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Sales Strategy & Management

How To Determine The True Value Of A Customer

You can boost profits by focusing on the lifetime value of customers. Here’s how to look at the real value of a client.

Harry Welby-Cooke




Lifetime value is how much a customer is worth to you over the entire period that they will do business with you. For example, if your average customer spends R200 every time he or she makes a purchase from you, and that customer will typically make one purchase a month and do business with you for five years, their lifetime value is as follows:

R200 x 12 months x 5 years = R12 000

Business owners can effectively boost their profits and the sustainability of their businesses by increasing the lifetime value of their customers. The trick is to change your focus from the single sale now to understanding the idea of lifetime value.

For example, let’s say you embark on a campaign to generate new sales leads that costs you R10 000. You get 200 new leads from the campaign. Effectively, each lead has cost you R50. Of these leads, 80 become customers, spending an average of R500 with you twice a year. Your average customer lifetime is two years.

That means that the lifetime value of your customer is R2 000. With 80 new customers spending R2 000 over their customer lifetime period, your campaign has generated R160 000.

And that does not take into account the fact that those 80 new customers might bring you referral business. If 10 of your new customers tell just one friend who buys from you, that’s an additional R20 000 worth of business of lifetime value, which means your campaign has generated R180 000.

Related: Your Customers’ ‘Why’ Is More Important Than Their ‘Want’

Think long-term

You see, it’s not just about the people that your campaign attracts, but the profit you will make from them and their referrals over the course of several years. It’s not about market share — it’s about wallet share. Instead of trying to get the biggest slice of the market, business owners should focus their attention on increasing the amount of money they make from each customer, over a period of time.

The critical thing is to turn each customer into a lifetime customer. And the way you do that is through customer service, building customer relationships and focusing on generating repeat business.

The truth is that many businesses require customers to make a second purchase before they break even (e.g. if it cost you R200 to acquire the customer and she only spent R100 with you the first time she did business with you). Repeat business is the sure way to profit. And the fact is that it’s up to six times less expensive to sell to an existing customer than acquire a new customer.

Type of business

Obviously, your customer lifetime will be different depending on the type of business you run. If you sell cars, your customers might buy once from you every five years, but over a period of 20 years. In that case, you can increase your lifetime value by using car services or add-on products to generate additional repeat business.

Related: Your MVP Isn’t Really Viable Until Your Potential Customers Say So

If, on the other hand, you run a quick-service restaurant, your customers probably purchase far more frequently, but for a lower value. You might attract additional repeat business by introducing a loyalty programme where customers get their tenth meal free.

Whatever the case, you can boost your profits by finding customers who will be with you for the long term and ensuring that you take good care of them.

Harry Welby-Cooke is the Master Licensee for ActionCOACH South Africa. He is also the President of COMENSA (Coaches and Mentors Association of South Africa). ActionCOACH is the world’s largest executive and business coaching company with operations in 39 countries. It is also on the list of the top 100 franchises globally. As a highly successful Business and Executive coach, Harry is a master of teaching business owners how to turn their businesses around and accelerate their growth. Email him at or call 0861 226 224

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Sales Strategy & Management

Key Tips To Retain Customer And Improve Sales In Ecommerce Sites

If the ideas you are selling are fresh, innovative or even intuitive, you might gain customers, but retaining them actually determines the exact ROIs you can gain from your venture.

Peter Davidson




Ecommerce in simpler terms is the activity of buying and selling of goods and services over the web.  With the increasing reach and accessibility of internet day by day, online mode of business transactions is gaining prominence. For any business, retaining customers is more advantageous than acquiring new ones.

Number Check

The root of customer retention for any business digs deep. And here are few stats to show the depth of its importance:

  1.  Almost around 41% of online revenues generated are from retained customers that too just by 8% of the retention rate.
  2.  If an ecommerce site can increase their customer retention by mere 5% rate their sales can increase by 25% to even 125%.
  3. Unsatisfactory customer service takes a toll on a business. About 71% of unsatisfied customers end their relation with the vendor.

As the importance of customer retention is being cleared, the next question to pop up is the method of retaining customers. You have to keep note of the important aspects that lead to retaining customers effectively. Here are a few handpicked proven ways to retain your customers and thus improve the sales.

1. Gesture of appreciation

A simple gesture of appreciation or offer or discount can do wonders in enhancing sales. Unexpected surprises or gifts are something which is appreciated by everyone and can cement your relation with your customers.

