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How’d that Happen? Customers,
Sales – But No Profit! “What you don’t measure, you can’t control.” – Edwards Deming (SPC, Taguchi method, 6 sigma) Are you measuring your business? • Number of prospects you have • What you conversion rate from prospect to client/customer is • Average $$$ per sale • No. of transactions over a specified period • Your margins • Lifetime value of a customer is = (# of clients * amount purchased each time * number of purchases * percent markup * attrition rate)/# of clients Once you know the above, you know your business – whether you are an attorney, a financial planner, a web designer or a marketing consultant. And once you know the lifetime value of a customer, you can leverage your business immediately. How? Here’s an example: Marketing $$$ in 2009 = $50,000 Number of new marketing clients from efforts in 2009 = 200 Cost per new client = $50,000/200 = $250 Average sale = $27 Average visits per year per client = 24 Length of time average client stays with you = 5 years Gross sales = $3240 Conservative number = $3240 * 0.75 = $2430 Profit Margin = 40% Gross Profits = $2430 x 0.40 = $972 DVM - $972, 5 yrs @ 6% = $726.33 Let’s round down to $700 Divide $700/%250 = 2.80 This means you could raise your advertising and marketing budget by 2.8 times right NOW and still break even. If you are making less than $250 profit per customer, you won’t be in business long! Now the question becomes what will give my business the best ROI on its marketing dollar? Call Us at 513-833-7966 or Ted@TedLeithart.com. We locate Windfall Profits and additional streams of income for Organizations business using low risk, low cost strategies.
Phone: 513-833-7966
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The Leithart Group,
LLC