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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.

Ted LeithartThe 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