For this you can add extra discounts, offer vouchers or can send the customer some gifts with a handwritten ‘thank you’ note couple of days after buying. This unexpected gesture of appreciation will divert customers’ attention towards your site.

Related: 6 Steps To Building A Million-Dollar Ecommerce Site In 60 Days

2. Email marketing


Your customers already provide you with data about their choices and preferences. However continuous email campaign is a subtle but effective way of expanding your customer database. Expand the items that are being added in the emails.

Try to innovate the offers and discounts, add newer items to increase your customer’s preferences and keep tracking them. Track which sequence of emails is gaining the highest hits.

3. Gold membership

Probably the most used, yet efficient way of customer retention is VIP privileges and Gold membership etc. A policy including reward points and hierarchical VIP status enabling your customers to various privileges offers etc. act as significant ways of improving sales. The alluring offers and VIP memberships will entice your customers to shop more.

4. Customer Services

A seemingly consistent and personalised customer service is what controls most of the brands nowadays. Most of the market researches show that it’s the customers who modulate and decide the fates of the brand. So be where your customers are for cementing a professional relation with them.

5. Showing diligence

Just occasional email campaigning and gifts and vouchers aren’t enough for successful customer retention. In the era of high-end competition, if you are not careful about the needs, preferences, requirements and most importantly, the complaints of your customers, no matter how much offers or VIP privileges are provided, customer retention is impossible.

Being proactive to the needs of customers, engaging them continuously as well as collecting and reacting to their feedbacks are the three major steps for any customer retention scheme.

Related: Watch List: 15 SA eCommerce Entrepreneurs Who Have Built Successful Online Businesses

6. Create value for Customers

If you are buying online , will you choose to buy from a website that sells low quality products at a cheap price? The answer is certainly no because everybody desires for quality in terms of shopping. Also, cost alone isn’t valued by customers, there have to be multiple components of value addition to optimise the overall shopping experience for your customers. As an e-commerce company, you need to master the elements of making a successful e-commerce website and later work upon your plan.

7. Limited period offers

Almost all ecommerce sites nowadays follow the policy of giving limited period offers and big bash discounts etc. A large-scale promotion before the said offer period, and some lucrative offers along with VIP privileges can help.

Improvising the existing privileges too can lure the existing customers into more shopping and hence enhance online retail sales.

8. Transparency in sales

Honesty is the key to success in any field of life. An ecommerce business site is no different. It takes painful long period of time for building up a company’s reputation. The only cue card that vouches for the reputation is transparency in sales and company’s policy.

The more transparent you are the better feed you get in return. So, whatever be the service you provide, keeping hidden policies and hidden charges is a strict no-no.

9. Promise and supply gap

It’s good to aspire for more, for bigger contracts, more sales but aspiration shouldn’t blindfold your capabilities. Continuous offerings to customers, more discounts and bigger promise for retaining them shouldn’t go beyond your limits and you end up giving lower outputs in reality.

This, in long run, hinders your company’s reputation to a considerable extent as well. So, promise only according to your limits and not beyond.

Related: The Future Is Now – Ecommerce Retail Trends For 2019

10. Building up a customer community

Humans are social beings by nature. The brand you are selling can actually act as a platform for different customers. Add a community chat room in your site where your customers or the Gold members can login by their credentials and discuss the pros and cons, offer fresh ideas, match and compare their services etc.

This allows for a rigorous service assessment, customer needs, and fresh idea generation for increasing sales and knowing the pulse of the shopper.

11. Enhancing social shares


This is an add-on feature of the preceded one. Your clients are your potential buyers some of whom are even potential giant-scale buyers. To churn the need of buying in them, incentivise your social platforms. You can do that by putting brand ambassadors’ photographs and ask for a competition amongst the clients.

Alluring offers and gifts for the winners will also make it an enticing professional deal. This can act in both retention and outreaching to newer clients. Also, these gifts and competitions can enhance the word-of-mouth publicity as well.

To wrap it up

Retaining customer is as important as reaching new ones. In fact in long term, customer retention plays a pivotal role. So a proper, polite and courteous customer service, a prompt feedback and complaint resolving team, transparent policies and quality performance on-time are few attributes that can retain customers and take your business sky high.

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Sales Strategy & Management

The Pros And Cons Of Selling To Your Friends And Family

Don’t ignore the first stages of engagement, just because they don’t result in immediate purchases.

