Do you feel like your marketing is not working?
As we discussed in part 1, the problem may not lie in your marketing.
It may be due to a poor offer.
When creating your offer, a little bit of thinking outside the box is needed.
Which is why I made this video to help you create your irresistible offer.
The strategies include
- getting to know your customer lifetime value
- building revenue continuity
- creating a product ladder.
In this video, I explain how to create a really good offer using these three strategies.
Check it out now.
Okay, so the next thing I want to talk about before we get into more actual practical examples is Customer Lifetime Value.
Customer Lifetime Value is, basically it’s the way you look at customers. Most business people, most entrepreneurs will look at a customer as like a one-time transaction. So what I want you to do is to change the way you look at customers. So it’s not like you look at the customer on a transactional basis. You look at them on a long-term relational basis.
So how does that make things different?
Let me explain right?
So, instead of like.
Say, for example, someone comes into a grocery store.
If you don’t look at the customer lifetime value, all you’re seeing is that a guy comes in to buy a $5 carton of milk. Right? So you value the customer in your mind as okay, this customer is worth $5. If you know that on average, the customer that comes in to buy a carton of milk, who keep buying a carton of milk for maybe the next five years, right? And they would buy the milk at maybe twice a week and buy some other stuff as well. Now, your customer, your perception of this customer, they’re not value at five dollars anymore. They’re now valued at maybe $5000, because over the next five years, this customer could be worth $5000 to you.
So how does that change things? How does that change things, is that, now you’re looking at.
Instead of when you spending on ads, for example, you’re not looking at, “Oh, I spend $10 to get one customer in to buy a $5 carton of milk, I lost five dollars”. Now you’re thinking, I spend $10 to get this customer to come in to buy from me once. And I know on average is each customer that comes to do that will be worth $5000 to me over their lifetime.
So now you’re thinking, I spend $10 to get a $5000 customer. Your thinking completely changes right. Now you’re thinking, “Jeez, how many $10 can I spend to get more customers to get, but come in and buy more cartons of milk”, right?
And that’s the difference in concept there, where you’re not looking at the customer in terms of a once off transaction anymore.
So, you know, I think it’s important if you have a business that’s been around for a while to look at.
Okay, what is the average customer value to us over the lifetime?
So for me, for example, I know, on average a customer that comes to me and works with our agency, on average, I’ll say they will stick with us for at least, like 9 to 12 months.
Okay, so let’s call it 12 months.
So on average, I know that if a customer comes in, works with us at even that $2000 a month, right? To me, that’s worth $24,000. So what happens then is, I’m now willing to spend a lot more money to go and get this one customer. I’m willing to spend a lot more on marketing to get this one customer, right? So if it’s $24,000, maybe I’m willing to spend up to $5000 to get this customer, because I know our profit is $17,000, right? So that means I got a lot more money to spend on marketing.
Does that change the way you think about, you know, acquiring customers?
Like how much you’re willing to spend to acquire one customer? I mean, for some of you, it might be a little bit hard.
Like say, for example, for Rona, for example, right?
Because one customer could buy one now today, and then the next time to buy could be seven years from now. So for you it’s a little bit harder to kind of evaluate.
But yeah, maybe that’s where I guess, you know, yeah.
For you, maybe not so important, but it’s also, I guess, the other thing to consider, as well is the amount of referrals you get as well, right, from that one customer. If they’re happy with you, especially in Asia. I find that, okay, if someone’s happy with your product, they would tell like two or three friends, and they all will come and buy from you, kind of thing.
Now the next thing I want to ingrain within you guys is that, you know, in conjunction with that, customer lifetime value is to. If you don’t have it yet, is to build what I call continuity. Continuity of income, continuity of revenue from your customers.
So I guess a good example is this, this community, right? Where it’s like, okay, you pay an annual fee, right? And it renews every year. So I don’t have to keep going out to get new customers, because, okay, there is this community that’s going already. And I know there’s certain revenue that will come in to cover my cost for maintaining this community, right?
Same thing with my marketing agency, is that, okay. Every month, okay, this customer will pay me two to $3000 whatever it is, right? So I know that I don’t have to keep going out to look for new customers all the time to maintain my revenue. I think that’s where you know, you guys need to think. Okay, how do you build continuity into your products? Right?
So here’s some suggestions. So the agency model, I just explained it, subscription model, I just explained it as well.
So, you know, instead of like buying once off from you, how do you make people subscribe and pay you every month or every year?
So, for example, for a real estate agency, I’m just thinking back when I was in Australia.
There was a real estate agency that actually created what they called an Investors Club. So they were normal real estate agency, but they changed their focus and created an Investors Club. So this Investors Club is like, all right, if you sign in and you basically pay x amount of dollars a year, they will help you to find deals for you, that you know, meet your criteria for investing, okay.
So I can’t remember how much they charge per year. But, you know, basically, if you’re part of this club, you get certain meetings, you get certain seminars and all that kind of stuff that people pay for as part of your membership and you also get access to special deals.
