Pillar 6 Your Revenue Regeneration

Silver and Gold members of Your Profit Club can go straight to the training modules

P6M1 More Sales To Customers

P6M2 Customers Buy More Often

P6M3 Increasing Customer Spend

P6M4 Customer Loyalty

Pillar 6 Your Revenue Generation – What’s It All About?

Pillar 6 of the Eight Pillars of Business Prosperity  focuses on Your Revenue Regeneration and is often the biggest opportunity for profit improvement.

Your Revenue Regeneration System helps you to convert a one time buyer into a long term customer who buys from you regularly and refers you to other likely buyers.

Two critical measures for your business success are:

  1. How much it costs you on average to create a customer
  2. The average profit you get from a customer – usually called the customer lifetime value.

The more measure 2, the customer lifetime value exceeds measure 1 the acquisition cost, the more profit there is in the business.

Increasing Profits

Your challenge is to increase the difference and you have two ways of doing it:

1 – reducing customer acquisition costs

2 – increasing the lifetime value by helping your customer to buy more and to buy more often.

In Pillar 4 Your Lead Generation System you learnt how to attract the right types of prospective customers and in Pillar 5 Your Lead Conversion, the focus was on turning prospects into customers.

Both Pillar 4 and Pillar 5 concentrated on reducing your customer acquisition costs.

In Pillar 6, Your Revenue Regeneration System, I turn the logic on its head.

The more you build up lifetime value, the less customer acquisition cost matters.

Costs can only go down so far but revenue can be increased by many times the acquisition cost.

In fact one very effective and counter-intuitive strategy is that you can deliberately start to outspend your competitors. This means you can build a powerful customer acquisition machine if you get enough profit on the back end transactions.

That is a very powerful market position to be in and creates a virtuous circle which is great for you and very damaging to your competitors.

How To You Increase Lifetime Value

How much a customer is worth to you can be increased in two ways:

  1. The customer can spend more so you make more profit from the direct sales
  2. The customer can pass on word of mouth recommendations and help you attract new customers through referrals, testimonials and endorsement letters.

More Purchases

Getting the customer to buy more means that the first buying experience has to have been good – or well recovered – so that the customer has confidence in you as a supplier.

Then you need to be making regular offers to encourage repeat purchases or even arrange the next purchase or service at the time of the first. Perhaps even bundle up a number of transactions together and offering them at a discount.

Your offers can be the same product or service, if it is something appropriate for repeat purchase or you can find additional items to sell which are bought before, during or after your product or service.

I had a client who was a high quality roofing contractor. Once the roof was fixed it stayed fixed so there was no repeat sales for the same service. They were able to add an inspection and guttering clearing service and also became the contact point for other home improvement services.

If you feel nervous of making regular offers to your customers and you don’t want to appear pushy, you need to know that a big survey showed 68% of lost business happened because the customer felt ignored and under-valued.

You should also see the link with Jay Abraham’s concept of the strategy of preeminence. If you remember, we covered this first in Pillar 2 (when we talked about customer focus) and then again in Pillar 4 (on getting the right marketing mindset).

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