Are you meeting your personal and professional goals for the year yet? Sometimes we might need a little help, a little encouragement, a little accountability. One of my personal goals this year was to support the American Lung Association by participating in the Stair Climb at the Silver Legacy Casino. 36 floors and 10.5 minutes later I succeeded.
Marie Gibson set to participate in the Silver Legacy Casino Stair Climb.
P.S. Although I successfully completed the stair climb, I’m continuing to train for my next event with Sierra Strength & Speed.
P.S.S. Rob has an inexpensive 8-week program starting Monday, May 7th at 6:15 PM. For more information, call him at 815-0735 or email: Rob@Sierrastrength.com
P.S.S. If you need help achieving your business goals, call us.
What is a client worth?
How much is the average client worth to your business? Not just per project or even per year, but for the lifetime of your business. Calculating the lifetime value of a client is an eye-opening exercise I recommend to every small business owner.
Let’s take several examples. A client who eats a $15 lunch at your restaurant every Monday is worth $780 for one year and $2,340 for three years. It really adds up, doesn’t it?
A personal services business, such as a chiropractor, massage therapist, manicurist or hair stylist has a similar business model where they can hopefully attract repeat clients. A client who gets a $20 manicure once every two weeks is worth $520 per year and $2,600 in five years and that does not include the tips. Grocery stores, hardware stores, clothing stores, and office supply stores are just a few industries with similar models.
Large purchase with add-ons
Some businesses such as furniture stores, airlines, and computer sales rely on a larger but less frequent purchase than some of the industries listed above. Many of these larger purchases can be increased by adding service contracts, delivery charges, financing charges, and by selling more items.
Some businesses will benefit from becoming aware of the lifetime value of their vendors, partners, and employees. For example, contractors are often reliant on their subcontractors to deliver great services so they can complete the construction projects. Landscaping firms make great partners with nurseries and bring them much business. And employees who sell and close large contracts can have a lifetime value to your business of millions of dollars in some cases.
One way all businesses can increase the lifetime value of a customer is by counting the amount of referrals the customer sends you. Let’s say Kathryn spent $500 with you. She was so impressed with you that she sent three clients your way and they each bought $1,000. Kathryn is now worth seven times what she originally purchased from you: $3,500. When each of these new clients refer more people and buy more in subsequent years, Kathryn’s value to your business gets bigger.
This might just have you treating your clients like Marie with appreciation for their smaller purchases.
Multiple service lines
The more products and services you offer, the greater your opportunities for increasing the lifetime value of your customers. Let’s say Kathryn buys a $500 product from you in January. In May, she comes back and wants the $2,000 service you talked about in a newsletter you sent her. She’s so happy she refers two clients to you that buy $1,000 apiece. What can start out as a $500 client has now morphed into a $4,500 client and can easily mushroom into a five-figure client by the end of the year. I’m sure it’s happened to you over and over again—perhaps without you realizing the dynamics of these relationships.
Take some time this week to create a spreadsheet that shows you the lifetime value of your clients. I’ll think you’ll be pleasantly surprised to see how valuable your current clients really are. If you need help with the calculations, let us know. We’re here to help.