Building Profits & Client Base Two Sure-Fire Strategies

Julia King TamangLERN P TACE 2009www.lern.org

Reality check

• Consider the establishments you frequent the most

• What keeps you coming back for more?

MacDonald’s knows it

Your grocery store knows it

Apple Computer knows it

You’re about to learn the secret

Strategy number one

• More frequent transactions per customer

How do you get them to come more often?• Mail to the right people, more

often• Use your in-house list• Hit past participants 3 times• Hit other ‘best customers’ three

times, too

Other repeat strategies

• Discounts• Certificate programs• 20% new classes minimum• Building more for the right people• Talking to your customers in focus

groups– Giving them what they want, when they

ask for it

Know your repeat rate

2009 Clients 2010 Clients 30 50

15 Clients from 2009 purchased in 2010

15/30 = a 50% Repeat Rate

Goa

l: 50

% to

75%

It’s 10 times more expensive to get a new customer

MAILING RESPONSE RATE AMOUNT

600 past clients 10 % 60

3,000 prospective clients .5 % 15

Assuming the cost of each promotion is $3.00, the following is the cost to get a new client versus retaining a past client.

$3.00 X 600 = $1,800/60 = $30

$3.00 X 3,000 = $9,000/15 = $600

Know the LifeTime Valueof your clients

1(1 - repeat

rate)

x average contract fee

1(1 - .50)

x $5,000 = $10,000

If you can increase the repeat rate, you will increase the LifeTime Value

1(1 - .75)

x

1(1 - .75) x

$5,000 = $20,000

*If you can increase your average contract rate, you will increase the LifeTime Value

$7,500 = $30,000

Repeat customers generate customer referrals, which generate additional income.

Client strategywhere to expand

New Clients

New

Pro

du

cts

Current Clients

Exis

tin

g

Pro

du

cts

This is what you have now. You have existing products for existing clients.

Here’s a good way to expand. Take an existing product to a new audience.

Here’s a good way to expand. Create a new product for your existing clients.

Here’s a poor and risky choice. It is extremely difficult to succeed by creating a new product for a new audience. Stay away from this option.

1

2

3

4

Strategy number two

• Increase spending per transaction

How does MacDonald’s do it?

Try these proven options

• Add additional services• Add optional services• Add VIP services• Add materials options• Add teacher contact options• Add individual interaction options• Add facility use options

Amazon.com does it

Get your registration staff to sell

Get your teachers to sell

Spin off your successes

Pick a successful programSpin off more classesSpin off eventsSpin off materialsSpin off webinarsSpin off an online cohortSpin off one-on-one helpSpin off clubs Spin off memberships

Making money should be FUN

Because giving customers what they want is fun.