Are you treating your clients according to their Lifetime Value?

July 29, 2010

After speaking with a lot of coaches and clients I’ve found that most businesses treatment and appreciation of their customers revolves around how much they spend monthly with them.  I’ve been guilty of this in the past as well.  But today is a new day right?

Let me show you an example.  I’ll use my coaching business as an example.  My average client invests approximately $2,000 a month for coaching services.  Now in the past, I looked at that client as just $2,000 per month.  I know what you are thinking.  $2,000 is a lot of money.  I bet you really appreciated them for investing that kind of money with you.  The short answer is YES I did.  However, when I did the numbers on the lifetime value of a client, I discovered something amazing that revoloutionized the way I treat my clients.

What I discovered was the LIFETIME VALUE of my clients.  You see, on average, my clients invest $2,000 a month, but they do this for an average of 1 to 2 years.  Let’s take the middle ground and say 18 months for this example.  That’s $2,000 multiplied by 18 months for a total of $36,000.  I’ve recently moved to a 3 year minimum to work with me since I only want serious people as clients.  Now the lifetime value is $2,000 times 36 months or $72,000.  That’s impressive in and of itself.  But here’s the kicker, I’ve also discovered that each client I coach refers me to more clients.  On average, I sign up 2 more clients based on those referrals.  So $72,000 times 3 (the original client plus 2 referrals) brings my AVERAGE lifetime value of a client to a whopping $216,000.

I don’t know about you, but when I repositioned $2,000 a month client into a $216,000 lifetime value ASSET, I started treating my clients a whole lot different.  The gifts, thank you notes, and celebrations you share with your clients should reflect the proper level of excitement you have for each one of them.

So my question to you today is…..   How are you treating and valuing your clients?  Have you put the proper value on them?  Are you showing them the proper amount of gratitude for their business?

I’ll guarantee that as your level of respect and gratitude for your client grows so will your business.


Want to know how to get Larger Coaching Clients?

July 27, 2010

Here’s a post that I wrote for my coaches that are clients this week.  I thought I would share this here since ANY business owner can apply this to getting bigger clients for their business.  Enjoy!

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I’ve spoken to about 20 coaches in the last month and I get asked by every coach I meet how to get larger clients.  I get asked this for two main reasons.

1.  Most coaches don’t think they can sign smaller clients.

2.  After a while in this business, coaches want to get their average dollar sale up.

 So here are my thoughts and experiences on both topics.

  1. You probably don’t think you can sign smaller clients.  So what’s a small client?  A small client is 0-500K in revenues.  I’m here to tell you that you can sign these people.  I’ve made a business out of this target market.  And these people can pay between $1,500 and $2,500 per month.  I know this because I sign these clients all the time.  I’ve recently hit a pattern of signing clients that are only generating about 20 to 40K in annual revenues.  And yes they are paying in the $1,500 to $2,000 per month range for coaching.

Here’s the thing about MY FREE COACHING sessions….  Prospects see the value of coaching and they know by the end of the FREE COACHING SESSION that they only have to front the coaching fees for the first 90 days or so and then coaching is not only paying for itself but generating a profit.  This is absolutely KEY to bringing these people on board.

One of my clients came on as a start up almost 3 years ago.  He had a projection of $140K in revenues, but had only generated about 50K so far that year.  We started him at $2K per month and he put it on a credit card.  Fast forward 3 years and his business is generating $4.3 Million in revenues.

The point I really want to drive home is that you CAN sign these “smaller” clients and they can pay you really well.  It just depends on how you position the investment into coaching.  Oh yeah, and then you have to get them results.  Get them results and they will refer everyone they know like my first client did.  My first client was making about 400K in revenues when I met them.  They flat out said there was no way they could make 500K a year in revenues in their business and it hadn’t been done in 50 years of running the place.  I started them at $1,800 a month.  We ended their first year of coaching at approximately 657K in revenues, reduced the owners hours IN the business from 80 to 15 per week, and increased profits by about 15%.  They became a steady stream of referrals for me.

2.  All that said, HOW DO I GET LARGER CLIENTS?  This is what you really want to know.  You may not like my answer.  Have you gone back to the SYSTEM AND reviewed the MARKETING flipcharts?  If not, you may want to right now.

Remember the slides about your target market?

First off, do you know what your target client looks like?
What are their revenues?

How many employees?

What cities do you want to target?  (Remember that you can market to your ENTIRE state.  PHONE COACHING ROCKS!)

What industries do you want to target?

                That’s step 1.  Defining who the market is….

The next step (step 2) is brainstorming where they are in the largest concentration?  The whole purpose of this is to figure out the best ways to reach them in mass quantity.  Here’s a bit of a secret.  If you are looking to attract businesses that are generating 1 to 5 Million in revenues, you have to look for them at their place of business.  That is where they spend the most time.

So step 3 in this process is deciding how you want to market to these people.  If you need to reach them in their office you will want to consider Bold or Cold calling strategies…  I like Phone Mail Phone for these people and make it very specific to them and their business…  Be creative with direct bulky mail…  Send packages instead of direct mail…  Ask people in your networking groups if they know specific contacts at these companies…  And an absolute MUST is that you create a top 50 or even 100 of these companies that you want to do business with.

My favorite strategies include Strategic Alliances with CPA’s, Staffing Companies, and other partners that work with my target market.  A third party referral from one of these people is like GOLD!

Here’s a secret about targeting higher revenue clients.  The acquisition cost is higher.  That means it may take longer to acquire them and it may take several touches just to get them interested.  The other part of that is that the lifetime value, SHOULD BE GREATER!  You just have to keep this in mind when you are marketing to them.

Step 4 is that you have to test and measure your results.  What’s working, what’s not, and what do you need to change up?

Step 5 is the crown jewel of coaching.  Go back to the 5 ways.  How many leads do you have that fit your target market?  How many FREE COACHING SESSIONS have you set with someone in your target market?  How many have you closed?
Want more large clients?  Look at the numbers…  Focus on the activity.  If you only have a 20% conversion rate you can do one of two things.  Generate more leads or get better at closing.

Here’s a hint.  There are fewer prospects in the multimillion dollar range than there is in the 500K and below range.  So work with both and hone your coaching with the smaller clients.  Turn your small clients into big fish in your market and they will refer other big fish to you.


Facing the Giants

July 6, 2010

What a great video.  If you have the time, rent the whole video.  It’s a great story.

Most people have no idea what is possible when they only focus on the obstacles in front of them.  When you remove the obstacles, anything is possible.

What a great example of how a coach can push you to accomplish things you didn’t even know were possible.