What is one customer worth? Open up your book of business, find one client, and tell me what dollar value you would place on them.
It sounds easy – simply add up all the transactions they have had since they became a client and, if you’re feeling frisky, extrapolate how many more years they will follow that trend.
What about the goodwill they have extended to you? Referrals, introductions, and even an occasional “get out of jail free” card they might have extended to you when their customer experience wasn’t top-notch?
NOW what is that lifetime value?
It gets difficult, doesn’t it?
The truth is, ANY regular customer has value and that value is far beyond a dollar figure in a ledger. At the same time, every customer of yours is also in a lifecycle with respect to how they expect to do business with you.
New clients don’t spend as much while established clients may ask for far more (and not be afraid to pay for your expertise). Think about it like this – all customer relationships are based, at the very beginning, on a quid pro quo basis. I’ll give you money for this product or service – simple as that.
Over time, though, that relationship evolves. You spend time working with one another and become more “three dimensional” to each other. They know about your family, they know what hobbies you have, and they come to value your knowledge.
to sound crass, but they can be upsold into bigger products and services. Now, this is not always the case, but it occurs often enough that you should definitely have a methodology for doing so. Why? They already know, like, and trust you, so some of the major issues and challenges associated with upselling have already been handled.
Of course, the big question is do you have a product that can be upsold? Many of our clients balk at this – they say
“we’re just a (insert deprecating term for their business here) and we only have a retail operation.”
Wrong! Anyone and anything can be upsold if you have some creativity! In the accounting world, I see it all the time – a small firm that claims to only handle returns. Why not make monthly bookkeeping a part of the operation? You already know which of your clients have (or need) this service, so incorporating it into your business could be as simple as creating an affiliate relationship with a bookkeeper.
Retail or restaurant? A very similar process can be used – think in terms of catering lunch for “regulars” to have for their office or inviting your regulars to come have a “first look” at a new line when it comes out.
Will every one of them buy? Of course not. On the other hand, though, enough of them will that it will put more money into your pocket every month.
An example I recently heard of was a business coach in South Georgia. He had a client who was a personal trainer and he insisted that his client could sell a $1,000 monthly package despite the trainer’s belief no one would go for it (the trainer’s highest monthly package at that point was $180). The trainer put it out to his clients and 4 of them took the offer!
Boom! $4,000 extra each month and the overall “extra” time involved was 2 hours each week. I’ll bet if you spend some time thinking about how you can create value for your oldest and most valuable clients, you’ll be able to design products that can dramatically increase your bottom line and reinvigorate an older client list.
Staying away from tax problems can save you substantial money in penalties and interest. A lingering tax liability can steal your future gradually putting you in a difficult financial position. Call me if you would like my help. It’s what I do. Call Patrick LeClaire @ 407-287-6638 before penalties and compounding interest starts to take control of your cash flow.