So that’s targeted more towards investors, right?
But I think also, moving down to the fourth one is where you can look at complementary products.
Like if you’re in the real estate game, right? What kind of complementary products can you create that will help generate a constant revenue for you every month?
Just thinking outside the box here, right. Once you sell someone a house, maybe what you can have is a separate cleaning service, right. Where, you know, you charge a monthly fee or weekly fee for someone to come and clean your house. So all those things are complementary products.
I guess a listed example here is like, you know, where like PlayStation, or the you know, Nintendo basically gives you their console and a really, really cheap price to suck you in. And then after that, you need to buy games. So that’s where they make the money. It’s on the games. So the game console is like a Trojan horse. And then the games are where they really make the money. And the third one is inbuilt obsolescence.
So basically, like computers, they last for like three five years. And then it’s like they don’t work anymore, they need to be upgraded, okay So that’s like, cars are the same thing, right? So you might drive a car for seven, ten years, and then you need to change it. Because it starts breaking down and stuff like that. Okay, so that’s how you can build.
I have some ideas to build continuity into your revenue so that your income doesn’t fluctuate.
So, because for business owners it’s very hard if your income fluctuates every month, right. Great sales this month, it goes up. Bad sales next month, it goes down. That’s a really hard business to run. Very stressful. Okay, what we’ll do is we’ll go through some examples afterwards, so you can get some better ideas how you can build recurring revenue. Doesn’t quite work for you, okay, maybe. But I think that’s where need to. Yeah, I mean, if you’re talking about your water filters, your filter inside that needs to be replaced every now and then, right?
So that could be a recurring revenue model. Or if you’re focusing on the business side, could be a thing where they have to, you know, be part of the membership group, or the thing where they have to pay this thing every month.
Okay. Anyway, I will show you some examples. Hopefully they’ll trigger some more ideas for you.
So the next thing is, yeah, Do you have a product ladder? Do you have different levels of products and services?
For example, you know, you can have a low end product where it’s like up to $50 mid-range product 50 to 500 high-end products and ultra high-end product, right? So those are just arbitrary numbers but just to give you an idea of, you know what kind of different ranges there are.
And if you look at any company where there’s a lot of customers, right, the 80/20 principle always applies. So what does this mean? It means that Well, first of all, around 80% of your customers, around 20% of your customers will give you 80% of your revenue, right?
Secondly, is when it comes to pricing, you will find that 80% of your product sold are in one range of your products. All right? Could be the low end, it could be the mid range or could be the high end. And what’s important is that, I guess there will be 20% of customers or a certain amount of customers that will be willing to pay the ultra high-end, right?
So you need to have, come up with ways to devise products that where there are certain customers that will pay you a lot of money. And, you know, there’s a lot of customers that will pay you very little money, right? So you need to have that whole ladder in place to maximise your customer lifetime value.
Like, for instance, Vince told me recently in one of his seminars, right. Where there was one guy. And this is an extreme example. But there was one guy that actually bought a hundred of his $1000 products training programs. So one guy bought 100 of his programs. And basically, he wanted to give that to his business associates, right? So one guy spend a $100,000 just on that program to give to all his friends. So that’s the ultra high-end type customer, right where it’s on the extreme side of things.
Okay, so you should always cater for those people who are. You know, those people are like, you know, whatever you give them, they will snap it up.
And then there’s the other ones, which, you know, you have to lower your price to get them into the front door, right? And hopefully the customer lifetime value will be worth it in the end.
Okay, so how do you create these various types of products?
So one strategy is called Product Splintering.
So, where you take the big product and split it up into multiple small products.
Okay, it’s like, for example, okay, my agency service, what do we do?
We manage ads. We build funnels. We build pages. We write emails. We create ads. We provide consultancy service. We create video editing and create video scripting.
So what I could do is I could split them up.
So someone doesn’t want to pay $2-$3000 for a full agency service. I’ll say, okay, that’s fine. If you can’t do that, why not, we will do, help you with consulting where I’m charging them like $1000 per month, right? For 2 times a month, they get to talk to me, okay. One-on-one, right? I could write, create a Facebook ad for them, and maybe charge them like 200 bucks for it. Okay. I could. We actually build funnels, standalone funnels. So we can build all your funnel pages. And we can charge you say two and a half grand for it. So all this we can split it up and make it easier for people to come in.
Because not everyone’s going to come in and say, yeah, I want to buy a $2000 $3000 full consultancy service full agency service.
You know, you can basically get customers to maybe take that first step with you, and then we get them on the customer lifetime value, right? Which we talked about, right? Cool.
And then also, once you split them up, right?
And then you allocate a value to them, right? Also, now they see, okay, wow, if I take your full agency service, I get your consultancy, I get your ad management, I get your funnel building, I get your ads creation. Wow, if I add that all up is worth like $5000. But I’m only paying like, say, $2000 for your agency per month.
That’s like great value, okay.
So that’s also a value thing as well.