What Your Customers are Worth (and Why it Matters)

What is the value of a customer? What profit can they bring this week? This year? Over a lifetime? It may seem like a simple concept, but many small businesses have no idea what a regular customer is worth to their business. This creates two problems:

  • Uncertainty about effective marketing. What is the number of new customers you’d like to attract and what is an appropriate budget to do that? Defining a customer value will guide your marketing strategies!
  • Ambivalence regarding customer retention. With a metric for measuring customer values, you can navigate appropriate parameters for retaining them or expanding their business. Research shows that increasing customer retention rates by merely 5% increases profits by 25% to 95%!

Customer Lifetime Value

While there are many complex formulas for calculating a Customer Lifetime Value (CLV), a basic approach is to break calculations into five digestible portions, like this:

  1. Average Order Value (AOV). On the most basic level, AOV is calculated by how much money is spent per customer in a year, divided by how many orders are placed by that customer in that timeframe.
  2. Purchase Frequency (f). Take the number of orders/visits/transactions from the past year and divide it by the number of unique customers you had. The total equals frequency, or how often an average customer purchased from you.
  3. Customer Value (cv). The base value of a customer can be calculated by multiplying the AOV by the purchase frequency (cv = AOV * f). In this instance, the customer value is being calculated for one year.
  4. Average Lifespan/Time (t). A customer’s lifespan is how long they actively connect with your business before they move on or go dormant. This can be a complex calculation, but to keep things simple you can either give a broad estimate (an educated guess) or you can calculate an average based on a select number of known customers (adding the length of each of their commitments and dividing by the number of customers). For example: Total Length of Commitment/Number of Individual Customers = Average Customer Lifespan (t).
  5. Customer Lifetime Value (CLV). Now that you’ve got a general idea of a customer’s value for a year and the average customer lifespan, you can use these variables for a lifetime value: Customer value (cv) * Average Lifespan (t) = Customer Lifetime Value (CLV)

While this is a very simplified equation, even a ballpark CLV can give you a more accurate idea of how valuable each client is to your business. What should you look to spend in order to gain a customer? How much should you spend to extend their loyalty? A benchmark CLV will give you a helpful base for marketing, loyalty programs, and sales goals for the upcoming year. Take a look at a more complex approach Starbucks has taken to determine their CLV as a whopping $14,099!1

Your Customers Are Your Future

A customer represents the future of your success and your livelihood, and it will be difficult to thrive if you aren’t willing to risk or invest to attract new business. What are your obstacles to expanding your reach or enlarging your advertising? Has the uncertainty of direct mail marketing kept your business from growing? Why not rely on our expertise? We offer sophisticated, simple ways to reach a mass audience for an amount that works within your budget. Need a creative concept or help to carry it to completion? We offer prompt, knowledgeable service for every custom design mailing. Give us a call today at 856.429.07105!

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Cash Flow and Marketing: What You Need to Know

ThinkstockPhotos-484376185.jpgCash flow is important in the lifespan of any business, but one of the key things to understand is that it’s about more than just “money in versus money out.” It’s a valuable look into the bigger picture of what you’re doing, and by having a handle on this aspect of your finances, you can take advantage of business opportunities when they arise.

First, you need to understand how every element of your business relates to this cash flow concept, including marketing. To that point, marketing has a very specific relationship with cash flow that you’re going to need to be aware of moving forward.

Hone Your Budget

Yes, it’s true that marketing costs can often seem unpredictable. However, working hard to hone your marketing budget can make these unexpected situations easier to deal with.

To get started, sit down and think about your upcoming marketing efforts in relation to your other expected cash inflows and outflows. You can’t afford to throw just anything at the wall to see what sticks;  you have to be more precise than that. Create a realistic marketing budget (that includes room for experimentation if needed) that is proportional to the rest of your expected business expenses and revenue streams.

It’s All About That Return

What matters most? Return on investment. For this, focus on the metrics that provide you the context necessary to understand your marketing efforts.

Essentially, stop thinking about marketing ROI as just “how many sales did that last campaign bring in?” and don’t be afraid to break things down on a more granular level. Start looking at metrics like your customer acquisition cost. If one of your campaigns was aimed at increasing more traffic to your website, start breaking things down based on metrics like “time spent on site” and “conversion rate.”

It’s important to know how your marketing collateral is performing in terms of overall sales and revenues, but in terms of your cash flow you need to dive deeper than that. As long as you’re able to A) show that your marketing is giving you something in return, and B) you can identify exactly what that something is and when it occurs, you know where the value of every marketing dollar rests.

