The Most Important Number in Your Business – Episode 2 #SmallBusinessTips

Do you know your numbers? 📊 Every business is different, but one number, in particular, is more important than any other.

That number is:

The Average Lifetime Value (LTV) of your customer.

Without it, you can’t advertise intelligently…
… because you have no clue how much you can afford to spend to acquire a new customer.

Without it, you can’t price your products & services appropriately…
… which means your margins and profitability go out the window.

Without it, your business is destined to die…
… because those who don’t know their numbers eventually fail.

Period.

So, let’s get you set up and headed in the right direction!

How do you calculate your LTV of your customer?

Easy. 🙌

Just take your total business revenue from last year, then divide that by the number of customers that paid you during that period.

That will give you the average LTV of a customer over the course of a year.

If you have all your bookkeeping up to date, you can also discover the real LTV of your customer by taking the all-time total revenue of your business, then divide by the total number of customers you’ve had since you started.

💥Here’s why knowing your customer LTV is so powerful:

In 2013 I ran a business that sold a digital training product which helped entrepreneurs learn how to use blogging, YouTube, email marketing, and a variety of other methods to build their brick & mortar business.

The initial purchase every customer made was for $25.

But when I did the math, every customer ended up spending on average $1,400+ in their lifetime.

Because my product (digital training) was essentially free to distribute, the only cost I had involved in the sale of my product was the cost of advertising.

What that meant is that as long as I could spend LESS than $1,400 in advertising to acquire a new customer, I would be profitable.

Even though the entry level product was $25, I was happy to spend $300-500 to acquire that $25 customer because I knew eventually that the numbers would play out and certain customers would buy our premium priced packages. And they did.

Everyone has read or heard this information somewhere, and they’ll say to themselves, “Oh yea, I know that,” but then have no CLUE what their customer LTV is.

Don’t be that person.

Dig into the numbers. Find out what your customer LTV is so that you can profitably and sustainably grow your business for the foreseeable future.

If you liked this video, you’ll love Episode 1: Who’s Your Golden Goose?

, , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.

Menu