Title: Boost Your Customer Lifetime Value – Proven Strategies Revealed – **1PMP Series**
Guest: Chris Goldman
Peter: Today, I am back with Chris Goldman, the marketing strategist and business coach from bizmarketing.com, and we are continuing our series on the one page marketing plan. Today, we’re talking about increasing customer lifetime value. So this is part of the after section of one page marketing plan. So as a reminder, we have the before, where before they even know who you are, you’re a potential customer. During, when they know who you are but they haven’t purchased.
And then after, which is after they purchase you. The last conversation we had with respect to the one Page Marketing Plan was delivering world class experience for your customers. This is the next chapter, which is increasing customer lifetime value. If you’re like me, you’re intrigued by stories of common people who have achieved uncommon success in business and life. Join me as I interview fascinating people about how they got started, their successes and failures, their habits and routines, and what inspires them.
Chris: Chris, what
Peter: do you think of that?
Chris: First of all, it’s good to be back and visit about these important things for businesses. And part of this is all leading to this idea of building a fan base, not just customer base, but people who go around talking about your business, your service, your team because they’ve had that world class experience, and there’s this constant lifetime value you’re giving them. So, basically, what I wanna do, Pete, is I wanna just go through and ask you some questions as a provider, but also as a business owner and what we’ve learned going through this together and also hearing from Alan and his great teachings through the one page marketing plan. So as we get to this, the first part that we wanna start with is this question about where do you start with it, and why on earth would I, as a business owner, actually go to the people who are already my customers?
Peter: You bet. Alan in the book talks about a widely quoted statistic. This I’m reading verbatim from the book here. He said a widely quoted statistic is that a person is 21 times more likely to buy from a business they’ve bought from in the past compared with one they’ve never purchased from. So we’ve already had an experience with the business.
We’ve already sort of broken the ice with that business, so to speak. So we are more likely to purchase from that one that we already know versus one we don’t know. Now there’s also an interesting Harvard Business Review quote that I found online as well that said, Acquiring a new customer, so this is somebody that’s never purchased from you, can be five to 25 times more expensive than retaining an existing customer. Now, the book, the one page marketing plan, we’re dealing with prospects, right? We’re dealing with people who are not customers of yours, rightly.
That’s, as Alan points out, that’s bread and butter to building a business. But building a scalable business is a lot about, yes, getting new customers, but also continuing to serve your existing customer base and provide even more value to them. And in return, you’re going to earn much more profit from those customers.
Chris: Yeah. As a matter of fact, one of the things he talks about is that one of the most overlooked ways that we just don’t think about sometimes is raising our rates because we’re also increasing our value. So as a business owner, Pete, let me ask you a question. How often let’s say over the course of five years. Mhmm.
How often do you want to see your services improve for your customers? Do you think maybe twice in five years we wanna get a little bit better? Or where’s your mentality?
Peter: Yeah. We’re constantly improving the services. We’re constantly looking for small ways, small improvements that add up to a big difference for our customers.
Chris: Yeah. And the reason I asked that question is every client we have talked to, they voluntarily it’s just part of the lifeblood of a business owner. You know, we got certified in this new certification. We’ve got this new product. We’ve upscaled our line that we’re covering.
We’ve we’ve gone with a improved, performance, if you will. And all of that costs both time and money. Mhmm. And people understand that. As a matter of fact
Peter: Yeah.
Chris: If you’re not doing that, you’re probably gonna get scrutinized by other business owners that are thinking, are they never improving? Right? So this is one of the ways we do it. But, also, it comes through as we’re looking at some of these suggestions, improving the product and the service quality. Why is it important that the product and service quality go up at the same time?
Peter: The service really is the experience that the customer has with you. We always want to be making that as friction free as possible and as enjoyable of an experience as we possibly can. What’s funny is some of our customers that we serve with our marketing services prefer that we don’t have a lot of interaction with them. We want to have monthly meetings with them. And a lot of times I’ll get feedback from my clients that say, listen, you guys do what you do.
We’ll do what we do. We don’t need to talk about it a lot. You guys are doing your thing. We’re doing our thing. Let’s just keep it the way it is.
So when we say improved service, sometimes this is listening to our customers and understanding how do they want to interact with us. We’re always looking for that in addition to the actual product that’s being delivered. Now, one of the things that I do want to emphasize, which is going back a little bit, which is raising prices, which is a way to increase customer lifetime value. Alan Dib points out, it’s not often that we talk about that, but if you don’t raise your prices over time, you’re effectively going backwards, especially these days with inflation. And I’m not saying you should just gouge people because you could just say, Oh, we have inflation, we have to raise our prices.
But if you’re not keeping a fair profit margin in your business, it becomes harder and harder for businesses to deliver outstanding service. So you want to work with a business that is making money. We’re all in business to make money. I would rather pay somebody who is actually a professional than somebody who is doing something as a hobby, for example. Right?
