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  • [MUSIC PLAYING]

  • Let me tell you a story.

  • Back in the late '80s, early '90s, somewhere back

  • in the mists of time, after my business, the Mackinaw Kite

  • Company, had successfully transitioned

  • from being a pure-play kite shop to being a hybrid kite toy

  • business.

  • We would always go to an event--

  • an event for the parents of young children.

  • There was an organization here in town

  • called the year of the young child.

  • And every year for a day, a Saturday in the fall,

  • they would rent a school gymnasium,

  • and all the local organizations and businesses

  • that catered to the parents of young children

  • would all come and set up and talk about their services,

  • shop their wares, and do all these sorts of things.

  • And I always liked the opportunity.

  • We'd set up-- I'd put some [INAUDIBLE] Brio and Thomas

  • the Tank and Playmobil on the floor.

  • Or the kids would get a chance to play with our toys.

  • I'd get a chance to chat up the parents.

  • But really, it was kind of a pain in the neck.

  • You know, we had to schlep everything there.

  • You know what I'm talking about.

  • If you're into retail, you know schlepping.

  • So we'd schlep everything there--

  • set it up.

  • The kids would all play-- break it down-- schlep it back.

  • And we never really did that much in sales.

  • There would be some sales during the day,

  • and there'd be a little bump the following week.

  • But if you looked at it-- just the revenue from that event--

  • it wasn't worth it.

  • So after doing this for several years,

  • my brother, Steve, and I decided we

  • weren't going to do it anymore.

  • It wasn't worth it.

  • And then a couple of months after that decision

  • but before the next year's event we learned--

  • I learned about lifetime value of a customer,

  • and it changed my business life.

  • And I think it's going to change yours also.

  • You see once I determine the lifetime

  • value of our customers, which was around $4,000,

  • my feeling about this event changed dramatically.

  • And it went from, Oh yeah--

  • nice kids-- how you doing--

  • being friendly-- being nice-- to, Oh my goodness.

  • There is a building filled with people

  • with $4,000 stamped on their forehead.

  • And of course, I wasn't that mercenary about it.

  • But it was the truth.

  • There was a building filled with prospects,

  • and each of those prospects represented $4,000.

  • And when you start thinking about $4,000--

  • when you determine the lifetime value of your customers,

  • It's going to help you determine how much you're willing to pay

  • or give up to get a new customer.

  • It also keeps you focused on keeping

  • your customers happy and loyal.

  • And it keeps you focusing on marketing, particularly,

  • to your current customers.

  • Once you know the lifetime value of your customer,

  • you'll start to understand how much you're willing to pay

  • or how much you're willing to give up to get a new customer.

  • Once you understand the lifetime value of a customer,

  • it keeps you focused on keeping your customers happy and loyal.

  • Once you focus on lifetime value of a customer,

  • and that will keep you focused on marketing,

  • particularly focused on marketing

  • to your current customers.

  • Staying focused on the lifetime value of a customer

  • allows you to cut your difficult customers some slack.

  • You realize that you're not willing to lose a customer,

  • and all of that beautiful lifetime value changed my life.

  • I hope it changes yours.

  • So let's figure out the lifetime value of your customer.

  • So lifetime value--

  • I hope that you have a piece of paper and a pen.

  • If you don't, pause this video--

  • go get it.

  • You might even want to go get your key employees

  • or your partners.

  • You might want to do this together, because like I said,

  • this is a rock and concept.

  • So it's determined by doing this simple equation.

  • You take your average sale and then

  • you multiply it by the average times your average customer

  • shops every year.

  • And then you multiply that times the average number of years

  • a customer stays with you, OK?

  • So we'll go through this and you can see how this all works.

  • So let's play with this.

  • So these are generic numbers that I've

  • created just so we can play with lifetime value of a customer

  • for a fictional business.

  • But what I really hope that you don't do

  • is start thinking about the numbers, like saying,

  • Oh, my average sales a lot different than that.

  • My customers different than that.

  • But don't focus on the number but focus

  • on what the concept means to your business.

  • So again this is a fictional business with generic numbers.

  • So in this fictional business, Bob's Boutique--

  • let's call it-- the average sale is $50.

  • And at Bob's boutique, the average customer

  • comes in six times a year.

  • Now, I know some of you are going well wait a minute.

  • Some of my customers come in three times a day,

  • and some of my customers come in once and never come back--

  • I get that.

  • We're just looking for an average.

  • No matter what there is always an average.

  • So just spit ball this number.

  • Don't get too caught up in the minutia.

  • And then the number of years that the average shopper stays

  • with Bob's Boutique is 10 years.

  • So in this case, the lifetime value

  • of a customer at Bob's Boutique is $3,000.

  • Do you see why?

  • $50 times 6 is 300 times 10 is 3,000.

  • That's Bob's Boutique right now.

  • But let's play with this a little bit.

