In terms of dollars, there’s a pretty simple formula to find out the lifetime value of a customer. Check it out…

Average transaction amount multiplied by the number of transactions per year multiplied by the number of years a customer stays loyal to your business.

This formula will spit out a dollar value which will help show you where to improve your business to make it more profitable. Adjusting any of the elements in the formula can have an exponential impact on your profits. It will also help you come to understand just how important it is to keep your customers happy. It puts a dollar value on your customer service (sort of), and also shows you how your relationship with your customers is a vital component to success. Remember, marketing is all about relationships.

As a marketer though, I have to say that this formula only tells one part of the story. The money part. As you know numbers are only one aspect of marketing. This is why many refer to marketing as an art. There are alot of variables in this game, and mastering these variables is what will make you successful. There are many things this formula doesn’t take in to account. How many people is this customer going to tell about your company? What are they going to say (You can be a customer and still have a negative opinion of the business; look at all the folks dissatisfied with Call of Duty: Modern Warfare 2, but continue to give Activision more money)? What about changes in the economy, like the one we’ve been facing for the past few years? How will that affect your business? What is it that makes your customers come back? I could go on, but you get the point.

Customers are the fuel that moves business. Without them, you’re history. In my view, you can’t begin to put a dollar amount on the relationships that you build with your business. I think the lifetime value of a customer is priceless.

What do you think? Comment below or email me at edwardviator@evil-marketer.com

Now is not the time to be mediocre. People want something inexpensive, or they want something of exceptional quality. No one wants “just good enough”. Right now we are in a recession, which means that now more than ever before, products need to fall in to one of those two categories. It used to be that wealthy people were so far removed from us average Joe’s. But the truth is, wealthy or poor, consumers are all very similar. When it comes to a product that is important to you, it doesn’t matter how much money you have, you will spend top dollar for the quality. Likewise, when you are looking at a commodity, or something that you don’t think too much about (salt is salt after all), price becomes more important. Seth Godin discusses this with his thirteenth trend in Meatball Sundae,”the wealthy are like us.”

Godin mentions that there are more wealthy people today than ever before. I guess this book was written a few years ago, because I’m actually seeing the opposite trend. I think that because of this current recession, more people than ever are starting to understand what it’s like to be poor. When you’re poor there are alot of things that you have to do without. Sacrifices must be made so that you can afford the things that you and your family need. If you are going to spend alot of money, alot of thought goes in to the purchase, and quality becomes even more important than it used to be. Even those fortunate enough to have jobs right now are feeling this pinch. Afterall, they are probably supporting an out of work spouse or partner. With this in mind, you need to begin thinking from the point of view that your product (or service) needs to be the inexpensive option, or the best quality option. If you are mediocre, you’re dead.

I could go on and on, but you probably would get bored and I’m sure you get the idea. The final trend discussion is coming soon.

Notable quote from this section:

• “It turns out that not only are the wealthy like us, they are us.”

In this link, Robert Middleton (founder of Action Plan Marketing) discusses an interesting tactic in pricing. I’ve actually heard this one before from a sales person I used to work with. Just like all sales people, he constantly had to face clients unwilling or unable to pay the price for the product or service he was selling. I asked him what he did in those situations and he told me “tell them you can lower the price, by taking away one of the features.”

I was amazed by the simplicity. But you know what? It works. Lower the value of your product, and then the price will follow. It takes you the same amount of time and money to produce the product; it takes the same amount of work and effort. Why should the price be lowered? Especially in these troubled economic times, most customers will be willing to do a little extra work if it will save them money. If they aren’t then they are basically valuing their time over yours.

Another tactic that Robert discusses in the link is to create tiered levels of the product or service. You know, Platinum, Gold, or Silver (hopefully you have more creative names than that, but you know what I’m talking about). Once the client has bought in on the value of what you offer and is ready to discuss price, the discussion becomes “which of these do you want” rather than “do you want it or not”. 

Agree / Disagree? Hit that comments button below or email me at edwardviator@evil-marketer.com

I was eating a cheeseburger at Whataburger the other night with my girl, feeling kind of depressed that I don’t have a job right now, and it suddenly hit me. This recession could be a big opportunity for marketers and for business in general. Let me explain.

If you’re one of the many people like myself that have been laid off this is an opportunity for you. Like my man Nietzsche said “That which does not kill me makes me stronger.” I have a feeling that you are all feeling pretty strong right now, because we’ve all been hit by hard times. Just remember, if you can survive and even succeed in difficult times like these, you can succeed any time. Just because you don’t have a job doesn’t mean you should stop working. Instead of simply telling companies what I can do for them, I started this site so that I could show them. You should too.

It’s no secret that money is scarce right now. This means that businesses have to work harder than ever for those few dollars. It’s survival of the fittest, and those companies that do not evolve will die. Remember my post about staying ahead of the curve. Companies that previously played things safe will need to take some risks if they want to stay alive. It’s a big opportunity for you creative thinkers out there to speak up. Don’t waste your opportunity.

Here’s what I think… forget the one million dollar superbowl ad or whatever you were going to spend on traditional media, and invest that money into a team of awesome marketers that can take full advantage of the free and cheap tools online to market your business. With all of the recent lay offs there are tons of excellent marketers sitting on the bench and hungry to make your company tons of money. You have A-list talent available, you don’t have a budget, and yet there are tons of free tools out there for those with the know-how to use them. Take advantage.

I could go on and on, but I’ll leave you with this… times won’t stay bad forever, but what you do personally and professionally right now will define your character for years to come. Take advantage of the opportunities available to you, and position yourself for the good times that lie ahead.

Happy 2010 to everyone out there!