“Keep from crippling your business with these 20 marketing mistakes” Mistake number 11: Not calculating the lifetime profit value of your customer. And there’s really no question about it. Our customers are the most valuable assets that we have. Get your free repot today
I don’t want to rub in any mistakes into you because it’s not your fault, honestly, of the things that you may or may not be doing because you didn’t know better. And we’re here to help you take these items–these 20 items. And of course, don’t get bogged down with the 20, really. When you go through these and you get a workbook, which today is number five. And we’re going to do one more day of the series, but I promise you on day five that I’m going to have the download for this report–this book that we put together for you on these mistakes and how to overcome them. The key is overcoming them.
And don’t think about having to do all 20 at the same time. Pick two or three of the ones that you think that would be the most effective to your business right now. And then once you get those done, pick the next three and go through those. And, you know, if you just do three, you’re going to be so far ahead of your competition that it’s just going to–you’re going to get excited, honestly. About the different and the amounts of profit you’re going to make and the things you’ll be able to do with your business because you’re finally tuning and you’re making your business better.
So, let’s go into mistake number 11 and how are you going to overcome that. You know what. This has really been one of my pet peeves because you hear me talking all the time about transactional business and many of us are set up for transactional business. But, one of the biggest challenges that I see, many of us, and including myself from the very beginning, is not calculating the lifetime profit value of your customer. And there’s really no question about it. Our customers are the most valuable assets that we have. And since we’ve already purchased them from, you know, as as leads and they’ve already purchased from you previously and then experience the benefits of doing business with you and presumably they’re pleased with those experiences and they’re likely to purchase from you again if given the opportunity.
Oh, that’s the key if given the opportunity. So, we need to do that. And they’re likely to be free to others who may need or watch your services or what you sell. So, nearly every business allots more money, time and effort to the acquisition of new customers. They do to keeping their existing customers.
And I love what Dan Kennedy says in years and years ago: “You need to build a corral around your customers so nobody gets access to them“. And that’s done by numerous things that we’ve talked about in these podcasts.
So, it’s been proven time and time again that it costs you five times more to bring out a new customer does to retain an existing customer. Think about that, five times more. What if you could spend half as much or spend as much? Take that budgeting dollars and cut them in for new customers, cut them in half. Get new customers and, you know, keep in touch with your old customers on a continuing basis.
So, determining the lifetime profit value of a customer, it’s simple and it’s the most profitable thing that you can do for your business because what you’re doing is you’re setting your sights out. You’re really laying down the groundwork and you’re projecting out and it really is numbers man. They can get really exciting.
So, I want to take a look at how most business owners take a look at transactions. Let’s say that you have a customer that you just, your average ticket sales is two hundred dollars and you’re thinking about them in the form of “Well, I’m just doing them today. It’s a 200 dollar profit it costs me X amount of dollars to acquire them”. You know, whether it be through a referral or whether it is a marketing piece, it costs money to buy customers however you want to put it in whatever frame you want to put it.
So, we have a tendency to look at that customer as a 200-dollar transaction. Let’s say for the fun of it: it’s a hundred and seventy-five-dollar profit that we walked into that transaction today. I want you to take one step further and look at it this way. Now this chart is going to be in the Workbook. So, look at it this way: You got to the average sale and we’re going to say it’s 200 dollars. The number of sales per year for that particular customer or let’s say it’s three times a year. So, that’s six hundred dollars a year that you’re going to get from this customer. Now, how many years are you going to keep that customer? Let’s say 10. Just for make it nice and easy to figure. So, now that customer is worth what? Six thousand dollars! So, with this going into the mindset, your mindset of walking that door of that 200 hours, is no longer a 200-dollar transaction but it’s a six-thousand-dollar transaction.
But let’s take another step further, just a little bit further and this can really get exciting. Let’s say that you get one customer that is referred to you each year by this customer and let’s say that only 50 percent do business with you. So, now you have three customers that are doing six thousand dollars a year and that’s a year, but over the course of a 10-year time. So, now you’ve got your six thousand dollars from your original customer, and then eighteen thousand dollars from your referrals, so that’s twenty-four thousand dollars. And that’s only in the first tier of referrals. It can grow exponentially. But, I’m just trying to keep this simple. So, if you get three customers from that person and you keep them for 10 years, plus that customer, you have twenty-four thousand dollars for the business. So, it’s no longer a 200-dollar transaction, but it is a 24-thousand-dollar transaction. Now, that gets exciting. And it gets passed–you pass the whole home of everyday business because now you’re looking towards the future of all your business. It’s no longer a transactional mode of the one day: one-dollar profit, but it’s the future profits for the future.
