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.
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.
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.
Sales Leadership: The New Frontier
The Leadership skill of Influencing people increasingly trumps “hard selling techniques” as people enjoy the feeling that they are forced into buying a certain product less and less.
“Once upon a time only certain people were in sales. Every day, these folks sold stuff, the rest of us did stuff, and everyone was happy. One day, the world began to change. More of us started working for ourselves- and because we were entrepreneurs, suddenly we became salespeople, too. At the same time, large operations discovered that segmenting job functions did not work very well during volatile business conditions-and because of that, they began demanding elastic skills that stretched across boundaries and included a sales component.” – Daniel Pink
The transformation of sales persons to Sales Leaders is not only the essence of this article but increasingly becoming a necessity, considering the skills demand required to convince people to buy your product or service within an modern environment wherein the consumer is spoilt for choice.
In general staples in the make up of old school sales training was and in some cases still is: Product knowledge, fielding sales calls in a friendly way yet creating urgency, learning the ability to overcome client objections and of course do not forget the all-important methods of upselling.
All those elements of selling are still important in general yet “soft skills” such as active listening, handling conflict, and above all removing the emphasis from selling a product or service to selling an enhanced lifestyle or life experience has become the new frontier for the sales game.
The Leadership skill of Influencing people increasingly trumps “hard selling techniques” as people enjoy the feeling that they are forced into buying a certain product less and less. The “parrot method” of drilling sales scripts into the salesforce of the company is slowly but surely becoming obsolete as people want to feel that they are being cared about and considered within the sales process as individuals. “Caring for the other person is the only leverage in any conversation”, Gary Vaynerchuk says.
The above theory calls for a balance between Sales Leaders whom inspires their sales teams to create a personal, professional, and vibrant environment for their customers wherein which they are highly motivated to buy, and Sales managers whom monitor the key sales metrics and checks that sales procedures are being followed. In the modern world both Sales Leadership and management are needed at each end of the balancing scale.
Still, to this day an unfortunate large proportion of sales people are like lambs put to the slaughter, within some situations, as the only weapon taught to them is product knowledge and wearing a smile and then suddenly a very unhappy customer unleashes their anger upon them, and now the poor sales person has no knowledge in terms of how to deal with conflict, generally speaking. How to cope with and overcome conflict and other negotiation skills has become paramount in sustaining very good client relations.
Ethical Leadership is also strongly put forward as a necessary component of any sales training or course through this article. Sales techniques filtered through the companies Vision, mission statement and value system to test its validity and alignment to the companies’ culture can be increasingly effective as opposed to simply applying generic methods of selling which is not always aligned to the company ethos. A high level of ethics amongst Sales Leaders can ensure that after sales promises are kept and that the product sold is in effect as good as propagated by the sales person.
When a servant leadership culture is prevalent within your company it goes a long way to ensure that your sales people create a caring and positive experience complimented by an enhanced after sales service. Servant Leadership within a sales context is to put the customers’ and teams’ purpose above the individual team members purpose and that by itself is a potential multiplier of sales performance.
A highly important factor within the context of sales performance is the sales Leaders’ ability to formulate the right questions to be asked of the client in order to create a very pleasant experience. Statements in general can be quite dangerous as it is normally viewed as final and very hard to take back once communicated. Questions on the other hand requires an answer and when posed in a caring way can quickly establish rapport with a client.
Subtle nuances picked up by the Sales Leader through asking the right questions can greatly assist in creating positive client engagement. A practical example would be to refrain from the very obvious question of: how are you? People are so used to being asked this question that they are not likely to give you a very open and honest answer and will be likely to provide you with very generic answers such as, “Fine thank you, “Well thanks and you”, and so forth.
By very simply changing the question to: “How are you feeling today? “, the very perceptive Sales Leader can relatively easily pick up on the client’s emotional state and adjust the conversation from there in order to create rapport.
In Summary, this writing actually asks one question to all CEOs’ and/or boards that must take their companies forward towards a desired future state: Do you want sales people and managers whom are likely to maintain the status quo, or do you seek Sales Leaders whom will challenge the status quo and will always be willing to ask more of themselves in terms of increased skill levels and performance?
You Have Less Than 7 Weeks Left To Turn Your 2017 Around
Implement these 5 steps and achieve 2017 revenue targets and set up a great start to 2018.
It’s no secret that 2017 has been tough for the majority, with less than 7 weeks to go before business winds up for the year. I’ve summarised an effective sales plan that will help you accelerate your way to success before the year ends.
Referred to as the “championship rounds” in boxing, the last few meters of a 100M sprint, be smart with the last bit of mental energy you have left and sell, sell, sell.
Implement these 5 steps and achieve 2017 revenue targets and set up a great start to 2018.
1Be Laser Focused on Your Customers
You’ll never be one size fits all to everyone, review your client base and define 3 to 5 groups of customers that your business serves, and solves problems for.
- Customers that behave similarly, have similar problems and face similar circumstances.
- Define the groups by age, volume, category, geographic location, and similar demographics. The more components you assign to each group, the better you understand them, and effectively communicate your services to them, ultimately solving their pain points.
- Personalise with a name it e.g. Sarah is a 30-year-old white collar worker that lives in the urban area, earns R30 000 a month in household income, she sends money back home each month “Black Tax” to support family members that lives in a rural area.
2What Goes Through Their Minds Before Making a Purchase?
- Whether it’s subconscious or psychological, people buy solutions to problems, especially in a tight economy.
- In order to stay relevant to your customers yesterday today and tomorrow. Continue to evolve and develop your products and services to ensure you are solutions driven.