This, in turn, will give you the context necessary to understand marketing’s affect on cash flow and vice versa. When you know that “X action will pay off in Y way after Z amount of time,” you suddenly know the impact that every marketing decision you make actually has and when that impact is going to occur. This makes long-term cash flow projections not only easier to make but more accurate as well.

Slim Business Cards

A MEMORABLE WAY TO DIFFERENTIATE YOUR BRAND

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Slim business cards are a sleek, bold way to make your business stand apart from your competition. While most of your competitors are printing traditional business cards, slim cards grab attention and are a memorable way to differentiate your brand.

In addition to exchanging cards during introductions, slim business cards are also an excellent tool for hangtags, leave-behinds, mailing inserts, and promotional tear-aways. Slim business cards can also be designed as a dual purpose way to combine your contact information with a coupon, event reminder, save the date, or website promotion.

While slim business cards are typically a narrow rectangular shape, they are available in a variety of dimensions, and can also include creative accents, such as die cuts, embossing, foil stamping, and much more.

If you’d like help creating the perfect slim business card that fits your style, we’d love to visit with you today!

Only As Strong As Your Weakest Touch Point

THE MAGIC TOUCH

Any time a customer interacts with your brand directly is called a touch point. Touch points act as an entry into your sales funnel or as the point where your visitors decide to turn away. It doesn’t matter if you have the best product or service, if you have a touch point that fails, you are losing potential customers before they even get a chance to discover all of the greatness you have to offer.

Take A Step Back

Touch points include everything from advertisements, flyers, business cards, blogs, networking and tradeshow presence, to your voicemail manners and anything else your customers come in touch with before, during, and after a sale. Simply just having a touch point in place is no longer an option. Rather, each of your touch points must perfectly represent your brand because this is where potential customers will form their opinion of your company.

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Take a step back and evaluate your brand from an unbiased perspective. Learn to see how the world sees your brand instead of viewing it as the owner of your company or the head of its marketing department. This can help you perfect each touch point so that it meets the needs of each visitor.

Every Touch Point Matters

If every touch point matters, then how do you balance each touch point with your brand? The answer is a simple, three-letter acronym: L.E.T. Б─■ List, Evaluate, Take Action. Managing your touch points through this formula will help you make sure each touch point optimizes, satisfies, and invites.

1) List

Begin by listing all of your current touch points. The key word here is “all.” Be sure to list all of the touch points that your brand uses, including websites, emails, customer service, direct mail, and many others.

By listing each touch point, you can then evaluate each one based on your brand.

2) Evaluate

The next step is to evaluate every single touch point you noted on your list. It is easier if someone else does this for you so that the results are not biased. Your goal with this exercise is to find the weaknesses and not cover them up with explanations. This is a process of discovery, to enable you to find the opportunities and to make corrections.

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3) Take Action

Once you’ve discovered which touch points are your weak links, you can correct any deficits. Remember, deficits are opportunities. Start with your biggest opportunity as that will be your weakest touch point.

Then, begin to implement tools that will help with the ongoing task of monitoring touch points, and keep in mind that as technology changes, so will the effectiveness of each touch point. Some helpful, powerful tools include customer evaluations and site surveys. Remember that this is not about a single touch point, but about all of them. Take the time to evaluate them individually and as a group.

When it comes to marketing, every touch point is an opportunity. How well are your opportunities representing your brand?

The Need for Speed

GET YOUR WEB PAGES ON A DIET

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The speed of your website can affect several metrics, including conversion rates, page views, bounce rates, and often most importantly, reader satisfaction. Page speed is also a ranking factor in Google’s algorithm. The faster your site loads, the higher your rankings are.

Here are a few factors that could be slowing down your site:

  • Large images or carousel sliders that aren’t optimized can significantly slow your page’s download speed.
  • Overloading your page with slow-loading ads, widgets, or plug-ins can slow your load time considerably.
  • Affiliate codes may seem small but can add up to slow your site’s speed.
  • The back-end code of sign-up forms, such as Google Feedburner or Aweber, can affect your speed.

Here are a few ways to test your site’s speed:

Think With Google (https://testmysite.thinkwithgoogle.com/intl/en-us) tests your mobile website speed and performance and offers recommendations for improving performance across all devices.

Pingdom Website Speed Test (https://tools.pingdom.com/) enables you to test individual pages on real browsers like Chrome.

Uptrends (https://www.uptrends.com/tools/website-speed-test) analyzes your website speed on an elemental level, identifying bottlenecks caused by bloat and third-party scripts.

