Episode 21: Lifetime Client Value

If you just market to the people who are already in your tribe, it is cheaper and more effective.

In this episode Jim and Tyson talk about the advantages of thinking long term and transforming one happy client into many.

Stop thinking about just having 1 business transaction with clients and think through the long term prospects of how you might do further business with this person and the people that they know.

Think long term. How many referrals will I get from a particular client down the road, or how many more times will this person is going to hire me if I do a good job.

Cost Per Acquisition Of a Client: if your lifetime value of your client is less than your acquisition cost, then you are doing something wrong.

Calculate your cost per acquisition of clients =

How much do you spend every month/year in your marketing
_________________________________________________

Clients that you acquire that month/year (You can do the same with leads instead of acquired clients)

How much is worth you to get a new client… As long as you get out more than you are putting in, then it’s OK, right?

Once you figured out what the value of a client is for one case, then the next step is to figure out how can you increase the number of transactions you do with this client and how can you orchestrate referrals down the road and transform 1 client into 5. In other words, increase the lifetime value of this client. Therefore you are going to be willing to spend more money to get those leads.

Follow up! If you take that extra step and you create things and stay in touch with your former clients, that makes a big difference.

Hacking’s Hack: A book, and it’s a little bit dated in the marketing message: it’s pre internet, but all the same principles apply.

“Getting Everything You Can Out of All You've Got: 21 Ways You Can Out-Think, Out-Perform, and Out-Earn the Competition” by Jay Abraham, St. Martin's Griffin; 1st edition (October 12, 2001).

It’s fantastic, it’ll give lots of ideas.

Tyson’s Tip: Actually, a tip! The “if when, then principle”. If you wanna stop doing something, or if you wanna achieve something in your life, one of the most effective ways of doing it is getting in the mind set where when something happens, then you do something that is healthier, better, or improves you in some way.

From the book: “Influence: The Psychology of Persuasion, Revised Edition” by by Robert B. Cialdini, Harper Business; Revised edition (December 26, 2006).

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