Not Understanding the Lifetime Value of a accounting Client

pThe tell all facts about these mistakes that have been made in businessbr /Often we only hear about a href=http://www.bestaccountswellington.co.nz/ target=_blankAccountants/a glory days and the high days but what werenbsp;the things that got us there?So itrsquo;s great to have these mistakes and the lessons – letrsquo;s call them lessons because they are lessons.I believe the first one is, and this might sound odd, but itrsquo;s not understanding the lifetime value of a client. So many businesses misunderstand this. Herersquo;s an analogy – theyrsquo;re filling up the bathtub,filling it up with new clients, getting new clients in, but they havenrsquo;t got the plug in, so the clients are just going out the bottom – so they are wondering why their business isnrsquo;t growing. Itrsquo;s because theyrsquo;re just focussing on getting new business in, but theyrsquo;re not looking at what they can do to keep those existing clients and keep them coming back. They do all that hard work because there is the saying out there that itrsquo;s five times easier to get an existing client than a new one. I absolutely agree with that.I was working with a accounting client the other day, a pharmacy, just on the retail side. They had a small list of 140 people in one area and hadnrsquo;tnbsp;been in touch with them for along time therefore came up with a letter for them and an offer, sent it out, and 69 of those 140 people came in and purchased. He created an instant $3,900, which was nearly a weekrsquo;s retail turnover. So, there is so much gold in there and so many businesses donrsquo;t see that and donrsquo;t get it.There are lots of things you can do to make that happen and one is actually know who your customers are. I was talking to my fianceacute;e the other day; she is the CEO of a technology company and she was working — well with a large a href=http://www.bestaccountswellington.co.nz/ target=_blankaccounting/a firm that begins with K. I donrsquo;t Think theyrsquo;ve made much effort because they continue sending her letters that say, ldquo;Dear sirrdquo; –She is a she. So the letter is, ldquo;Dear sirrdquo; and she has even told them but they still continue to come as, ldquo;Dear sirrdquo;. But to top it off, for Christmas they sent her a hip flask.Great bloke present. Now, in my opinion that is arrogant, itrsquo;s lazy and itacirc;Â#128;Â#153;s plain stupid. I mean, what kind of relationship are they building with a client that is spending tens of thousands of dollars a year with them?Irsquo;ve got a mentor, called Dan Kennedy, and he has a great saying. It Goes along the lines of yoursquo;ve got to build a heard, so yoursquo;ve got to get them in; yoursquo;ve got to fence them in; yoursquo;ve got to feed them well and then keep out predators and then you can benefit from them for life. So if you think about your clients as, you want to build this big-heard and keep it growing and look after it, keep out predators and do all the things yoursquo;ve got to do, then that is the right analogy – the right way to be thinking about your clients.Because the lifetime value number can be surprisingly big in some companies. I was in with an accounting firm the other day, and their average fee is $2,300 per client. But the thing with an accounting firm is they actually stay, on average, ten years.So thatrsquo;s actually $23,000 lifetime value. $2,300 is quite a small thing, but if you start looking at the client when they walk in as this is $20,000 opportunity, then you start looking at things completely different. It may even be a restaurant, if the average sale is $60 but they come ten times a year, thatrsquo;s $600 times four years, $2,400. And Then when you start thinking like that then you go, ldquo;What can I do to get them in?rdquo; You can do the killer offer, you can offer the free meal,you can offer the free consultation, the free gift – or effectively buying or acquiring the customer, because you know the value of that customer in keeping them over a lifetime.For me and my business, I did this well at times. There are some clients that over five years brought in millions of dollars and some$350,000 but it took me a long time to get this. Even now, nearly ten years on from starting Irsquo;m finally going, ldquo;Oh I get itrdquo;. And when you get this, this is when you grow your business and this is when you really make some money.If yoursquo;ve got someone that comes in and you think theyrsquo;re worth $60nbsp;yoursquo;re going to treat them on a certain level. Ifyoursquo;ve got some who comes in and he says theyrsquo;re worth $2,500yoursquo;re going to treat them entirely different.Think about the long-term value of your client, not the one-off payment you receive at first sale A whole different respect level, a whole different offer level, and thatrsquo;S SOnbsp;important. Irsquo;ve learnt — I must confess I had to learn that one theslow way. Getting the whole team to think like that as well./p