The Secrets of
Business and Marketing Wizardry Newsletter
Volume 13, Issue 8, Date 8/5/2009
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THE SECRETS OF MARKETING AND BUSINESS WIZARDRY
Volume 13 issue 8 August 2009
Publisher Joe Trevison MBA CPA
Editor Jim Trevison, BA in English
Volume 13 issue 8 August 2009
How to Figure a Marginal Net Worth and Lifetime Value of Customer
These two concepts appear again and again in my writings. It’s important that you master them.
The marginal net worth and consequent lifetime value of a customer is the total aggregate profit your business makes , over the life of an average customers-including al all advertising, marketing, and all product or service fulfillment expense.
Let’s say your average new customer brings a profit of $75 on the first sale, and He repurchases there more time a year, and the average reorder is $300. On each $300 reorder patronage life is two years. Every new customer in your door is thus worth $1050 to you.
I got the $1050 by adding up the $75 initial profit, plus three times purchase per year at $150 profit per purchase, multiplied by the two years he or she remains a customer.
If as customer will be worth $1050, and it cost you $30 in marketing and adverting to bring her in, the every $30yyo spend is worth $1050. You would be foolish not to increase adverting budget to produce more customers. In other word; spend everything you can as long as he /she costs you less the he or she earns you.
To calculate the lifetime value of you customers, do the following:
Compute precisely what a customer cost you to obtain , by dividing your current marketing budget by the number of customers is now producing.
Then compute the cost of a prospect the same way.
Then compute how many sales you get for so many prospects the same way.
Then compute how many sale you get for so many prospects (the percentage of prospects who become you customers) and the cost of converting those prospect to your customers.
Next, average the cost to garage an outright and the cost to generate, the convert a prospect. This is your average cost for the producing a customer immediately
Then subtract the amount determined above form customers’ average initial purchase . This will give your profit on the fist purchase.
Then compute your average repeat sale and you average profit that sale.
Then compute how much additional profit as customer could by worth to you over lifetime of patronage by determining how many most customers come back, and multiply that by the average profit per repeat sale. Be conservative.
Repeat sales and ancillary sale are where big money is or can be. That the “back end.” It’s one of the key to successful marketing. Once someone buys from you , it’s much easier to get to buy again from you.. It ‘s much easier to get them to buy again and again . It’s less expensive, too, because you don’t have to spend as money on advertising you do on front end,.
You can resell, upsell, and cross sell all you customers.
Reselling is simply selling them the same thing they bought before. Upselling is getting them to buy a better more expensive or more sophisticated product. Cross selling is getting them to buy something else that related to the original product..
What are selling on the back end right now? What could you be selling? How does his impact the lifetime value of your average customer.
The Secrets of Getting Maximum effort and Optimum Performance From Ad Agencies, Attorneys, Consultants and Other Outside Professionals.
How many times have you gone to an ad agency, an attorney, or some other professional and paid you hard-earned money up front with the fully knowing the true results of performances? My hunch is you’ve probably done it several times and if not., you know someone who has.. Let me tell you this: You no longer have to pay a single dollar to a professional ever again with out knowing the results..
Here’s how to do it. Pay, you pay , for performance. The next time you approach a professional firm time the that you’ll be delighted to employ them, as long as agree to accept compensation based on real results.. This is the only real control the you have in getting them to do the very best job possible. If profession firm knows it compensation wit be tied to results., such as actual customer inquiries, orders or sales. It will give you r business extra-special attention, because its compensation will be unlimited. Some firms won’t deal with you. Walk away. . Remain committed this approach, and you will find someone who will do business with you. I the results are lousy , pay them for the results the provide, not a penny more..
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Free First Chapter at:
http://www.joetrevison.com/downloads/Testedsentenceschapter1.pd If you want the whole book you can get it for a low price at:
http://www.Joetrevison.com/shop --------
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| Copyright Joseph J. Trevison Not to be reprinted, resold, or
redistributed for profit, except with written permission, but may be freely distributed electronically provided that the entire
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