Lisa Illingworth




“When starting out in business, the first people that you rely on to test out a product and pricing are those closest to you or as we teach the kids in the FutureProof programmes, low hanging fruit. But what do you need to keep in mind when using this as your first customer set? The feedback loop from selling to these people will be skewed and if you know this, you can build a business that will survive outside of “easy targets”, says Lisa Illingworth.


1. Confidence Boosting

Starting a business is ridiculously hard. To take the plunge is often the scariest thing that we attempt and with the failure rates being heavily stacked against business survival, it should be the goal of every new entrepreneur to boost your confidence. And nothing boosts confidence like an eager customer.

Friends and family make great confidence boosters. It’s their mandated job to enthusiastically follow your business Facebook page and buy every product you have to sell, even if it is in early development phase.

2. Gentle Criticism

Intrinsically linked to the first pro, is the second pro that friends and family should deliver criticism in a gentle manner that will not break your fragile spirit. These people should be heavily invested in your personal growth and if this is true, they will be concerned about your infatuation with this business, and not breaking it.

And this may only be because they don’t want to field phone calls late at night after the idea tanks or pay your rent when the funds dry up.

3. Cash Flow

The life blood of any new business is the constant trickle of money coming into the business in the early days to keep yourself, the entrepreneur alive and fed. Don’t underestimate the necessity of keeping money flowing, even regular but small amounts. Friends and family are great sources of quick, regular purchases and they are more likely to choose your small business over a larger one because of the emotional investment in you.

Related: 7 Lessons For The New Entrepreneur To Take Into 2019


1. Inflated Expectations

Please don’t be fooled by the outright enthusiasm that your family and friends have for your new product or service as the general sentiment carried by those that have no idea who you are. You will be sorely disappointed when you find out that all that hype was based on a personal connection and investment in you, the entrepreneur.

When people outside of your personal network see the value at the price you’re charging, you are then quite literally, on the money. Until then, keep your expectations in check.

2. False Feedback Loop

I think like most of us who could just not bare the deflated façade creep across a friend’s face if you gave them cold, hard feedback that the homemade mix of spices they have randomly thrown together and called ‘Chai Tea’ is not a tasty as she thinks it is. And thus, we buy a jar and stick it in the back of the pantry hoping it gets forgotten.

This type of feedback loop, whilst protects the relationship, does not protect the young business person from the harsh reality that their product is just not that good. You may be concerned about how a friend will take the news and the impact it will have going forward, a customer will not be that forgiving. The false feedback loop sets an entrepreneur up to fall even farther when the real feedback starts coming in.

3. Market Exhaustion

If the only customers you actually have are those purchasing based on their investment with you this market will quickly become exhausted. If you have not devised a strategy to tell others outside of your network about your business, you will not be developing a continuous stream of new customers through a customer journey.

Related: How Taking Risks – And Failing – Can Lead To Business Success

In marketing, it is almost never that people buy on the first encounter with a business. There needs to be a ‘dating’ like process where customers get to know, like, trust and try before they make a purchase. If you have ignored growing these segments of your marketing and sales, you will eventually exhaust those in your network and be left with limited cash flow and little market awareness.

What then is the answer to this conundrum? By all means take the confidence boosters from those closest to you that will keep you afloat in the early stages of growth, but keep your expectations measured and seek out the harsh criticism from strangers to refine your offering so as to have real value at a palatable price point.

We teach the kids at Futureproof to find people to buy your service or product that are easy to get to without spending time or money but we don’t specify who they are rather to find the low hanging fruit in order to start but spend time marketing to a larger audience at the same time. Don’t ignore the first stages of engagement, just because they don’t result in immediate purchases.

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Sales Strategy & Management

The 7 Rules Of Pitching

If you want to build an investable business and land funding, you need to understand the landscape. Vusi Thembekwayo unpacks how smart businesses attract investors.

Nadine Todd




Vital Stats

In 2014, Zithande Mbala pitched his business idea, a smart toilet paper lubricating device, to the Dragons on SABC’s Dragon’s Den. It was a bizarre pitch, not least of all when Zithande valued the business to be worth northwards of $100 million in a few months’ time. He was offering a 10% stake in the company for an investment of R1 million.

The Dragons did not respond to Zithande’s pitch well. It made for entertaining television, but no one thought they were watching a great investment walk out the door when the Dragons collectively said, ‘I’m out’.

