How to Create a Steady Stream of Cash for Your Business
Most businesses thrive on clients who keep repurchasing, over and over again. This goes on for months, years, and decades. All of those repurchases can put a substantial amount of profit into your bank account, but very little of that profit would be there if you did not bring those clients into your business in the first place.How much would it be worth to you if you could bring in an extra 5, 10, 20, 100, or 1,500 clients this month and every single month? One of the most overlooked and underused methods of client growth is the process of acquiring clients at a breakeven or a slight loss, and then turning around and making huge profits on back-end repurchasing. This method can work for you if you recognize some very important facts
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Steps
- Identify and understand exactly how much combined profit your clients represent to your business for the life of that business relationship. This will help you to determine how much effort you should put into keeping them.
- Know the lifetime value of your clients. The total lifetime value of your client is the total profit of an average client over the lifetime of his patronage, which includes all residual sales, minus all of the marketing, advertising, and service fullfillment dues. Let?s say your average new client brings you an average of $100 profit on the first sale. He repurchases three more times a year with an average reorder amount of $200, and on each $200 reorder you make $100 gross profit. Now with the average customer life lasting about two years, every new client is worth $700. You could, in theory afford to spend up to $700 to bring in a new client and still break even.
- Calculate your clients? marginal net worth. Here?s how you do it
- Calculate your average sale and your profit per sale.
- Calculate how much additional profit your client is worth to you. You do this by determining how many times he or she comes back to buy.
- Calculate what a client costs by dividing the marketing budget by the number of clients it produces for you.
- Calculate the costs of your prospects the same way.
- Calculate how many sales you get for x-amount of prospects. (% of prospects who become clients)
- Calculate the marginal net worth of a client by subtracting the cost & expenses to produce the client from the profit expected to earn from the client over the lifetime of his or her patronage.
- Keep records and be persistent. Nothing worthwhile comes overnight. Your dedication and organization will pay off in huge monetary benefits.
Sources and Citations
- http://resultsbasedmarketing.blogspot.com/
- http://athomebizopp.blogspot.com/
- http://www.EnigmaValdez.com
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