So, listen. I’ve had customers for 25 years. I’ve had–and I’ve even taken some of them and one day I was running through and I had a lifetime value of– from one customer was over fifty-five thousand dollars in business. Man, that’s just plain exciting. So, you can get past the transactional thought. You just have to think way ahead and plan way ahead.
Mistake number 12: Failure to calculate the costs of losing a customer.
So, here we go, number 12 Failure to calculate the costs of losing a customer. And I don’t want to take too much time on this. It is very important. And it’s more important if you have been losing a lot of customers. So, I really want you to think about this.
But, it’s the numbers are just staggering. So, you know, we calculate the lifetime profit value of a customer. So, let’s take a look at what it cost you, if you lost a customer instead of gained one. So, let’s suppose for a minute that: One of your employees got a customer upset with you and they stop doing business with you. No big deal, right? I mean there’s a lot. They’re just one customer. It’s not difficult to get another one to replace them.
So, how much would you lose if they never returned? So, let’s take a look at our previous example. We talked about that one customer, ten years is worth six thousand dollars and–but, I’m not going to–we’re going to negative effects ripple, more than positive talk in effect especially today with the Internet. So, let’s say you have an unhappy customer. Then they were to tell 12 people about that bad experience because they always tell more people about bad experiences and they do good experiences. And let’s say those 12 were to tell six others. Total number of people that are affected by one bad experience– just one would be like eighty-five people. Can you imagine that? Somebody posted something: A company this company ABC something sucks and they really did a bad job and bought all that other stuff. Now, it’s only 25 percent of those people chose not to do business with you that comes to 21 people. So, 21 people times six thousand dollars is what? 120000 dollars with a business–just from one bad experience.
Now, once you get too uptight about this this is just one thought on, you know. Yeah, getting rid of or losing a customer somehow. So, you say how to–“What do I do about that?”, “How
do I not lose a customer?”, while you need to have really good trained employees, you need to be able to be diplomatic about things but, you know, there’s tons of stuff you can do. And the best way to do that is to give your customers all the love, the care, the attention, the service you can. To kill them with service, you go overboard, you make it nearly impossible for them, even consider doing business with anyone else. Regardless of the price, location, convenience and any other reason become, not only the preferred place, preferred person to do business with, but the only one that your customers will consider doing business with.
So, over perform. Wow them. Kill them with kindness. Because you’re talking about thousands and thousands of dollars of future profits. We’re not talking about today’s profits, we’re talking about future profits. And, if you don’t have to work hard, because you’ve already got them. The hardest you have to work is to keep them happy and excited and let them know that you love them and care about them.
Marketing mistake Number 13: Not selling to your existing customers.
Oh, didn’t we just talk about cross-selling and up selling and all that stuff? Yeah, we did. But this is another item– another sideline here. So, the best prospects are the people that we’ve already– purchased from us before. So, they’ve already experienced the products and the services that we’ve offered, as well as, you know, all the great stuff that we have for them. So, they know us, they liked us, they trust us. At least they did when they first bought from you and they gave you money.
Hopefully things haven’t changed. And ideally, your relationship with them has improved. And how will it improve? By you continually keep in touch with them on a regular basis. So,
if nothing else makes good financial sense, to attempt, to sell your customers before looking outside for new prospects.
But, what do you mean by that? Have you ever come up with a new service? Or, here’s one that really, that I think a lot of times we overlooked and we don’t think about. A lot of times our customers call us for a particular item. So, I’m going to use myself as an example. I would do, before I would do a lot of drywall repair and I would get pigeonholed into, well, they’ve only done drywall repair. So, I would have to continually– educate them on the other things we did. And I would do it in different ways other than just direct selling to them. I would tell them: “Hey, did you know that we did this or we did that?”. And then of course, you all know that I had a monthly newsletter that goes out every month and each month I would put in a– project of the month. And it would be something else we did. So that they would know that we did more than what we’ve been pigeonholed for.
So, I mean that’s just one way to sell them on a regular basis. Other things that you do. So, I just mentioned a newsletter, and I’m going to say that’s the best way to sell them without selling them.
You know, if you have a referral rewards program, for your customers for referring one to another, you can publish those results in a newsletter. This reminds your customers about your program and entice them to participate in another.
And one thing that I would do is, I would always thank. I had a column, thank the people that referred me. People–man, I’m telling you, it’s exciting when they say: “Hey! I saw my name in print!”. But, honestly, people are not going to care about you unless they know that you care about them.
So, always think of ways to sell your existing customers more of your services and products.