And then in 2018, one of those Dragons, Vusi Thembekwayo, saw a smart toilet paper lubricating device at OR Tambo International Airport. He gave Zithande a call, only to discover that the business was off the ground — and had some large contracts to boot.

“How did we miss it? All of us are entrepreneurs and we completely missed it,” says Vusi. “I’ve rewatched that clip a hundred times, trying to figure out why we all thought it was a terrible idea with no hope of making it in the real world.”

There are lessons to be learnt in Zithande’s pitch for both funders and entrepreneurs looking for funding. “We pre-judged him, which we shouldn’t have done. He had an accent that he said came from spending time in New York, but we knew he hadn’t. It’s a strong lesson for us not to pre-judge, but it’s also a lesson for entrepreneurs. We all put on personas — we wear suits to meetings when we wear jeans at the office — it’s a part of doing business, but you need to be careful not to come across as inauthentic. If you’re trying to be something that you’re not for a funder, it might backfire.

Rather be who you are and have confidence in yourself. Authentic, transparent entrepreneurs will be respected, even if you’re coming from a completely different space or background to the investors you’re approaching.”

The next lesson speaks to the nature of both entrepreneurship and finding funding: Always persevere. “If you believe it, do it,” says Vusi. “It’s a cliché, but clichés exist because they’re true. Don’t listen to negativity, don’t stop, and don’t in the moment let the bumps in the road shape your reality.

“There will always be hiccups. We make mistakes. We get rejected. If you let these derail you, you’ll never succeed. Most companies don’t get funding the first time round. Most entrepreneurs don’t succeed with their first ventures. You need to learn to push on, no matter what life throws at you.”

But perseverance is just a starting point. If you want to build an investable business and land funding, you need to understand the landscape. These are Vusi’s seven lessons in attracting a funder’s attention.

Related: Pitching in the Dragons’ Den

1. Put each ‘no’ to good use

According to Vusi, it’s almost immediately apparent whether entrepreneurs have pitched their business to investors before, and it works in their favour.

“They answer the questions we’re thinking in their presentations, before we need to ask them,” he says. “No meeting with a funder is a waste. You can either let the rejections wear you down, or you can learn something and perfect your deck.”

2. Record all meetings

“No funder will say anything in a meeting that you can’t hear, so ask if you can record the meeting,” advises Vusi. “When you play back the recording, you’re now a third-party listening in. You can hear yourself — wow, why did I stutter there? Why do I sound so nervous? Why didn’t I say this… There is so much you can learn and improve on just by re-living a meeting.”

In addition, when you’re recording a meeting, you don’t need to take a lot of notes and you can be completely present in the discussion.

3. Use the 10/20/30 Rule of PowerPoint

A few years ago, Guy Kawasaki evangelised the 10/20/30 Rule of PowerPoint. In a nutshell, a pitch should have ten slides, last no more than 20 minutes and contain no font smaller than 30 points.

“We’ve seen this combined with design thinking, and it makes for a compelling pitch,” says Vusi. “When I first saw it, it seemed so basic and even obvious, and yet so few entrepreneurs use this format. If you do though, you steer away from an executive summary and SWOT analysis and instead focus on the problem, how you’re solving it and where the commercial opportunity lies.

“What is the problem you’re solving? It’s such a basic question to ask, and yet so few businesses start there when they’re pitching. Instead, there’s a tendency towards, ‘This is me and my team, and our amazing clients, and the 15 000 products we offer… and the person you’re pitching to is thinking, ‘hold on, what’s the problem? Help me understand the problem. Because if I get the problem, you have my interest.”

4. The goal of the first meeting is to secure a second meeting

You need to grab an investor’s attention in the first meeting to secure a second meeting, and the way to achieve that is by piquing their interest with a problem that you can profitably solve. “I’ve learnt that a pitch has to grab me within the first seven minutes, or my attention starts moving to my emails, to-do list or other urgent matters,” admits Vusi.

“I’m present at the beginning of the meeting — that’s where you need to unpack the really important stuff. The rest can follow later. If you grab an investor’s attention, you will get the opportunity to discuss your team, products and clients. All of those things are important. But you don’t want them upfront, and then by the time you’re reaching the most crucial part of your presentation you’ve already lost everyone’s interest.”

