You put in all this money into marketing and then wonder if it was worth it. Has this thought ever crossed your mind?  Let’s face it, we’re entrepreneurs, of course it has! If you’d like to finally know if it’s worth it, keep reading.

Opening a new business can be extremely exciting, especially as momentum builds and clients start walking through the door. And rather than stop to evaluate our progress, we continue through daily routines of servicing and attracting clients, like a horse with blinders/blinkers on.  

It’s a thrill to move at such a quick pace, not worried about anything behind you, or on either side.  But there comes a time when you need to stop and take a moment to work out your numbers.

One of the numbers that we often miss is the Lifetime Client Value (LCV).  And, yet, it’s the one number that can really help us determine if we’re making the right decisions when it comes to marketing, and even in calculating your future income.

Wondering why?

Rachel Cosgrove, co-founder of Results Fitness University and Results Fitness, explained it perfectly in one of her online mentoring sessions.  She explained that the LCV is directly related to your future income, expenses, marketing budget, etc.  

How?

Because it is the Lifetime Client Value that determines how much your investment will yield in the long term.  

[shareable text=”The Lifetime Client Value determines how much your investment yields.” width=”80%”]It's the Lifetime Client Value that determines how much your investment will yield in the long term.[/shareable]

Confused?  I admit, I was at the beginning.  But, consider this example:

If you charge $50 per session and a client trains with you 5 times per month, you’re generating $250 per month for that client.  Within the course of a single year, this client brings you $3,000.

Now, let’s say that the client also purchases a protein shake from you every other workout at $6.00 per shake and also spends another $100 buying apparel or supplements.  And, let’s assume, that on average, a client stays with you for one year (12 months).

LCV = $3,000 + ($6.00 * 30 visits) + $100 = $3,460

In this example, the Lifetime Client Value is $3,460.00

Make sense?

Ok, so how do we apply LCV to our Return on Investment (ROI)?

Before we get into that, though, let's take a quick step back consider a few other investment factors, like doubling our money and the return on educational investments, such as a new book.

On average, the stock market returns 6%, not counting inflation.  If you take into account the Rule of 72, then for every $100 invested at a 6% rate of return, it will take 12 years to double your money. This means that in twelve years, you'll get $200 back. Seems like a long time, doesn't it?

What if you invest $30 on a book about building your business. After reading it, you learn something in that book that results in one new client in the next 10 years, you’ll have made 121x your initial investment. Considering how many books you probably have lying around, it's comforting to know that a single client in 10 years can yield a return.

Would you agree that buying that book was a good investment?

Now, let’s say that you spend $3,000 on digital advertising over the course of the year, and you get one new client as a result, you’ve yielded a 20% return on your investment.  Here’s where it gets a little crazy — you only need to pick up TWO new clients in 12 months to double your investment!  

But what if you were to pick up one new client per month?  That would add $41.5K to your bottom line annually.  What if it were 4 new clients per month? That’s 48 new clients with an annual LVC of $3460 each, which adds $166,080.00 to your account!

But what does this all have to do with marketing?

Well, the reality is that when times are tough, or when professionals are starting out, the cost of marketing is often discarded. In fact, a lot of companies will actually cut their marketing budget when money gets tight.  But the reality is that if you consider the ROI for marketing your business, assuming that people love what you do and the services you provide, then investing in marketing is a no-brainer because it yields a high return on investment.

Consider this example, if we charged $30,000 per year for marketing your gym, most people would think that was way too expensive.  But if the LVC of a client is $3460 and those marketing efforts yielded 4 new clients a month, it’s a 454% return on your money inside a  year.

According to Rachel, most people don’t think like this, and I agree with her.  In fact, most people would freak out at those numbers.  But, this is because most people don’t ever take the time to understand LCV and where it fits in with ROI.

Would you give someone $1 if, in return, you were given $5.54 back?

HECK YES!

Want to know how LCV relates to your ROI?  Check out this neat online worksheet I put together for you!  Oh yeah, it's free, enjoy! 🙂


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