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 $$$ per sale
- No. of transactions
over a specified period
- Your margins
- Lifetime value of a
customer is = (# of clients * amount purchased each time * number of purchases
* percent markup * attrition rate)/# of clients
Once
you know the above, you know your business – whether you are an attorney, a
financial planner, a web designer or a marketing consultant. And once you know the lifetime value of a
customer, you can leverage your business immediately. How?
Here’s
an example:
|
Total Marketing $$$ spent in last 12 months
|
$50,000
|
|
No. of new clients from the above
|
200
|
|
Avg. Cost per new client
|
$50,000/200 = $250
|
|
|
|
|
Avg. Sale size (in this business)
|
$27
|
|
No. of visits per year per client
|
24
|
|
Avg. “lifetime” of a client
|
5 years
|
|
GROSS sales over the avg. life
|
$3240
|
|
|
|
|
Conservative Gross Sales (75%)
|
$2430
|
|
Profit Margin
|
40%
|
|
Gross Profits ($2340 x 0.40)
|
$972
|
|
Discount Value of Money, $972 for 5 yrs. @
6% interest
|
$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 HOW TO INCREASE YOUR LIFETIME VALUE OF A CUSTOMER
SUBSTANTIALLY and QUICKLY? We can answer
that by contacting us for a FREE
41 minute Consultation
Click here to schedule your FREE Consultation,
or call
513-833-7966, or email Ted@TedLeithart.com
We
locate Windfall Profits within your business and turn these into and additional
streams of income.
The Leithart Group,
LLC
Turbocharge Your Business Now
9276 White Pine Drive, Loveland, OH 45140 USA
www.tedleithart.com
Ted@TedLeithart.com
Phone: 513-833-7966