As an entrepreneur, Vusi learnt this lesson the hard way. “We went on fundraising rounds ourselves, and I realised that I had eight slides of fluff upfront, because there were so many things I felt I just ‘had’ to let them know. The reality is that I needed to present our hook — follow-on questions and meetings will cover everything you need to unpack. But if you don’t have that hook, you’ll never reach that point.”

Related: Pitching To Lenders – How To Get It Right, First Time

5. Practice, practice, practice

“Iteration is important. Deliver your pitch as many times as possible. Practice on business associates, friends, family — anyone who will listen. But make sure some of them are strangers, or at least people who will give you the unvarnished truth. You don’t want to feel good and get a pat on your shoulder — you want to perfect your pitch.

“Ideally, what you need is someone who will ask questions from an outsider’s perspective. See what they latch onto, or what they don’t understand. How long does it take to explain what you do, or the problem you’re solving? We all make assumptions and we all understand our businesses and industries, but don’t assume the person you’re speaking to has the same perspective or knowledge.”

6. Don’t treat every potential investor as the same

There are a number of key things to understand about the funding landscape. First, venture capital and private equity firms raise money from partners. They have shareholders that they are answerable to, and to whom they need to show returns. They need to grow the capital they invest. Therefore, if there isn’t a growth opportunity, there isn’t an investment opportunity.

“You need to show how the investment will help you grow the business,” says Vusi. “This is a key element — if I put in x, I will be able to get y out. Yes, there’s a risk that it won’t work, but you need to have a growth story; you need to be able to demonstrate how you plan to get there.”

In addition, each fund has a mandate. Approaching an FMCG and Agri investment fund for a tech venture is pointless. Similarly, approaching an eco-fund with a plastic bottled-water concept will not work. Understand the fund, the individual investors and how your business suits their mandate.

6. Know your numbers

If you’re a subject matter expert and not a finance person, speak to someone who is. “Tap into your network and find someone in that space. They will understand the money and ask you the questions that relate to that part of the pitch and business. This will give you an idea of what investors will ask so that you can come prepared to answer their questions. Too many entrepreneurs walk into an investment meeting and don’t have all the numbers they need at their fingertips. This is a red flag for investors — how will you grow their investment and your business if you don’t have a handle on the numbers?”

Pitch to a taxi driver

This is a simple lesson that Vusi himself figured out while taking a ride in a taxi. “We were waiting for passengers and started chatting, first about how the local music industry is changing and then moving on to my business,” says Vusi.

“It was an incredible experience. Here was the stranger, asking me questions about my business that I knew the answers to, but had never considered including in my pitch.

“Taxi drivers have a short attention span because of what they do. They also run high-volume, low-margin businesses and work under immense pressure. They understand exactly how to think about their businesses in terms of how much return their vehicles are giving them. Think about it. A taxi driver will charge a passenger R2,50 for a ride, but owes R250 000 on his taxi, so he understands all about capital returns and depreciation cycles. He’s an excellent resource — and he’s free. You need to get to the point and see if your pitch makes sense.”

The 10/20/30 Rule of PowerPoint

Guy Kawasaki’s 10/20/30 Rule of PowerPoint is made up of ten slides.

  1. Title: Provide company name, your name and title, address, email and cell number
  2. Problem/Opportunity: Describe the pain that you’re alleviating or the pleasure you’re providing
  3. Value Proposition: Explain the value of the pain you alleviate or pleasure you provide
  4. Underlying Magic: Describe the technology, secret sauce or magic behind your product. The less text and the more diagrams, schematics and flowcharts the better. If you have a prototype or demo, now is the time to transition to it. If a picture is worth 1 000 words, a prototype is worth 10 000 slides.
  5. Business Model: Explain who has your money temporarily in their pocket and how you’re going to get it into yours.
  6. Go-to-Market Plan: Explain how you are going to reach your customer without breaking the bank.
  7. Competitive Analysis: Provide a complete view of the competitive landscape. Too much is better than too little.
  8. Management Team: Describe the key players of your management team, board of directors and board of advisors, as well as your major investors. It’s okay if you have a less than perfect team. If your team was perfect, you wouldn’t need to be pitching.
  9. Financial Projections and Key Metrics: Provide a three-year forecast containing not only rands but also key metrics, such as number of customers and conversion rates. Do a bottom-up forecast, not top-down.
  10. Current Status, Accomplishments to Date, Timeline and Use of Funds: Explain the current status of your product, what the near future looks like and how you’ll use the money you’re trying to raise.

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