So professionals need to get paid. Therefore, you need to be thinking about raising your prices. Right?
Chris: Another part of this pricing that I wanna ask you about is upselling because Alan Dib talks about upselling quite a bit. And the value of doing it, bundling add ons is the language he uses. So how is that selling a positive thing, Pete?
Peter: What you’re doing is you’re delivering additional value to the customer. And a lot of times when we start with a business, we’ve found in the past that they maybe were a little hesitant, wanted to dip their toe in the water for marketing services. Now, generally I don’t just dip your toe in the water. I mean, you’re all in or you’re not, but what we found is some businesses just wanted to start with one of our small services or they wanted to start with one of our smaller packages. But over time, their needs were met and they found that they have increasing needs in the marketing.
So they’re going to want additional services. So in that case, we do upsell them. For example, a lot of times we’ll start with a client that has a website that’s not so good. Right off the bat, I’m going to recommend fixing that. In some cases, a client just said, look, I just don’t have the money on hand to do that now.
Let’s revisit this in six months. So we’ll do that. We’ll apply some other marketing, get their sales going. And then in six months, we’ll go ahead and upsell them to a new website, for example. And at that time, they’re happy to do it.
So what we’re really doing is encouraging folks to buy more after they purchase from us. In the case, the book, one Page Marketing Plan, Alan has a example in here that I can totally relate to where I was upsold and get upsold. And it’s more about when you’re first making the purchase. He talks about a principle from Robert Cialdini, who wrote this classic book called Influence, the Psychology of Persuasion. He talks about the contrast principle.
The contrast principle comes into play when you have two different things presented sequentially, and they feel more different than they really are. For example, if you lift a heavy object first followed by a light one, you’ll think that the lighter object that you lift second is much lighter than it actually is. His example in the book is where you go into a clothing store to buy a men’s suit, you shop for a suit, but you picked it out and you’re ready to pay the price on the tag. In reality, your shopping journey is just beginning because the sales clerk now starts discussing your shirt requirements. Now with respect to contrast, let’s say you just decided to buy this $750 suit.
When the sales clerk starts talking about your shirt needs and pulls out $120 custom fitted shirt, that seems like a smaller amount than it would if you had just walked into the store and said, Hey, let’s look at your shirts. You saw this $120 shirt. Probably would have said, Do you have anything else in my size? And then continuing on the suit journey, once you get that shirt, you’re going to need socks, you’re going to need a belt, You’re going need a tie. And next thing you know, you’ve doubled or tripled the amount of money you intended to spend when you just walked in there for a suit.
So that’s upselling, not necessarily always a positive outcome, although you’re going to look great. So that is another example of upselling where people just say, Hey, let’s think about all your needs. Really legitimately upselling, if it’s done legitimately is thinking about the customer’s needs that they probably didn’t think about anyway.
Chris: Okay. So I wanna cut in here and Yeah. Emphasize what you just said. What makes this work is the authenticity that you’re looking out for the best for your client and your customer.
Peter: Right.
Chris: I mean, 100%. It’s not just about making more money. And I’m gonna use your suit example that Alan brings up. I recently was shopping for a suit for my son’s wedding.
Peter: Mhmm.
Chris: And I I’d gone in. I bought cheap suits year after year after year and hated them. And I went in, and they gave me an education about what’s actually in the fabric that makes me not want to wear a suit. Mhmm. And they said, you know, literally for $200 more than what you’ve been spending, you can have a suit that you look great in and feel great in.
So we tried that on, and boy, could I feel a difference immediately. And we were we were thinking of the penny pinching. It’s like, okay. So I’ve got a shirt that I can work with this. And they stopped me, they said, okay.
Hold on just a moment. You’re about to go to your son’s wedding. It’s a once in a lifetime experience.
Peter: Mhmm.
Chris: And you’ve got this suit, and we wanna just do everything we can to have you walk out of here feeling great about everything. So we went through, and we looked at everything. And here was the key for me. I ended up buying the suit. I ended up buying two ties and a custom shirt that fit.
The salesman literally did this, said, these shoes are the kind of shoes that you need, and we will sell this pair to you right here. But I can tell you that down the hall in the mall Mhmm. There’s a shoe sales going on right now, and you can get almost identical for half price. And I would encourage you to take advantage of that because you’re already kind of at your price point.
Peter: Mhmm.
Chris: That kind of authenticity and reality with your customer, you wanna you wanna know where I’m buying my next suit? I’m going back to that salesperson, and I’m gonna be one of those percentages that will go back to the same person over and over rather than looking for just a quick, cheap saving. Alright. The next term that Allen Deb uses is the process of upgrading existing customers from their current product or service to a more expensive offering. This, they’re ascending into your products.
And we have to remember that our customers, our our business customers and our everyday customers, they aspire for greatness. They wanna be great at what they do, great at what they sell, and they wanna begin moving up. So, Pete, how is it that you look at, your current clients or business owners should look at their current clients and decide it’s time now to propose that we move them up? What are some of the triggers you’re looking for to say, let’s let’s move up?
