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Life Time Values

ltv_calculationThe crossover between online and offline is blurred for many successful marketers. They tale a perfectly good method that works for webmasters, and then they create a means for offline clients to access it.

If you can do this, then you are truly on to a winner, although it is not always apparent how to do so. One perfect way to make money with offline clients, is to show them what your services are worth in the real world.

They will sell the product to themselves if you can actually show them that the service is not just about getting visits to a website, or about how many backlinks you create. They don’t often speak that language, so you have to put it in real terms for them.

The key to providing this insight into how online services can make offline money is to show them the lifetime value of a client. Get them to think outside of the first sale they make online. Get them to think long term what your business can do for them way off into the future. For example, if you operate an SEO business, and are capable of ranking low competition keywords, and let’s say you speak with a lawyer firm who need promotion in their locality.

You agree to meet with them, and say that you can SEO their site for a fee of $500. They ask what’s entailed. You tell them, and they pretend to care. Then they say “What does it mean to me in terms of revenue, though?”. You tell them that they might get 3 clients a week with this work done on their site. They say thank you, and will call you back if they need you. You just lost a sale because you couldn’t put a figure of worth on your work.

To determine the lifetime value of a client, start with the client’s fees. How much do they charge the average client the first time they use the company? What is the average ‘sale’? Now, the magic question, how often does that client come back to use the company? Let’s say three times in their lifetime. So if the average ‘sale’ is $250, and they use the company three times, that’s $750 per client over the lifetime of their custom. Now, you told them you can get about 3 clients a week.

That is $750 per week, and $2250 LTV (Life Time Value). Every year, you will earn the company $117,000 LTV. Meetings will never be the same after you use LTV calculations.

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About Sean Donahoe

Sean is one of the most recognized industry leaders in business and marketing. As a popular speaker, author, consultant he has helped over 50,000 students world wide find success in their businesses and has consulted with Fortune 500 companies and businesses of every size grow and thrive...

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