Getting More Customers - How Much Do I Spend?

This is a common question I get asked quite regularly when starting out with a business. But before you decide what to do to get more customers into your business, there's a simple calculation to do first. It's called the "Lifetime Profit Value of Your Customer".

Once you have calculated this, you will then have an idea of what a customer is worth to you in PROFIT - over their lifetime with your business. A general rule of thumb is to spend no more than 10% but there is no right or wrong answer here. So here's how you do it.... Grab a pen and paper and calculate the following for your business:

Average sale value $

Less cost of sale $

Equals profit per average sale $

Multiply by no. of sales per year $

Gives you profit per year $

Multiply by no. of years as a customer

Equals Lifetime Profit Value of your Customer $

So now you know this figure, you can see what the average customer is worth to you in profit. Now what would you be prepared to spend to entice a new customer into your business?

Depending what type of business you are in, people love free stuff so what could you give a potential customer to get them to phone you or visit? If you're a cafe, how about a free cake or voucher. Restaurant - a free meal. Hair dresser - a free haircut. If you sell high value items, provide a free report on the benefits of a widget or 10 points a customer should know about your widget before they buy.

Of course you must provide excellent customer service so the new customer enjoys their experience with your business and returns as well as referring others to you. Common sense stuff really but I hope you find this information useful and I wish you good luck with your next marketing strategy.

Check out my website for the Customer Lifetime Profit Value template. You'll need to register first and log in but then you'll have access to some free stuff you can use in your business. (Don't be afraid to register, your details will be kept confidential. I hate spam so I'll never sell your details). Over and out for now. Arlene