Even a small semi cash strapped small business owner and or service provider, at some point during their entire existence, has ongoing repeat customers and or clients. Do they not?
Of course they do. The real question is, do they consistently have enough revenue coming through the door, to justify their ongoing and future expenses. Right?
Which means, practically every small business owner and or service provide, on some level, at least partially understands, the very basics of the total lifetime value of a customer concept.
And the remainder of this particular post (and quite possibly) series, will help further your total comprehensive understanding, of this potentially profitable marketing and or promotional concept.
So Who Else Definitely Wants To Know Why Understanding The Total Lifetime Value Of Customer Concept Is So Potentially Profitable!
So once again, (simply because), this particular industry, happens to make a great illustrative case study example.
Which practically any and every body can understand. Let’s say you currently run, a very successful, single location, Mom & pop style of hair salon.
Which primarily caters to local women. And your salon currently has a grand total of five full time stylists.
Including yourself. So Tuesday – Saturday. From 9 am – 9 pm. All five stylists,are making local women,look and feel even more beautiful,than when they initially walked through the door. 😀
Even Your Semi Cash Strapped Small Business And Or Service Can Create An Extremely Profitable Sales Funnel!
And here’s how your particular customer base, relates to the total lifetime value of a customer marketing concept.
Your typical, long term repeat customer. On average, visits your shop about once per month. Or twelve times per year, correct?
And typically, they get their customary wash, trim and rinse. Which normally sets them back, about $60 dollars. Or X.
And since you typically net 75% of that amount, (or) $45 dollars per visit. And they normally repeat this bare bones minimum process at least twelve times per year. You gross about $540 dollars per customer per year, correct?
($60 x.75% = $45 dollars x 12 visits per year = $540 in initial gross front end products.)
Even A Not So Great Marketing Funnel Will Still Yield Some Pretty Impressive Long Term Results!
And since on average, your ideal female customer, will remain an extremely loyal customer, for about five years or 60 months. (12 months x 5 years = 60 total months.)
Your ideal female customer, is easily worth over time, $2,700 dollars each! So in other words (entrepreneur), based on the typical, lifetime customer value metrics, for this particular service.
($540 dollars per year x 5 = $2,700 dollars in lifetime gross profits.)
Your ideal female customer, has a total lifetime customer value of at least $2,700 dollars. Plus, when you consider (and factor in), on average, she’ll tell, continuously (brag to) least, ten or so of her closest friends, relatives, in laws,neighbors, co-workers and or employees, about your really great service and super convenient hours etc. 😀
And of course, occasionally, these same women will provide positive word of mouth compliments, whenever your customer shows up, with a really great looking hair and or nails do over! Correct? 😀
This Is How And Where Your Comprehensive Understanding Of The Total Lifetime Customer Value Metrics Can And Will Pay Huge Dividends!
So on average of the ten people, one of your most loyal, long term repeat customer tells, about your incredible service!
(Extremely important note: Of course in reality. You know and totally understand, over the entire course, of the lifetime your best, long term repeat customers remain with you.
They will have told a ton more than just ten people (potential) first time customers, about your particular service! The number ten, is merely being used to easily convey, the overall marketing strategies and or concepts.)
This being said, of the ten (or X) number of people, they continuously brag to about your service. On average, about four of them, (or 40%) of them.
Will not only become initial first time customers, but they too, will stick around for at least the next five years or so! Say what? 😀
Entrepreneur I Why You Definitely Need To Know About Some Proven Direct Marketing Strategies And Or Tactics!
So four of them, are worth a grand total of $2,700 dollars each . Or X!
Plus your original customers $2,700 dollars. Means every time you generate, a brand new first time customer to your hair or nail salon and or service X.)
In reality, they’re actually worth, somewhere in the neighborhood of $13,500 dollars! Say what? No way!
($2,700 dollars X four referrals = $10,800 + your original customers $2,700 dollars in gross revenues, equals a grand total of $13,500 dollars!
This is what just walked out the door! Probably for good! Whenever, you and of your stylists, decide to simply blow them off, as a lousy $45 to $60 dollar sale for the day or month!
Wanna Set Up A Potentially Profitable Word Of Mouth Or Mouse Sales Funnel For Literally Pennies On The Dollar!
So imagine this. You (and or someone within your organization), who at least semi understands, how to really market and or promote your extremely high quality services.
Based on the total lifetime value of a customer concept.You inform an existing repeat customer, either by opt in email/mobile marketing.
And or simply by creating, some type of old school. two sided, index style card.Their next trim, wash and rinse, is just $10 dollars. Or X.Say what?
Provided (of course!), they drag a potential first time customer with them to your shop, whose at least 18.Or, you’ll give them their next two wash, trim and rinses, for just twenty dollars or X!
Will This Type Of Information Help You Build A Far More Profitable Sales Funnel!
If they do the previously mentioned.Entrepreneur, if you currently have, at least 250 local customers.And just a measly 15% of them take you (and or your major competitors) up on your extremely generous offer!
This means 37 of them, bring a friend, and over time, 40% of those original 37, first time customers stick around for at least five years or more! (250 x .15% = 37.5 customers or 37 customers as a practical matter.) (37 x .40% = 14)
You just added 14 brand new, long term repeat customers. Or a grand total of $37,800 more dollars more to your bottom line. For literally pennies on the dollar! Don’t you agree?
See Why You Definitely Don’t Need The Outrageously Expensive Fortune 500 Approach To Using Profitable Lead Magnets To Grow Your Business And Or Service!
(250 x .15% =37.5 x a .40% retention rate = 14 brand new, long term repeat customers to your hair or nail salon.) And those 14 customers, have a combined total lifetime value of a customer metric, of $38,700 dollars!
So hopefully, you can now, much better appreciate, why your comprehensive understanding, of the (so called), total lifetime value of a customer metric, is so critically important.
To your long term success.Don’t you agree?
P.S.Now as is customary during this part of our show.
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