Apr 3, 2010

How to Increase Your Customer's Life-Time Value 300%

How much is one customer worth to you? Most companies spend their money to get new customers rather than to look after their best profit source – existing customers.

It's said that it's 15 times easier to sell more to an old customer than to get one new customer. Yet, most companies miss this opportunity. They try expensive advertising campaigns to get new customers without a clear plan what do once they get a customer.

Companies like American Express, Apple and Amazon.com know that it pays to look after your current customer because they are most likely to buy again and more from you.

Let's say, one customer is worth to you a thousand euros per year. What if I told how to double or triple your customer's value over the next 12 months?

Here is why it's wise and profitable to focus more your attention to your old customers:
  1. Your customer has the power to refer to his or her friends about your product or service.
  2. Your customer's Life-Time Value (LTV) goes up like an Apollo rocket if your every customer brings in two or three new customers.
Direct marketers call this a-friend-get-a-friend model. A fancier term for it is Viral Marketing. Here is my question to you: Have you asked for referrals from your customers?

Most people are happy to recommend a product or service which they use. They are pleased if you ask for their advice. Even if the customer doesn't buy from you today, they might know someone who will. The most important thing in sales is to ask.

According to research, customers are most likely to recommend a product right after they have purchased it. But, in business-to-business sales I have discovered that you get more referrals when your prospect decides not to buy. People like to help.

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