There’s an old story of two grocers. They were sitting on a park bench. One says to the other: “You know, I’ve just gone over the figures and I divided the week’s revenues by the number of transactions and I’ve worked out the average customer is worth $72.90 to me. Have you ever worked out what a customer is worth to you Bob?”
Bob says “Sure Bill, about $75,000.”
What’s the difference? Bill was thinking in terms of one sale. Bob, on the other hand, knows about the lifetime value of a customer.
He figures it like this:
$72.90 x 52 weeks x 20 years = $75,816
What’s the lifetime value of your clients? If you don’t know, you could be missing out on thousands of dollars of opportunity.
The point is, it’s not enough to get a client in the door, sell to them and then say “Thanks for dropping by. Do come again sometime.” You have to develop a system to keep them coming back to you instead of going to your competitors. And you’re about to learn how. You’ll learn how to get them to spend more when they do, and how to encourage them to come back more often.
Did you know that there is but one formula for practice income growth? There are only three ways to grow any business:
• Increase the number of clients.
• Increase how much they spend or the profit per transaction.
• Increase how often they come back.
Here’s the equation: C x Act x F = I
Where: C = Number of clients
Act = Average client transaction
F = Frequency of transaction
I = Income
If you increase each one by a mere 10% you’ve added 33% to your income.
Add 25% to each and you’ve doubled your income. Double each of the 3 areas and you’ve increased your income by 800%! Notice the multiplying effect?
Think about how you can use this in your business.
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