And honestly, and any time you’re thinking about adding on something? RUN IT BY YOUR CUSTOMERS FIRST. Because like I said: They know you. They Like you. They trust you.
And, if you’re looking for that service, then they’re going to purchase it from you because: they know you, they like you, they trust you.
number 14: Changing your marketing even though it’s working.
Wow, that’s a big one! A lot of us get bored with our marketing. And even though it’s working, we want to pizzazz it up a little and we’re really not paying attention to it. So, that’s one of the most common mistakes that we make with our marketing, is to try something out, find out it works.
Then stop doing it and then try something else. So, really, a better approach would be: to find something that works, tweak it–a certain part of it, try it again, tweak it again keep on doing. Remember that we discussed with regard to testing previously. As long as something continues to work, man, don’t give up just keep trying to prove it so it will work better. Guaranteed, it will not work for ever.
That’s why we always talk about testing and measuring. But there are several reasons why people change–or most of us business owners changed from marketing even though it’s working for us. Number one: we don’t test our ads promotions and we don’t monitor the results.
So, we don’t know what’s working, we don’t know what’s not working and how well it’s working and how well it’s doing or even if it is working. I know I just said a lot. We’re not really sure whether it works or not.
Was it because we don’t test it? That’s really the main thing. We get tired of doing the same old thing every time and change her ads just for the sake of change. Now listen, I have to tell you this: Sometimes boring is better and that’s boring on my side.
Remember that when you’re attracting a customer that that customer is a new person with new eyes on that one marketing piece that is working. The only one that gets bored with it is you! But if it’s working, DON’T STOP DOING IT! Continue to do it. So, they hear about something someone else is doing and they want to see if it were for them. Usually, very little thought because that decision. “It looks pretty, so I’m going to do it!”. Don’t do it, don’t be tempted to do that.
The only reason you would ever want to change at any ad, campaign or promotion is to see if you can make it perform better. Any other reason shouldn’t even be considered. That’s it.
Marketing mistake number 15: Taking advice from the wrong sources.
OK number 15. This is a big one. Taking advice from the wrong sources.
You know, it seems like everyone is an expert nowadays. An advice is so freely given and offered even if you have no intention of seeking or asking for it. We have friends, we have family, we have co-workers, we have associates, we have other people in the trades and neighbors. Nearly, every person you come in contact has something to say or some advice to offer. And for the most part– it’s well intentioned. Except for– listen,
I’m going to be really honest with you on this one. If you go to some of the Facebook groups and stuff like that, and you ask questions, there’s a lot of people on there that it will automatically give you bad information on purpose. So, you know, be careful on where you go to get your information from. Hey, when you seek information, check it out. See if it’s a credible source. Other information comes from self– can’t even say that right. Self-proclaimed gurus and experts. Some who’ve never even been in business. That’s the amazing thing.
It’ll pay you big dividends to carefully consider the source of any and all information that you receive. You know, check it out on your own. Just don’t blindly do it too often. Testimonials are used to relate the work done in a field or a project that beats absolutely no resemblance to what you’re involved in.
While, the principles are constant and specifics can and will always change.
Here’s what I mean: “A principle is timeless that never changes“. For example: in advertising, a principle would be that you get more readership from an ad using a headline, a specific, on the other hand is the application of a principle to a unique situation. So, in our advertising example that we’ve used, how the headline is used, may vary from one type of business to another and some headlines. Like an autobotic shop for instance may run headline that relates to their business. A Printing Company will still– while still using a headline, will want to tailor the headline to a need of the printing customer and prospects.
The point is this: Make sure the advice you get, whether it is volunteer or sought out, comes from a credible and reliable source. And make sure that someone has specific knowledge of the business or at least they can relate to the specifics of your business. Test it and timeless principles that apply to all businesses. So, just be careful of who you listen to and the people they give you free advice is probably the most costly advice that you will ever get.
So, next one, we’re going to pay for it till tomorrow. Marketing mistake number 16. But, I just want to let you know that I have downloaded. It will be on the page– show notes page. I promise you the workbook and the for this whole series. On day 5 but I’ve got 5 more quick ones that go through and that will be tomorrow and it will be the last part of the series. However, I get it. I have promised to I’m going to have the workbook on there so you can get a go to the shows page and get your workbook.
I promised you on day 5 , I would give you access to the Report
There are so many ways to do almost free marketing you just have to think about it or you could just go to the web site and pick up the free download.
If you have a story to tell and would like to be a guest on this podcast email my assistant Shell at Shell@contractorssecretweapon.com and she will send you our guest sheet.
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