This past Mother’s Day, I hope you took advantage of an amazing opportunity….to connect with your customers
For 5 years, my company has sent out Mother’s Day cards to our clients.
The following Monday, I received a call from a client thanking us for the card and how it brighten her day.
We send the cards for three main reasons
- We truly care about our clients
- We look to continue to build, cultivate and maintain our customers
- No one else sends cards on this type of holiday, thus setting us apart from our competition
Look, you work too hard to get new customers to have them walk right out the back door of your business.
In business, I believe you must focus on three big areas of your business:
- Generating new leads
- Delivering on your service
- Cultivating your existing customers
Yet most of the time, businesses only focus on one out of the three, generating new leads.
The reason is we get too comfortable and lazy with our current customer, believing they will not leave us.
We often forget that every day our customers are presented with alternative companies.
I believe to truly sustain your business you have to shift your focus.
For me things shifted, once I realized the importance of moving my customer from a basic one-time sales transaction to thinking how to turn this initial sale to a long-term relationship.
I learned to respect these two simple metrics.
(CAC) Customer Acquisition cost
This is how much you spend to get a new client. It can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) divided by the number of customers acquired in the period the money was spent.
For example, if a company spent $100 on marketing in a year and acquired 100 customers in the same year, their CAC is $1.00.
Long-term Customer Value (LCV)
The LCV is the total revenue you earn from a customer subtracted by the money spent on acquiring and serving them.
For example, if it cost you $10 to get the customer and they spend $100 then the customer value is $90. Yet, if that same customer because a repeat customer you no longer have to spend the $10 to acquire them thus they become more profitable.
Once, I better understood how much it cost me to get a new customer and their long-term value.
I easily realized that it costs me more money to acquire a new customer than to keep and sustain an existing customer.
That is why those Mother’s Day cards, we sent out that only cost $2.00 per card allowed us to show love and appreciation to our customers.
Trust me $2 is way cheaper than me working to acquire a new customer.
It reminds me of an old song from Johnny Taylor “Cheaper to keep her”.
I encourage you to figure out these two metrics customer acquisition and long-term customer value.
Once, you better understand what it means to your business, this will in power you to make better sound business decisions.
Remember, you must continue to date your customers to build a lasting relationship because you have heard the saying “A bird in the hand beats two in the bushes” .
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