Peter: Well, I mean, it really depends on, obviously, what product you’re selling. But I did hear an interesting perspective on this today with respect to Ascension. And in Alan Dibs book, he talks about having different prices. He talks about ultra high ticket items and having standard products and premium products. And he said, at a minimum, you need to have a standard in a premium product.
Now, so what I’ve done in the past is I’ve maybe configured my products using my own wallet, meaning I wouldn’t necessarily shop for the ultra premium product, but we have clients out there that want that and we haven’t offered it in the past, right? He’s saying you must offer the ultra service level or the product level. And I heard today on a podcast called Nudge, where they talked about a pricing phenomenon where, and it’s very well documented, if you have two packages and you have a starter package and medium package or a more high priced, you have two packages. If you offer those two to the marketplace, you’re going to get a split fiftyfifty more or less.
Chris: Right.
Peter: Okay. If you offer three packages, you have your starter, your medium package, and an ultra premium package. You’re not going to sell many of the ultra premium packages, but you’re going to sell a whole lot more of that middle one. And the starter package, it’s almost neglected as well. So the percent of the medium packages that you offer goes up dramatically.
So offering that high price product, that ultra premium product may not even get purchased by many, but when it does, obviously there’s going be a lot of profit there as well as there should be some more profit there. So this is kind of an opportunity. So you always need to be thinking about packages. Two other concepts that I wanted to touch on real quickly before we wrap up. One is frequency.
Yep. And so he talks about, so Alan talks about if you can increase the frequency at which folks buy your products, that is obviously going to increase your customer lifetime value. And that one could have anything to do with car washes, massage, getting your teeth cleaned. For example, I was on a six month program and then my hygienist convinced me to go to four months on the teeth cleaning. So that is one way that really can increase your customer lifetime value.
And the last one that he talks about is reactivation. What he’s talking about there is you are sitting on a gold mine if you’re a business owner and you have a list of your past customers. These are the people that have trusted you enough to cross the chasm between prospect and customer, just as we spoke about in the beginning of this podcast. They know who you are. They’ve purchased from you in the past.
Not necessarily everybody’s going to purchase from you again, but their situation may have changed. For example, we have one client who deals with home services. We’re sending out some information about, hey, you may have recently moved. Get an inspection for this particular service on your new home. So it’s a way to reactivate customers who may have needed your services recently or a long time ago.
Nothing wrong with reaching out to them and reminding them of the services that you provided and the opportunity for you to serve their current needs as well.
Chris: I wanna give you a real life example that I ran into recently with our home with Home Services. Yeah. Allen Dibs says in that reactivation, one of the keys is to make a strong offer to get them to buy again.
Peter: Okay.
Chris: What that means is almost a deal too good to pass up. And we recently reached out to a vendor that used to do some things for our home and said, hey. We were thinking about reengaging your services again. And they they literally said, we you’re on our list to call and say, hey. We would you be interested in this?
I said, sure. They came back with an offer, and here here’s what was interesting. Their offer was the opposite of what Alan Dib suggests. They came back and said, hey. We can get this going.
We have a special for you that the first services that we would come in and provide would only be three times of your normal monthly costs. So the normal monthly costs were $200 to reengage. It’ll only be $600 to get going, and then after that, it’ll be $200. Now three or four years ago when we were using their services
Peter: Yeah.
Chris: It was only 150 a month. So I quickly did the math and said, so to get this started again, I’m looking at four months cost upfront. Mhmm. So the offer was strong on the fact of they were gonna do extensive services, but it was so strong on the financial end Mhmm. That I was like, oh, I can’t do that.
Mhmm. Whereas, had they come in and said, hey. We have an offer at your previous rates. We’re gonna get this going again. And then, yeah, we we’re like everybody else.
Rates have had to go up, then it’s gonna go up incrementally about 20%. I probably would have said, you know what? Let’s get that going. So when you make that reactivation offer, list of Aledip device, make a strong offer that gets them to buy again because everybody knows your money’s gonna be made on the monthly subscription. Alan’s done a great job with this in having this lifetime customer value.
It’s what every business wants to do. I know it’s what Pete’s wanting to do with biz marketing, and we’re hoping you guys just have great experiences in getting your current customer base towards a fan base that’s excited to give you lifetime business because you’re giving them lifetime value.
Peter: Excellent. Chris, thank you very much. Can’t wait to go through the final chapter in one Page Marketing Planet and wrap it up and put a bow on it. This has been great. Thanks for your time today, Chris.
See you soon.
Chris: Thank you. Bye bye.
Peter: Thanks for listening to this episode of Biz and Life Done Well with Peter Wilson. You can subscribe to us on iTunes, Google Podcasts, Spotify, and most of the other popular podcast platforms. Please tell your friends about us and leave us a review so even more people will find out about us. Thanks again. We’ll see you soon.
