Do you know the true value of your ideal customers?
It might be more than you think - let me explain...
For this story we're going to use a simplified example of a business called "Ben Builds".
Ben Builds has 25 customers and each of them have an average annual value of £10,000 - generating £250,000 in revenue each year. Ben is pretty happy with what his business is achieving.
But Ben doesn't want to settle for "pretty happy"...
He is eager to double his revenue over the next year, but he doesn't have the time or resources to double the number of customers he serves. He also doesn't want to grow too big too soon, otherwise he might lose the great reputation he's built.
So he gets curious and starts digging deeper into his customers' purchase history, here's what he finds:
- His best 20% of customers are actually worth 2.5X as much as an average customer, generating £25,000 each.
- The lowest 60% are only worth half as much as an average customer, generating £5000 each.
- The other 20% fall somewhere in the middle - averaging £10,000 each.
After looking at what he has just found, he has light bulb moment💡
"I don't need to double my number of customers to double my revenue. I just need to swap my low value customers for high value customers."
If fact, Ben realises that he could actually serve fewer customers and still double his revenue! Just look at the example below.
If Ben serves 20 high value customers (5 fewer than before) he can double his annual revenue - without increasing his time or resources!
Ben has doubled his revenue and now has 20% fewer clients to manage - Which means he can have Fridays off and enjoy spending (or saving) the extra £250,000 he earns each year.
Or maybe he will invest that extra time to build his business, by having the time to work on it rather than in it.
Can you do the same as Ben and look at what each of your customers are worth? Hopefully you'll find something interesting just like Ben.
Need help creating a profitable way of utilising your existing assets whilst also helping those who are in need? Our Innovate to Survive challenge will guide you through this process. We've had stories of businesses getting the inspiration they need after just the first two steps.