Sometimes I talk to pros who are just starting out and/or who have never made any kind of investment in advertising or marketing for their business. They have high expectations for the ExpertHelp Quote service but are quick to throw in the towel when the first two to three leads don’t go their way. They write off the experience as a waste of money and time.
These pros probably don’t understand what the Lifetime Customer Value (CLV or often CLTV) of a new client is, or they wouldn’t have given up after the first few attempts at closing the deal.
Let’s take the tax preparation category as an example. The average quote for tax preparation services is around $250. Let’s say that you spent $15 in tokens to send quotes and you connected with 3 different customers at $25 each, but only ended up doing business with one. You have spent $90 to make $250 in revenue. This is a 277% return on your investment, which is actually really good! But it gets even better!
A tax preparation client will often come back year over year to do his taxes. It is not uncommon for a tax preparer to prepare taxes for a client each year for 5 to 10 years. Let’s assume our tax preparer only keeps a client for 5 years and never raises his rates. The lifetime value of that client is 5 x $250 or $1,250. Now if you factor in the original investment of $90 to make $1,250, your return on investment is 1,388%!
Of course, this is just an example and your customers may have different purchasing behaviors. Take the time to understand what the CLV of your typical customer is and you can make a well informed choice when deciding where to spend your advertising and marketing budget.