Episode 70 - Lifetime Value

The Lifetime Value of Your Customers             I recently spent time in Stillwater Minnesota enjoying the scenery, seeing old friends, and relaxing with my wife.  As usual, we spent the weekend at our favorite Bed & Breakfast – The Ann Bean Mansion.             While at the Ann Bean, it struck me that they truly understand the lifetime value of their customers – and they treat us like we are VIP’s as a result.             It made me reflect on how I treat MY customers and it made me think about how you treat YOUR Customers.  Do we treat them as if they are truly as valuable as their lifetime value would suggest? Here’s Your Net Worth Tip of the Day             Knowing the Lifetime Value of your customers is a simple exercise but requires some calculation.  But once you do it, you’ll change the way you think about your customers and you’ll begin to treat them like VIP’s.  Here’s a step-by-step guide: Calculate your Average $ Sale for all customers – take your total sales in a week or month and divide that number by the total number of transactions in the same period. The result is your Average Ticket or Average $ Sale. Calculate the number of transactions per client you’ve had over this past month or over this past year. To do this, take your total number of transactions and divide that number by the number of individual customers you have served over that same period. Calculate how long each individual customer does business with you – do this in terms of months or years. Yes, there is an average. Multiple your answers (#1 x #2 x #3)= the Lifetime Value of Your Average Customer.             Do this exercise.  Be sure to be consistent with the time periods you use.  Once you have this number, share it with your team and treat your customers as if each one were worth that amount to you – because they truly are! To get more tips on how to improve your leadership skills, your team engage and your business results, go to my website, www.tourdeprofit.com and you’ll find lots of free stuff there.  Now, go get ‘em this week.  And remember, whatever you do, RIDE HARD!