Lifetime Value and how to works it out for Marketing Purposes

It’s Duncan from PWP Web Design and after going on a marketing course recently, I thought I could pass on some of the things I picked up on. Marketing is my business, that’s to say marketing other people businesses is my business. This is why I absorb as much information as I can.

Let’s say you would love to start attracting new clientèle to your hair salon. There are lots of steps you can take to heighten the effectiveness of any campaign. The aspect we shall be looking at today is “life time value”. Do you know the lifetime value of your clients? If you don’t then how do you know how much to invest in order to make it worthwhile to attract them in the first place?

In this example we are using hairdressers, one because they were used on my marketing course and two my business partner David was an ex-hairdresser. You can of course substitute your own data to work out the lifetime value of your clients by asking yourself these questions.

·         What is your customers average spend?

·         How many times do they visit you, per year?

·         How long are they loyal to you?

LET’S WORK SOME FIGURES OUT:    

·         Average spend is £50

·         They visit 6 times per year

·         They stay loyal for an average of 5 years

Remember these are figures for hairdressers, your business will vary.

Now that we have these figures we can work out each customer’s life time value:

£50 x 6 x 5 = £300 x 5, = £1,500

Now you are in a very powerful position! If you know how many customers are on your books you can calculate a good idea of your turnover this year? Each customer being worth £300 per year. You can also work out how many more customers you need in order to reach your 3 year or 5 year goals. You can also work out which form of marketing or advertising will work well for you.

Let’s assume you know a really good online marketing company (you know who) are regularly getting other businesses like yours 12 new clients a year.

Those 12 new clients visit the salon every 8 weeks over the year, spending an average of £50 each visit:

That’s 6 visits per year for each new client (£300) multiply by 12

 = £3,600 of new business per year. Or x 5 = £18,000 over their loyalty lifetime!

WHAT IS THE INVESTMENT WHICH GETS YOU £18,000?    

Our research figures show Flexiads at £59 per month x 12 for the year = £708

£18,000 as return on investment of £708 as percentage is + 2,542%

WHAT THIS MEANS:

If you can answer these questions:

·         What is your customers average spend?

·         How many times do they visit you, per year?

·         How long are they loyal to you?

AND you have a good idea of the conversion rate of each marketing strategy.

FURTHER ADVICE:

There is a great blog on the life time value of customers – CLICK HERE

More information on PWP’s Flexiads – CLICK HERE

UK Marketing Magazine – CLICK HERE

About the author:

Duncan Malloch is an entrepreneur from the UK with specialism’s in online marketing, website design, search engine optimization and coaching. If you are looking for a one stop shop to promote your business online, visit the PWP Web design website by CLICKING HERE. Thank you

Where Do Your Customers Come From?

How to keep Track of Phone and Email Enquiries

When you receive a phone call or email into your business, it is vitally important to track the original source. Tracking of all your marketing activities is absolutely crucial. Once you know what is working and what isn’t you can reallocate your marketing activity for maximum effect.

If you have Google analytics installed into your website you are provide with a fantastic tool to tell you what is going on there. But and yes, this could be a big one. Analytics doesn’t tell you if a prospective client rang your phone number from your call to action in your websites description. Because they can do this without even clicking on your website!  If they send you an email from your website, you can set up goals to measure this. I like to set up a goal as reaching the thank you page for this purpose. But once again analytics does not tell you if a customer decided to call your business from the phone number they got off the website.

The challenge seems to be figuring out where your phone call enquiries come from. There are several ways you can monitor this. The most effective, fool proof way is to have a separate telephone number for different marketing activities. One for leaflets, one for advertising in local press, and another for your website. Each month you can get an itemised bill which will show the volume of calls received from each marketing source. The second and cheaper alternative is to ask everyone who calls where they got your number today. Then log them all on a simple tally chart like this.

Day/Source	Leaflets	Press	Website	Word of Mouth	Saw Van
Monday	II	I	IIII	I
Tuesday	I	I	III		I
Wednesday	II	I	IIII	I
Thursday			IIII	II
Friday	II		IIIII II	I

A more comprehensive method of tracking would be the use of a sales funnels like this one:

Name/Source/Action	Source	Enquiry	Follow Up 1	Follow Up 2	Sale
Mrs Smith	Website	Phone			£59.99
Mr Brown	Leaflet	Email	28 Jun 13	1 Jul 13
Miss Jones	WOM	Phone	28 Jun 13		£215.00
Mr Black	Website	Email	29 Jun 13	3 Jul 13	£87.49
Mrs White	Press	Email	1 Jul 13	4 Jul 13

Using these simple tools will make your business more profitable! Without them you will never know where your customers are coming from, and by association you will not know where your profits come from either.

