Do your prices include your costs to get the right customers? Here's an easy way to make sure and see what it really costs to acquire, maintain, and retain them. From BSC RISE Austin 2012.

2. How Much is that Customer in the Window?
What customers are really worth
Presented by: Jan Triplett
CEO, Business Success Center
Business Success Center. | 7600 Burnet Rd. #130 | Austin, TX 78757
P: (512) 933-1983| E: coordinator@bscusa.com
| www.bscusa..com

3. All Customers Are Not Equal
Some cost more to get
Some cost more to keep
Some add value
Some take away value

4. Customers Are Acquired When
They spend MONEY
Not just inquire or
respond to an ad or push

5. CAC Cost Are More When…..
• Just taking your entire cost of sales and
inbound and outbound marketing over a
given period, including salaries and other
related expenses
• Dividing that by the number of customers
that you acquired in that same period.
• You must include earlier attempts to get
those customers & non-sales & marketing
costs.

6. Why It’s Important to Know
Validates (or shows what needs to improve)
Pricing
Business Model
Sales Strategy
Product Mix
Attracts funding
Improves sales

7. Not So Simple Calculation
Platinum Customer LTV (Lifetime Value)
CAC (Cost of Acquisition)
Radio Active Waste Customer
costs the most, provides the least
More Value, Less Cost

8. Cost of Online vs. Brick & Mortar Customers
Customer acquisition costs are much
higher for Internet retailers ($82 per
customer) than for brick-and-mortar
retailers that sell across multiple
channels ($31 per customer),
according to a survey of 221
retailers conducted by Shop.org .

9. Good Results
CAC X3 < LTV
CAC should be recovered by sales to that customer in 12 months

10. CAC Cost
•Increase if
•Learning curve
•Wrong customer focus
•Changing business game or model
•Unclear vision; wrong positioning; wrong marketing
•Wrong product, product mix (what else can the
customer get from you)
•Poorly trained staff, delivery system, admin
•Bad sales strategy
•Freebies out of control & not accounted for
•No tracking, evaluation, and changes
•No warning system when things going wrong

11. CAC Cost
•Decrease if
•Right customer focus (Platinum)
•Connection connectivity
•Products & Services with appropriate
benefits & features
•Effective, trained staff
•Strategic alliances; channel partners
•Good sales strategy; good marketing efforts

12. LTV Revenue
Customer Lifetime
Gross Of
Margin Relationship
Subtracts all support, installation, and servicing (including
portion of the upgrade) costs.

13. 7 Touches
•Most sales still made after the 7th touch
•Include all “touches”
in your calculations
•Include testing
costs as well as out of
pocket costs

14. Decrease in LTV
• Unhappy or dissatisfied customers
• High customer turnover
• High customer employee turnover
(depending on the product or
service you provide)
• Lack of good customer information

15. Increase in LTV
• Suggestive sales strategy
– product line that supports &
encourages that
• Improved customer relations
• Product improvement
based on customer wants

16. Look At Your Customers
•Start measuring their true total costs
•Be as accurate as you can
•Include everything relevant, not just
sales & marketing, including R&D,
testing, trials, previous attempts
•Start measuring their value in terms of
•Revenue, ideas, QA, connections,
referrals
•Re-order & prioritize them from
Platinum to RAW
Adjust what you do to get and keep customers. Try to lower costs & increase revenue over
time. Train staff to cross sell & upsell

17. Don’t Give it Away

19. Here’s to Your Success!