Today's episode is all about the importance of Lifetime Value (LTV) when it comes to lead gen strategy. Now, a lot of people think the lifetime value of your customers is something you measure and think about after you get lead gen dialed in - but that's simply not the case. Whether you're a new business, or a well established business - in order to properly launch an effective lead gen strategy - you need to already know what your average customers are worth - not "right away", but over the course of their relationship with your business. 

Businesses that base their acceptable customer acquisition costs on the value of immediate sales will always lose to those businesses who factor in Lifetime Value when deciding what they're willing to pay for leads - and eventually customers. Almost all "pay to play" platforms nowadays are auction based models - meaning that you (and your competitors), determine what your going to pay for visibility. Most platforms have enough inventory for only a handful of "winners" in any segment of a market. So if you're a cleaning company using Google Ads to acquire customers in the Greater Boston area - you might be competing (or bidding against), 10-20 other cleaning companies and half a dozen lead companies. Although there may be 30 or so total advertisers bidding for that traffic, only half a dozen or less are likely getting any significant customer flow because of limited page one inventory, and search volume etc. (there's lots of factors that play a role here). 

In our experience, 80% or more of the total available customers each month are probably going to 3-4 of the "real businesses". These are the businesses who: provide the best user experience in their advertising; have the best social proof; the strongest offers; and who are willing to spend the most - there's just no way around it. 

Now many of those factors you can control - like providing a great user experience by using proven ads and creatives, driving to a great offer on a direct response marketing funnel etc. And you can work to get more positive reviews than any of your competition. But you can't spend more unless your business model supports it. Meaning, if the LTV of your average customer is $350 - but your competitors are able to maintain a $550 LTV - they'll always be able to outspend you, and capture more market share - allowing them to grow month after month, while your business remains flat.

So what do you do? It's simple: put a focus on increasing LTV of your average customer.

There are an unlimited number of ways to increase LTV, but let me spur your thinking with our current example of a cleaning company. You could offer additional services that you don't already offer. You could change your pricing model to charge for extra bathrooms, larger kitchens etc. You could incentive customers to get on recurring programs. You could do better email marketing and run monthly and season promotions if you're not already. You could sell gift cards and get your current customers to become a referral engine for your business. You could partner with other related, but non-competing businesses and earn referral fees - maybe partnering with someone who does grout replacement, heating and air conditioning vent cleaning, laundry services etc. The point here, is that with a little creative thinking you'll see there are always dozens of ways to add additional revenue streams for any business - and hence - to increase your average customer lifetime value. 

When each new customer is worth more to your business - you can invest more to acquire those customers, and ultimately - become the leader in your space. Because you've probably heard it said (I believe the original quote was from Dan Kennedy), that whoever can spend the most to acquire a new customer wins - and I know it's true.