If you’d like help creating marketing materials that will drive visitors to your website, we’d love to help!

 

From Small Things Come Big Changes

ThinkstockPhotos-470778170.jpgPierre Omidyar didn’t plan to start a mega-corporation in the late fall of 1995. In fact, all he wanted to do was get rid of some computer equipment he had laying around by selling it through a digital garage sale. However, once he realized how popular his simple web page started to become, and the fact that he could charge a fee for folks to use it, eBay was born.

In three short years, the eBay online auction concept went from a private website to a viable business that quickly began to explode. Omidyar had hit on what many in business invention call a “primal need,” something that everybody needs and doesn’t yet exist.

With the help of Jeff Skoll, Omidyar brought in Meg Whitman, the same Whitman who later ran for California’s governor, and corporate eBay took off. By 1998, eBay had gone beyond just selling used and collection items and was quickly becoming a viable brand name for online selling in general. The model continues today and competes directly against regular retail selling.

Seeing What it Could Become

The key aspect of Omidyar’s success, however, was not Whitman and her corporate choices of personnel, nor was it the smart linkup with PayPal to make eBay’s payment processing extraordinarily fluid and easy for customers. Omidyar could see that he had something valuable and, if given the resources, what it could become. This key talent is what makes the difference between inventors and idea people who never quite achieve success, and people like Omidyar who realize what seems to be impossible starting out.

Omidyar had a number of essential factors present and working in his favor:

  • Again, the primal need for an online auction platform or similar garage sale digital tool was needed.
  • Second, it could be easily accessed by anyone who wanted to participate and pay the fee.
  • Third, the tool was easy to use and produced immediate results and rewards for those using it.
  • Fourth, and most important, no one else was making the same idea happen successfully at the time.

Without these elements in place, Omidyar’s personal website might have made some small cash and even generated a small following, but it would not have turned into the worldwide corporation we know as eBay today.

Finding Ways to Make it Grow

Some explain the opportunity as a momentary blast of good luck or fate, and others argue it’s the genius of the person involved producing some incredible new service or product. In reality, eBay is neither; it is a product of Omidyar being able to see the promise of an idea and finding ways to make it grow and become more useful, accessible, and popular.

Ebay expanded and became a household name because the company took every opportunity to follow the four principles above in its business strategy. That constant commitment to creating value in a brand is why people keep coming back to eBay as a service some 20 years later, regardless of what the internet and technology have provided since.

If you need help creating value in your brand, we’re here to help. Give us a call today!

Making Philanthropy the Family Business

ThinkstockPhotos-668204996.jpgIf you ask the owners of many large, family-owned businesses what keeps everyone together, you may notice a trend: philanthropy. Helping others truly does run in the family, and multi-generational businesses are in a unique position to pass along not just the business perspective needed to be successful, but also how to have a positive impact on the community. Even if kids are too young to be involved in the family business, it’s never too early to begin coaching children about why it is important to help those who are less fortunate. It’s not just large organizations that benefit from giving back — family businesses of all sizes find that philanthropy offers a way for all ages to come together around a common goal.

Teaching Financial Stewardship

While most parents strive to raise children that are strong and confident of their place in the world, the reality is that there will always be others who do not have the same opportunities for nutrition, good schools, and a loving family environment. It can be challenging for kids growing up in a family business environment to understand that not everyone has access to the same technology, toys and clothing — and that being a good steward of finances means finding ways to contribute to the health and well-being of others. This often starts early with a percentage of allowance going to support those in need and can continue to grow throughout their life.

Legacy of Values

Passing a company down through multiple generations is a powerful legacy,  and one that provides no small measure of pride when passed along. The values of hard work, thrift, and benevolence make for great leaders in the community and in the business — and are a good way of maintaining strong ties with customers and employees. Even family members who are not a part of the daily running of the business are often able to get involved in a philanthropic effort in some way.

Deliberate Goals

Being deliberate about creating goals for your family business around giving is yet another way of enforcing the importance of strategy within the organization. When multigenerational leaders work together to solve challenging problems for the greater good, that hard work often spills over into daily life. A key to selecting a good philanthropic effort is that it’s large enough to engage family members of all ages in some way. This allows you to tailor opportunities for service and giving to the specific preferences and strengths of an individual. For instance, some people are born to be fundraisers and are able to weave a compelling tale about the how monetary gifts will be utilized in a way that compels people to provide cash infusions. If others are more comfortable working behind the scenes, there is plenty to be done there as well.

Building family values, providing support to the community — where’s the downside? When you need printed materials for your next community project, contact us at 856.4290715!