ENS on Sales

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Lifetime Customer Value

            Our participants in Guided Discovery Selling have told us one of the most productive tools we provide is a system to manage the ‘Value Equation’.

Value = Customer Expectation  +  or   –   Customer Experience

            The reason this equation is so valuable is that both variables in this equation, the customer’s expectation and the customer’s experience, can be managed by your account executives.

            We begin by re-setting the bar for the customer’s expectation, and for the account executive’s expectation, from each campaign. Rather than claiming to be ‘number one’ or reach ‘thousands of consumers’, you can make your customer’s expectations more realistic and achievable, through our Guided Discovery questioning process.

            Begin by researching and developing enough pre-planned questions to establish what the ‘Lifetime Customer Value’ is of each new customer you attract to your prospect’s business.

            Your prospects will discover for themselves how one customer attracted by your station will pay for a one week campaign of 25 commercials!

             At a men’s wear store, for example, you might ask;

“What’s the profit in the advertised suit?”

“What’s the profit in the average up-sell or spontaneous purchase for every suit sold (belts, ties, shirts etc)?”

            “Assuming you delight each new customer, how many times a year can you expect them back? How many years can you reasonably expect that same annual amount of sales from that customer?”

            Keep asking questions until your prospect has an estimate of the Lifetime Customer Value of every new customer your campaign generates

            Your final question is always about word of mouth advertising. “Do you get referrals?” (By the way, if they don’t get referrals then your advertising can’t help them….advertising can’t make a bad business a good business.)

            When you multiply the average Lifetime Customer Value estimate by the average number of referrals your prospect says she can reasonably expect from each customer, that figure is always many times greater than the cost of a one week campaign.

            You’ll discover your advertisers will be happy if you simply attract one new customer per week, once they understand the Lifetime Customer Value of every new customer you attract.

            Next week’s ENS on Sales will address how to manage the other end of the Value Equation; the customer experience.