Dean Graziosi explains why service businesses should calculate Customer Lifetime Value before spending on ads. An air-conditioning client worth $1,000 as a one-time sale could be worth $5,000 over a year if they return. Knowing your LTV lets you spend more on acquisition than competitors stuck chasing one-off deals.
What people don't realize, it is way easier to get a happy client to upgrade than it is to go find another brand new client in your door. I promise you, no matter what business you're in, if you are a one and done, every Monday you're fighting for new clients. Say we both have a service business, air conditions. If you're a one and done and your customer's lifetime value is, hey, we go see this person once and we get an average $1,000 for a client with a $200 profit, but I service them so well, and while they're there they say, oh my God, if I need this, and then I need this, and then I need this, at the end of the year your client's worth $1,000 to you. At the end of the year client's worth $5,000 to me. If you think about advertising, who wins in advertising? Those that can afford to spend the most to acquire a client. When I go to advertise, I could spend $2,000 to acquire that client. You can only spend $300. Who wins? You. It's not just a matter of selling more, it's about serving them at every level, knowing your lifetime value. You should know 6 months, 1 year, and 3-year lifetime value, and that's what you can afford to acquire a client. And most people don't do that. They're one and done, and that's why they should
