Discover The Marketing Edge That Will Drive a Wave of New Customers Through The Door

by Stephen James

Published on this site: May 10th, 2005 - See more articles from this month...

Are you still putting out the 10% discount SALE sign and hoping for a flood of new customers to walk through your door?

Do you get disappointed when your SALE turns into a FAIL?

Would you like to know how to make powerful offers to instantly attract new customers to your business?

Well, the secret to making irresistable offers to attract new customers is knowing the “Lifetime Value” of your customer.

No matter how large or small your business, no matter what product or service you sell, you must know the Lifetime Value of your customer.

For many small business owners, this concept is a mystery, yet it is the key ingredient to making decisions about marketing expenditure.

So let me explain what the Lifetime Value of a customer is...

Lifetime Value of a customer is the average sale price, multiplied by the number of times a customer buys from you in a year, multiplied by the number of years that person remains your customer.

For example, lets say you own a hairdressing salon and your regular customer spends $70 on average, of which $40 is profit. Your customer makes a hair appointment 10 times a year and they stay with you for an average of 3 years. This means that your regular customer is worth $40 x 10 x 3 = $1,200 in profit.

You can use this same formula for a restaurant, a car service centre, dentist, clothing retailer and so on. I have been going to the same dentist all of my life. When you start to plug in numbers where the loyalty factor is very high, the Lifetime Value of the customer will simply amaze you. And it doesn’t stop there...even if you sell high value items such as white goods, office furniture, pools and spas or seemingly one off type items, there is always the service contracts, spare parts, complimentary products and customer referrals that all add up to extra sales and profits over time.

So armed with this valuable information, how does it give you the marketing edge?

At the start of this article, I mentioned the 10% discount SALE. Everyone seems to do it, so why not you? I don’t know about you, but a 10% discount offer does not get me excited enough to hop in the car and drive to the store to make a purchase or experience someone’s service for the first time.

But what if you were to offer something for FREE.

Aaaagh!! Shock horror. I couldn’t give something away...I would go broke! This is the sound that I now hear reverberating over computers screens as business owners read this article.

Well, lets take a breath and have a calm, rational look at this.

Take the example of the hairdresser. What if a hairdresser was to offer a FREE style cut to attract new customers to their salon. The cost in labour and products for the FREE style cut would be around $10 to $15. If the person that takes up this offer becomes a loyal regular customer, the Lifetime Value to the salon of that customer could be as high as $1,200 in profit. Do you think that the cost of $10 to $15 is worth it? You bet it is.

Here are some other examples:

• Restaurant – free main course
  
  
• Accountant – free consultation worth $150
  
  
• Bowling centre – free game
  
  
• Car service centre – free muffler check
  
  
• Clothing retailer – Gift voucher for $20

Because you know the Lifetime Value of your customer, you know that you can afford to “buy” a new customer...and there is no better way to break a person’s buying habit and attract them to your business than to offer them something for FREE.

But wait!!!

Before you get all excited and start making FREE offers to the world, a word of caution.

Make sure that you have calculated the Lifetime Value of your customer. Then, like with any marketing promotion, test your offer on a small scale first. When you have analysed the results and are confident that you will be able to maintain customer service standards, roll out your offer on a larger scale.

Put this marketing strategy to work and you’ll not only surprise yourself, but also your competitors.

Stephen James specialises in teaching small business owners powerful sales and marketing systems that unlock large amounts of untapped cash within their business for low or zero cost. Be sure to sign up for your FREE access to The Business Club at: http://thebusinessresultscentre.com and utilize the free articles, ebooks and other information that can enhance your marketing!