Duncan is an Entrepreneur with specialist skills in website design, search engine optimisation, marketing, photography and electronics. Please do subscribe to our channel to keep up to date, you can also follow PWP Web Design on Twitter and Facebook

Google Penguin 2.0 Update

If you haven’t yet heard about the latest Google update, referred to as Penguin 2.0 you will! Why? Well because this will affect websites who use, either intentionally, or unintentionally, manipulative SEO practices!

What is a manipulative SEO practice? That I suppose is the million dollar question. Looking back at previous updates these have been things like paid listings on various websites and directories. The first to go were links from so called link farms, basically websites just set up to get money just for putting links back to another website. Since then it has been difficult to say which links are going to get penalised and which aren’t?

It amazes me that the likes of Yell.com, Thompsons and the like are still in business. There business is taking money for links back to websites? The difficulty as a webmaster is knowing where the black and white is, but there is a lot of gray about! Of course Google cannot say how its algorithms work, because even more cheating would go on.

The problem as I see it is down to Google in the first place. Any search result or web page ranking that has anything at all to do with back links is simply asking for trouble. I have wrote an answer to Matt Cutts on his blog with what I think is the answer. AS I see it Google are chipping away at the black with a tooth pick, instead of using some good old TNT!

These pesky back links are to blame. Unless you have a lot of friends in very high (ranking) places, you are always going to struggle. The focus should be, and should always have been on the design, structure and content of the website. By using Google very own tools webmaster can find out the popularity of certain words throughout their website. Presumably a website that has “Ford Cars” appearing more times than any other phrase will have something to do with Ford Cars. You don’t have to have 1000 back links to discover this. Also if a website has 99 pages about wedding photography, then you can be fairly certain the whole website has lots of information on wedding photography – a lot more than a 3 page website, for instance.

Websites should also be easy to navigate, not for Google, but for the people who want to use it. Next you should have not just page after page of text, but also include pictures and videos. Matt Cutts has always said that “content is king.” At the moment it is on the substitute’s bench, but I hope, really hope that one day soon, it really will be the prime consideration when judging a website.

My name is Duncan Malloch and my company is PWP Web Design which offers customers around the World advice on web design and search engine optimisation. Were on Facebook and Twitter too

Marketing - Not for Idiots

Not for Idiots

When you spend so much time talking to fellow business owners, do you despair? I am shocked on an almost daily basis as to the lack of business knowledge most of these people have. Certainly in the good old days (remember them), you could get by with just being good at what you do. But people, the world has changed.

It is no longer good enough for you to be good at what you do.

You really should understand cash flow, you really should know where your customers are coming from and how they found you. You should know what your average profit per customer is and how much you have to spent to get them in the door.

I have been in business many years and I have tried most things. Loving innovation and change I lap up books on how to..... How to start a business, how to manage your accounts, how to sell, how to market your services. And this is continually changing so you need to keep up to date. All this is of course in addition to keeping abreast with the latest goings on within your business sector.

If you can’t sell – you’re doomed!

Let me clarify, if you are a one man band or can not afford to hire someone in with sales experience you are doomed. How many people in business just expect people to come to their door? It just doesn’t happen as much today. My God, even the prostitutes are advertising!

Here is some Free advice if you’re interested on marketing your business.

Ask yourself, how many ways are there to market and promote my business? Write them down. Things like TV may be far too expensive so you can cross them off your list for now. But what about the others? What about radio – quite expensive with diminishing audiences that would have to listen at specific times of day to hear your 4 times a day ad. What about paper advertising. Now I would say this depends on your business. Emergency service like 24 hour plumbers and electricians may do well from these. But again for the majority of us you have to appear in front of the reader when they are in buying mode.

You have to be in front of a prospective client when they are in buying mode.

That should trim down a few advertising mediums. Think now about the internet, or rather Google. Nowadays people “Google it” don’t they?  I know I was looking for a 6 panel internal door and Google was where I went to check prices and local stockists. And I bought one after ringing a local supplier.

If you are not on Google your business is Doomed!

Bill Gates said if you don’t have a website, you very soon won’t have a business. The world has become more focused since then. Since 93% of all searches in the UK are done on Google, you have to be there or you are Doomed!  Actually its much worse than that. You see Google's first page gets about 94% of all the clicks. So all the other thousands of pages are fighting over 6%. So the hard reality of it all is, if you are not on the first page of Google your business is doomed.

Duncan Malloch is an entrepreneur and an investor. Since 1978 he has had a keen interest in electronics, computers and the web. Since 2000 he has been quite heavily involved in business and has built up a great understanding of how it and how money works. When the financial collapse came he set up Red Kite Solutions to help local businesses get their fair share of that Google market. You too can tap into this huge resource at www.red-kite-solutions.co.uk Email by clicking HERE