal net worth of a
customer by subtracting the
cost to produce (or convert) a
customer from the profit you
expect to earn from a
customer over the lifetime of
patronage.
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Average
profit on
the first
sale
Repurchases
that year
Average
reorder
amount
(Gross
Profit)
Average
patronage
life
Every new
customer is
worth
$75 + (3 X $150) X 2 years = $975
Average new customer
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HOW TO
GROW A
BUSINESS 1) Acquire more
customers
As long as you can buy a
customer for less than
$975, you can buy
customers all day long.
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HOW TO
GROW A
BUSINESS 1) Acquire more
customers
The most lucrative
short-term way to get
more starter
customers.
Spend more buying new
customers.
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HOW TO
GROW A
BUSINESS 1) Acquire more
customers
Increase the incentives
for new customer
acquisition
Think strategically
Give the revenue from the
first sale to the sales
person
make your profits over the
lifetime of the customer
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HOW TO
GROW A
BUSINESS 1) Acquire more
customers
Partner with
companies whom have
your target market and
reward them for co-
promoting your
product
Think strategically
Give the revenue from the
first sale to the partner
make your profits over the
lifetime of the customer
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HOW TO
GROW A
BUSINESS 1) Acquire more
customers
Pay for referrals
Think strategically
Give the revenue from the
first sale to the referrer
make your profits over the
lifetime of the customer
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HOW TO
GROW A
BUSINESS 1) Acquire more
customers
Go to all your
struggling competitors
and offer to buy their
customers
Think strategically
Give the revenue from the
first sale to the competitor
make your profits over the
lifetime of the customer
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Before acquiring more customers ensure you have systems to keep those customers w
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TRAVIS OKEEFE Here: [email protected] Everywhere: www.linkedin.com/in/travisokeefe