January 11, 2010
As we move into this new year, I want to invite you to take a minute and consider the following question.
What is the purpose of your business?
Now, I’m not talking about something high level like your mission statement or vision. I’m talking about why your business exists.
After you’ve come up with your answer, keep reading to find out mine.
Create More Value, Make More Money
Your business exists to create and retain clients. Notice I used the word “client” rather than customer. This was deliberate, as I see that a customer buys one time, while a client invests repeatedly.
When you are focused on creating business momentum, it is crucial to look at lifetime value of a client. Lifetime value of a client means how much you can reasonably expect to receive from a client who continues to invest with your business over years.
An example of lifetime value would be this:
Let’s say that your lowest level coaching package is $1000 a month. If your average client typically stays in coaching for 1 year (12 months), your lifetime value of a client is $12,000. ($1000/month x 12 months.)
This is a simplistic version, as you really ought to be thinking of how to get clients to stay with you for years, and how to get them to continually invest at higher and higher levels.
To achieve this, you must be able to create new, and valuable programs and services which evolve as they do.
Remember, the purpose of your business is to serve your clients, and retain them, while creating cash flow for yourself.
Everything else comes second to this basic principle.
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