BYOB

If you walk into a company-owned cell phone store to sign up for a contract, what are you worth?

Given the huge gross margins at AT&T and Verizon and the standard two-year contract, I think it's easy to figure on more than $2000 in lifetime value.

If you ran a business where a customer represented an additional $2,000 in profit, how would you staff? How long would you make someone wait? If staff costs $25 an hour, how long would that extra person take to pay off?

Few businesses understand (really understand) just how much a customer is worth. Add to this the additional profit you get from a delighted customer spreading the word--it can easily double or triple the lifetime value.

So, a chiropractor might see a new patient being worth $2,500, easily. And yet... how much is she spending on courting, catering to and seducing that new customer? My guess is that $50 feels like a lot to the doc. Instead of comparing what you invest to the benefit you receive from the first bill, the first visit, the first transaction, it's important to not only recognize but embrace the true lifetime value of one more customer.

Write it down. Post it on the wall. What would happen if you spent 100% of that amount on each of your next ten new customers? That's more money than you have to spend right now, I know that, but what would happen? Imagine how fast you would grow, how quickly the word would spread.

Here's how you'll know when you've really embraced this--a good customer at your podiatry practice (or supermarket or tax firm) walks out the door in a huff and you turn to your partner and say, "There goes $74,000."

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Brilliant piece from Seth on Lifetime Value - a concept widely talked about but seldom practised.

Update from Jeremy Squire.

Hi Andrew, Good to hear from you. Business idea going well, we signed up an exclusive partnership to represent a market leader in the technology area I specialize in for the UK.

Almost all marketing attempts to do neither of these, and of course, fail. Painless and quick are rarely associated with 'successful.'

But let’s go back to Number One in the elements of success. What skills do you and I need as solo gunslingers in order to call ourselves “successful” over a full career?

My Wednesday treat is Steven Pressfields writing about being a successful artist - its all applicable to starting your own business as well though.

The question is: What is one thing you'd be willing to do every single week, perhaps every single weekday to market your services?

This is the most powerful question in this book. You can approach this question in two ways: What is the closest you can come to making something free, without actually pricing it at zero? Or, in a true gesture of enlightened generosity, you can figure out how to part with something very valuable for no monetary return at all. If either strategy is pursued with intelligence, the result will be the same. The network will magnify the value of the gift. But giving something away is not usually easy. It must be the right gift, given in the proper context. To figure out what to give away, consider these questions:

Here's a rule that's so inevitable that it's almost a law: As an organization grows and succeeds, it sows the seeds of its own demise by getting boring. With more to lose and more people to lose it, meetings and policies become more about avoiding risk than providing joy.