  • This is where the fun starts to happen.

  • So Bob, in his wisdom, engages in some sales training

  • and does a little bundling and raises his price a little bit.

  • So Bob raises his average sale 5% from $50 to $52.50 And Bob

  • starts to be a little savvier marketer.

  • And Bob does some things--

  • he starts doing some more promotions and special events.

  • And Bob increases the average number of visits per year

  • from six to seven.

  • You see none of this is too difficult.

  • Those are all just by applying what

  • you can learn from WhizBang Retail

  • Training in your business.

  • This Is all eminently doable.

  • And then Bob increases the number of years from 10 to 11.

  • So now if you do that math-- $52.50 times 7 times 11,

  • Bob has now increased the lifetime value of his customer

  • from $3,000 to $4,042.50.

  • That is a 25.7% increase.

  • That's a huge increase without doing very much.

  • But you see if Bob does this with all

  • of the customers in his customer database,

  • this starts to really, really make

  • a difference in the long-term outcomes.

  • It makes a big difference in his overall prosperity.

  • But now let's take it one step farther.

  • Let's talk about something that is still incredibly doable--

  • incredibly doable.

  • I'm looking all of you in the face

  • and say that unless you are on rails-- unless you are totally

  • awesome and nailing it to every part of your business,

  • you can probably do this.

  • Bob took his average sale from 50 and increased it 10% to $55.

  • If you aren't using the retail sales academy right now,

  • I'm looking you in the face and saying,

  • By creating a service culture that

  • sells by using the retail sales academy to create a service

  • culture that sells, you can easily

  • increase your average ticket by 10%.

  • Bob got serious about marketing.

  • Bob started doing a lot more promotion.

  • Bob started doing a lot more with social media Bob started

  • doing a lot more marketing.

  • So instead of it being six times a year,

  • Bob has increased the average number of visits per customer

  • from 6 to 10.

  • And because Bob is doing all of these things so well,

  • he is engendering loyalty.

  • You see the beautiful thing about marketing correctly--

  • this customer-focused marketing that we teach here at WhizBang

  • Retail Training--

  • is that when you're doing it correctly,

  • your customers come to know you-- like you-- trust you--

  • be more loyal to you--

  • stay with you longer.

  • So instead of the average number of years being 10,

  • Bob is keeping the average number of years to 15.

  • Again, none of these numbers are mind- blowing.

  • All of these numbers represent something that is very doable.

  • But you see what's happened here?

  • The lifetime value went from $3,000 to $8,250.

  • That is an increase in the lifetime value

  • of Bob's customer of 175%.

  • Let that sink in, ladies and gentlemen.

  • That is doing nothing to get new customers.

  • That is merely doing more with the customers

  • that Bob already has.

  • Your action plan for today should

  • you choose to accept it is to play with these numbers.

  • I mean really play with these numbers-- not just you.

  • You know the key employees--

  • if you have a partner-- play with these numbers.

  • See the power of lifetime value of a customer.

  • Recognize what it can do for the long term

  • profitability of your company and start

  • to mold your company around this concept

  • so that you keep your customers first--

  • so that you're always looking to A--

  • keep your customers, and B--

  • work to increase their lifetime value.

  • There it is-- lifetime value of a customer.

  • That concept changed my business life forever.

  • And if you've never been exposed to that concept before,

  • I hope it changes yours.

  • If you've already known about it,

  • I hope it reinvigorates you.

  • It helps you focus on doing the things that

  • are going to give your customers that great experience--

  • that are going to make them loyal

  • that will increase that lifetime value.

  • If you don't subscribe to our free email tip of the week yet,

  • I would strongly encourage you to go to whizbangtraining.com--

  • sign up.

  • Every Wednesday we'll send you something great.

  • And if you want more information on how to build that sales

  • culture that I talked about or how

  • to be a really, really WhizBang marketer,

  • go to WhizBang training.

  • Or while you're there signing up for the tip of the week

  • and look at the retail sales academy

  • and look at the retail mastery system.

  • They are two resources that will do amazing, amazing things

  • for you.

  • And until then, we'll see you next time.

  • [BEEP]

  • Let me tell you a story--

  • [BEEP]

  • --to a hybrid court.

  • [BEEP] [BEEP]

  • Let me tell--

  • [BEEP] [BEEP]

  • All right-- here we go.

  • I got this.

  • [BEEP]

  • [BEEP]

  • [BEEP] [BEEP]

  • Maybe.

  • [BEEP]

  • All right.

  • [BEEP]

  • OK, here we go.

  • [BEEP]

  • Cut your di-- let me start that part over.

  • [BEEP]

  • Let that this sink in ladies--

  • let me start--

  • [BEEP] [BEEP]

  • Let that sink in.

  • [BEEP]

  • I'm going to start that over.

  • [BEEP] [BEEP]

  • We got to go to lunch.

[MUSIC PLAYING]

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