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Customer in the window BSC Rise 2012
How Much is that Customer in the Window?

               What customers are really worth




               Presented by: Jan Triplett
              CEO, Business Success Center
 Business Success Center. | 7600 Burnet Rd. #130 | Austin, TX 78757
           P: (512) 933-1983| E: coordinator@bscusa.com
                         | www.bscusa..com
All Customers Are Not Equal


Some cost more to get
Some cost more to keep
Some add value
Some take away value
Customers Are Acquired When



                  They spend MONEY

                  Not just inquire or
                  respond to an ad or push
CAC Cost Are More When…..

     • Just taking your entire cost of sales and
       inbound and outbound marketing over a
       given period, including salaries and other
       related expenses

     • Dividing that by the number of customers
       that you acquired in that same period.

     • You must include earlier attempts to get
       those customers & non-sales & marketing
       costs.
Why It’s Important to Know

Validates (or shows what needs to improve)
   Pricing
   Business Model
   Sales Strategy
   Product Mix
Attracts funding
Improves sales
Not So Simple Calculation

Platinum Customer                      LTV (Lifetime Value)



                                     CAC (Cost of Acquisition)

Radio Active Waste Customer
costs the most, provides the least




                                      More Value, Less Cost
Cost of Online vs. Brick & Mortar Customers

       Customer acquisition costs are much
        higher for Internet retailers ($82 per
        customer) than for brick-and-mortar
          retailers that sell across multiple
           channels ($31 per customer),
            according to a survey of 221
         retailers conducted by Shop.org .
Good Results



             CAC X3 < LTV

CAC should be recovered by sales to that customer in 12 months
CAC Cost
•Increase if
    •Learning curve
    •Wrong customer focus
    •Changing business game or model
    •Unclear vision; wrong positioning; wrong marketing
    •Wrong product, product mix (what else can the
    customer get from you)
    •Poorly trained staff, delivery system, admin
    •Bad sales strategy
    •Freebies out of control & not accounted for
    •No tracking, evaluation, and changes
    •No warning system when things going wrong
CAC Cost

•Decrease if
   •Right customer focus (Platinum)
   •Connection connectivity
   •Products & Services with appropriate
   benefits & features
   •Effective, trained staff
   •Strategic alliances; channel partners
   •Good sales strategy; good marketing efforts
LTV Revenue


          Customer                  Lifetime
           Gross                       Of
           Margin                 Relationship


Subtracts all support, installation, and servicing (including
               portion of the upgrade) costs.
7 Touches

•Most sales still made after the 7th touch
  •Include all “touches”
  in your calculations
  •Include testing
  costs as well as                  out of
  pocket costs
Decrease in LTV

• Unhappy or dissatisfied customers

• High customer turnover

• High customer employee turnover
  (depending on the product or
  service you provide)

• Lack of good customer information
Increase in LTV

• Suggestive sales strategy

  – product line that supports &
    encourages that

• Improved customer relations

• Product improvement
  based on customer wants
Look At Your Customers

                                             •Start measuring their true total costs

                                                  •Be as accurate as you can
                                                  •Include everything relevant, not just
                                                  sales & marketing, including R&D,
                                                  testing, trials, previous attempts

                                             •Start measuring their value in terms of

                                                  •Revenue, ideas, QA, connections,
                                                  referrals
                                                  •Re-order & prioritize them from
                                                  Platinum to RAW

  Adjust what you do to get and keep customers. Try to lower costs & increase revenue over
                             time. Train staff to cross sell & upsell
Don’t Give it Away
Customer in the window BSC Rise 2012
Here’s to Your Success!
Customer in the window BSC Rise 2012

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Customer in the window BSC Rise 2012

  • 2. How Much is that Customer in the Window? What customers are really worth Presented by: Jan Triplett CEO, Business Success Center Business Success Center. | 7600 Burnet Rd. #130 | Austin, TX 78757 P: (512) 933-1983| E: coordinator@bscusa.com | www.bscusa..com
  • 3. All Customers Are Not Equal Some cost more to get Some cost more to keep Some add value Some take away value
  • 4. Customers Are Acquired When They spend MONEY Not just inquire or respond to an ad or push
  • 5. CAC Cost Are More When….. • Just taking your entire cost of sales and inbound and outbound marketing over a given period, including salaries and other related expenses • Dividing that by the number of customers that you acquired in that same period. • You must include earlier attempts to get those customers & non-sales & marketing costs.
  • 6. Why It’s Important to Know Validates (or shows what needs to improve) Pricing Business Model Sales Strategy Product Mix Attracts funding Improves sales
  • 7. Not So Simple Calculation Platinum Customer LTV (Lifetime Value) CAC (Cost of Acquisition) Radio Active Waste Customer costs the most, provides the least More Value, Less Cost
  • 8. Cost of Online vs. Brick & Mortar Customers Customer acquisition costs are much higher for Internet retailers ($82 per customer) than for brick-and-mortar retailers that sell across multiple channels ($31 per customer), according to a survey of 221 retailers conducted by Shop.org .
  • 9. Good Results CAC X3 < LTV CAC should be recovered by sales to that customer in 12 months
  • 10. CAC Cost •Increase if •Learning curve •Wrong customer focus •Changing business game or model •Unclear vision; wrong positioning; wrong marketing •Wrong product, product mix (what else can the customer get from you) •Poorly trained staff, delivery system, admin •Bad sales strategy •Freebies out of control & not accounted for •No tracking, evaluation, and changes •No warning system when things going wrong
  • 11. CAC Cost •Decrease if •Right customer focus (Platinum) •Connection connectivity •Products & Services with appropriate benefits & features •Effective, trained staff •Strategic alliances; channel partners •Good sales strategy; good marketing efforts
  • 12. LTV Revenue Customer Lifetime Gross Of Margin Relationship Subtracts all support, installation, and servicing (including portion of the upgrade) costs.
  • 13. 7 Touches •Most sales still made after the 7th touch •Include all “touches” in your calculations •Include testing costs as well as out of pocket costs
  • 14. Decrease in LTV • Unhappy or dissatisfied customers • High customer turnover • High customer employee turnover (depending on the product or service you provide) • Lack of good customer information
  • 15. Increase in LTV • Suggestive sales strategy – product line that supports & encourages that • Improved customer relations • Product improvement based on customer wants
  • 16. Look At Your Customers •Start measuring their true total costs •Be as accurate as you can •Include everything relevant, not just sales & marketing, including R&D, testing, trials, previous attempts •Start measuring their value in terms of •Revenue, ideas, QA, connections, referrals •Re-order & prioritize them from Platinum to RAW Adjust what you do to get and keep customers. Try to lower costs & increase revenue over time. Train staff to cross sell & upsell
  • 19. Here’s to Your Success!