Navigation       Home                            Contact                           Link

AMAZONTAGHERE6

 

ARTICLE PREVIEW

How to Write Killer Sales Copy
Sales copy is kind of like high school kids: the nicest, most polite ones often have the least friends. There are so many misconceptions going around as to what makes good copy that I thought it...read more

How To Choose A Divorce Lawyer In Toronto
Choosing a Divorce Lawyer or a Family Lawyer in large urban centers such as Toronto, Thornhill, Markham, Richmond Hill and Vaughan, can be very challenging due to the large amount of divorce...read more

How to Get Your Business Noticed
Many people will tell you that to get your web site noticed you need to 'optimize' your site for the search engines. You are then led up a path where you have to keep changing your web site as the...read more

HOME >> How To Determine your customer's value

 

YOURIMAGEHERE3

How To Determine your customer's value
By Abe Cherian

 

 

You may publish this article in your ezine, newsletter on your web site as long as the byline is included and the article is included in it's entirety. I also ask that you activate any html links found in the article and in the byline. Please send a courtesy link or email where you publish to: support@multiplestreammktg.com

----------------------

How To Determine your customer's value By Abe Cherian Copyright ? 2005



This literally can be the most profitable thing you'll ever do for your business and that is to understand exploiting the actual value of your customer. It's been called the Marginal Net Worth and the Lifetime Value.

What is the current worth of one of your customers or prospects? It's the total profit of an average customer over the lifetime that they do business with you. That includes all subsequent sales minus advertising/marketing and your fulfillment expenses.

Let's say the average customer brings you $75 per sale. They re-purchase 3 more times in a year. Their average order amount is $300. On each $300 reorder, you make $150 gross profit The average life lasts 2 years. Every new customer is worth $975.

You reach the 975 by adding the $75 initial profit to the 3 other purchases each year of $300. Only $150 is profit, so $150 times 3 equals $450. If they do that for 2 straight years, that's $900 plus the original $75.

If this is our average customer and they're worth $975 in profit and it only costs you $30 through your advertising/ marketing expenses to get them, every time you spend $30 you receive $975 back .

You would be foolish not to increase your advertising/ marketing and promotional budget to produce as many of these $30 cost customers so you would spend $30 over and over and over again to get $975 back

Theoretically, you could spend $975 to get that customer because you know they will come back and spend $975 and you will break-even. Of course, we don't want to do this. Remember, this is an average customer. Some will buy more and some will buy less This is an average number.

Now you "know you can spend up to $975. You could just as easily be spending 100% of your $75 profit just to get that first sale because that's just the first sale's profit, and you'll still end up with $975 over the next 2 years.

If you offered to give that $75 service for free and it doubles your customers, it "would double your profits over the next 2 years.

One in 100 business owners think about this You want to spend everything you can justify to bring in a customer as long as that customer costs you less than they earn you. If you can't afford to spend more than the entire profit from the first sale, remember you'll be making money just in a few months from them. Start out spending what your cash flow can justify. After a quarter or several months after their re-order profits come in, then you can step up your ad budget

About the author:

Abe Cherian is the founder of Multiple Stream Media, a company that helps online businesses find new leads and more customers without spending a fortune. http://www.multiplestreammktg.com

Return to HOME to read more articles
 

RSSTAGHERE4

 

COPYRIGHT � 2009-2015 HOW TO - ALL RIGHT RESERVED

 

CLICKBANKBUDDYTAGHERE5