There is a powerful metric in your business that when used properly, can add 20-80% additional revenue and profit quickly, easily and often at no (or very little) extra cost…
Featured Download: How to increase your Lifetime Value Metric
How to Boost the Most Important Metric in Your Business
There is a powerful metric in your business that when used properly, can add 20-80% additional revenue and profit quickly, easily and often at no (or very little) extra cost…
You simply need to know:
- What it is
- How to measure it
- How to use it to boost growth
To Illustrate…
Here’s a quick client win that demonstrates just how quickly you can get results by focusing on this metric.
I recently began working with a new client in the fitness industry.
- We formalised a strategy to boost this metric during our first session together on a Monday
- This particular client is a fast mover and he began implementing it on Tuesday
- By close of business on Wednesday, it had added an additional 37% revenue to the business. Most of it was profit and all of it was recurring
While a great result, it’s not at all uncommon.
In fact, from my experience of coaching and advising over 300 businesses in 34 industries, when you focus on this metric it’s not unusual to find 20-80% in additional revenue straight away – regardless of industry!
You can more than likely achieve the same.
The Magic of Lifetime Value
The metric I’ve been alluding to, is called Lifetime Value (LTV).
It’s a measure of how much revenue (or profit) a customer is worth to your business over the lifetime of them remaining a customer of yours.
The trick is to ensure that this metric keeps going up. Firstly, because this will mean that your business is growing organically. Secondly, because it focuses your energies on delivering value so that your customers keep coming back and buying from you again and again.
How Do You Calculate It?
For the purpose of this article, we are going to explore LTV from a revenue perspective of your overall business (It can also be calculated on an individual customer basis and you can use it to measure revenue or profit).
To begin with, LTV is actually derived from two other metrics…
The first one being Average Dollar Sale.
This is a measure of how much revenue on average, a customer spends with you every time they transact with your business.
The second, is Frequency of Purchase.
This measures how many times on average, customers buy from you in a given time period.
In a simple manner, the formula can therefore be represented as:
Lifetime Value = Average Dollar Sale x Frequency of Purchase
Once you know these two numbers, you can then focus on increasing each one individually to boost your Lifetime Value.
This has the potential to significantly and quickly boost your business as most strategies do not require a large investment of time or money (relative to attracting new customers).
Getting Started…
You can increase your Frequency metric by enticing customers to come back and buy from you more often, or stay with you for a longer period of time.
You increase your Average Dollar Sale metric, by enticing customers to buy additional products or services that they would naturally be inclined to buy anyway.
- These could be items they are currently buying from your competitors, but could easily be buying from you instead
- You may decide to bundle certain items together to create a much more valuable package
- You could simply decide to put your prices up
The idea here is that you implement one strategy at a time and that you focus on adding additional value (real or perceived) to your customers.
If you get it right, you’ll have a high growth, high performance business that’s ready to boom.
Helping You Take Action…
Now you know what Lifetime Value is, how to calculate it as well as how to use it to boost growth.
When learning (or relearning) something new, you need to take action within 48 hours if you want to get traction and results.
To make this easy for you, I put together a cheat sheet with a bunch of different strategies to increase Average Dollar Sale and Frequency.
Simply download it, pick one strategy to begin with and start implementing!
Featured Checklist Download: How to increase your Lifetime Value Metric