3Build The Right Pitch
As each of your customer group face their unique challenges. Build a pitch that positions your communication for each customer group to maximise effectiveness.
Follow these 5 important pitch building steps
- Who is the consumer?
- What is the pain point that you’re looking to solve?
- What is the setback for your consumer to not have that pain point solved?
- What do you do to solve that pain point?
- What is the result for your consumer, of having that pain point solved?
Once you’ve built the pitch, utilising them adequately, and start selling!
4Implement Your Strategy
This revenue-generating strategy has 2 aspects: hunting (Active) and farming (Reactive)
- Hunting takes on the form of outbound action. Searching, meeting and engaging with your potential clients. In short, stepping out and finding your customers.
- Farming is more reactive, it is known as inbound selling. You farm by leaving breadcrumbs that lead your customers towards your services. This is done by generating practical content and using digital platforms to attract attention towards your services or products.
- Build a calendar for your hunting and farming activities, for the next 12 weeks, and specify tasks for each day.
5Execute, Measure, Adjust
- Hunting: Make 10 calls before 10 am each day, make use of a sales script, this forms part of your daily activities.
- Farming: Schedule a week’s worth of social media content to post.
- After week one find out which group gives you the best response, tweak it & carrying on.
This plan will help you to notice which approaches yield the best results. You’re able to remove what doesn’t work and focus your time on what leads to the most sales. May this help you turn the last 7 weeks of the business year into a profitable one.
Email Is Great But Face-To-Face Meetings Are 34 Times More Successful
If your goal is to communicate, talking is a lot better than typing.
We have all of the advances in communication technology – Skype, FaceTime, Slack. etc. Yet, nothing beats a good, old fashioned email. It’s quick, easy-to-use and, best of all, it’s free.
Email remains one of the most effective and important marketing channels for brands. It’s even popular among millennials since they don’t enjoy talking to people on the phone. I love email but recent research has found that it may not as persuasive as talking to someone face-to-face.
The research was reported in Harvard Business Review and published in the Journal of Experimental Social Psychology. It suggests the success of a face to face is due to the lack of personal connection we experience today. The lack of actual one-on-one connection to someone can ultimately cost us what we really want.
For the study researchers Mahdi Roghanizad and Vanessa K. Bohns instructed 45 participants to each ask 10 strangers to complete a survey. Half of the volunteers sent their requests via email while the other half found people to ask in person. The exact wording was used for both groups.
The experiment found that the face-to-face requests were 34 times more likely to garner positive responses than the emails. As Bohns explained in the Harvard Business Review: “In our studies, participants were highly attuned to their own trustworthiness and the legitimacy of the action they were asking others to take when they sent their emails. Anchored on this information, they failed to anticipate what the recipients of their emails were likely to see: an untrustworthy email asking them to click on a suspicious link.”
However, the researchers did not look into how these results would have differed if the participants had contacted acquaintances instead. It’s possible that asking someone you know as opposed to a stranger through email would have better results.
There’s something about face-to-face communication that email, or any text-based communication for that matter, just can’t top.
Personal communication seems best – whether you know the person or not. You should never underestimate the power of face-to-face communication.
Body language is extremely important when it comes to communication. It’s not how you said something, but also your facial expressions and body posture. All of these cues are lost in emails.
In fact, around 93 percent of communication effectiveness is determined by nonverbal cues. And, that’s not limited to strangers. Studies have have found that even you closest friends can’t interpret your emotions in emails.
2Authentic, trust building experience
All people, even millennials, still demand intimate and face-to-face encounters to build a more authentic and trustworthy relationship. At some point we should communicate with other people through a webcam, FaceTime, or conference tools like GoToMeeting.
3The power of touch
According to Psychology Today, humans are wired to interpret the touch of our fellow humans. Touch can promote bonding and cooperation. Studies have found that seemingly insignificant touches yield bigger tips for waitresses. People shop and buy more if they’re touched by a store greeter. Strangers are more likely to help someone if a touch accompanies the request.
Maybe it has something to do with mimicry and mirroring. When you’re in the same room with someone else it encourages them to engage and participate in whatever action is going on. So, if you ask a colleague to do a task, there’s a good chance that the person next to them is going to get moving instead of sitting there doing nothing.
Face-to-face meetings are usually shorter than conference calls. That’s probably because when on the phone everyone sits there quietly with their phones on mute until the discussion is over. I’ve been guilty of this numerous times.
Since you can’t pick-up on body language, you can’t see how disengaged the audience is. This action can keep you rambling on while the attendees start to drift in and out.
With face-to-face situations you can pick-up these non-verbal cues, which in turn pressures you to get directly to the point.
6Easier to sell yourself
It’s much more difficult to sell yourself over an email. Take Marie Forleo and Gary Vaynerchuk, for example. They’re both extremely charismatic people who were born to be in front of the camera. No matter how knowledgeable they are, reading a piece of text from them is nowhere near as engaging as watching one of their videos.
Make face-to-face communication a priority whether it’s meeting a prospective client for the first time or scheduling semi-regular meetings with your team.
If you can’t do so in person, then at least use your webcam or apps like Skype. It’s not exactly the same, but it’s going to be more effective than only email communication – especially when you have a request.
According to Bohns:
“If your office runs on email and text-based communication, it’s worth considering whether you could be a more effective communicator by having conversations in person. It is often more convenient and comfortable to use text-based communication than to approach someone in-person, but if you overestimate the effectiveness of such media, you may regularly – and unknowingly – choose inferior means of influence.”
Getting rejected in-person sucks. But, is that fear of rejection really worth avoiding a face-to-face when it’s far more likely that you’re going to get a “yes” instead of a “no?”
This article was originally posted here on Entrepreneur.com.
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