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7 Steps To Creating A Steady Stream Of Cash For Your Business

How much would it be worth to you if you could bring in an extra 5, 10, 20, 100, or 1,500 clients this month and every single month?

One of the most overlooked and underused methods of client growth is the process of acquiring clients at a breakeven or a slight loss, and then turning around and making huge profits on back-end repurchasing. This method can work for you if you recognize some very important facts.

If your business is one that has a high probability of customers comign back over and over again, repurchasing from you the same or different services and products, then you owe it to yourself to do everything you can to get clients into the buying stream. This can be done quickly and easily.

You can’t begin to know how much blood, sweat, and tears you can afford to invest to acquire a client until you identify and understand exactly how much combined profit that client represents to yoru business for the life of that business relationship.

You need to know the lifetime value of your clients. Let’s look at the example of big companies like Columbia House. Why would they send you six to twelve CDs or books for a dollar? They recognize that for every 10 or 120 people coming in, a large number will keep buying over and over again at a full rate. They do everything they can to make it easy and appealing to get you started buying and using their services in the first place.

By this method, they accumulate millions of dollars a year from the people who come in on that break-even method.

There are many credit card companies that offer a 4% or 6% interest rate for the first six months you have the card. Online internet companies, such as AOL and Earthlink, offer thirty days or 1000 free hours when you sign up.

Knowing how much a client will spend with you over a period of years will tell you how much you can spend to acquire a new client. Estabilishing this information will be the most profitable thing you will ever do for your business.

What is the current lifetime value of your client? The total lifetime value of your client is the total profit of an average client over the lifetime of his patronage, which includes all residual sales, minus all of the marketing, advertising, and service fullfillment dues.

Let’s say your average new client brings you an average of $100 profit on the first sale. He repurchases three more times a year with an average reorder amount of $200, and on each $200 reorder you make $100 gross profit.

Now with the average customer life lasting about two years, every new client is worth $700.

You could, in theory afford to spend up to $700 to bring in a new client and still break even.

Where Do You Go From Here?

You need to calculate your clients’ marginal net worth. Here’s how you do it;

1.Calculate your average sale and your profit per sale

2.Calculate how much additional profit your client is worth to you. You do this by determining how many times he or she comes back to buy.

3.Calculate what a client costs by dividing the marketing budget by the number of clients it produces for you.

4. Calculate the costs of your prospects the same way.

5. Calculate how many sales you get for x-amount of prospects. (% of prospects who become clients)

6. Calculate the marginal net worth of a client but subtracting the cost & expenses to produce the client from the profit expected to earn from the client over the lifetime of his or her patronage.

7. Keep records and be persistent. Nothing worthwhile comes overnight. Your dedication and organization will pay off in huge monetary benefits.

So there you have it. If you deliver great service, value, and results, these people will continue to come back to you. The fact that you were the only one with enough faith in yourself and your business to take a risk, instead of putting the risk on your prospect’s & client’s shoulders will long be remembered favorably by these clients.