It's my precious!

One of the very great pleasures of the Xmas and New Year holiday is being able to do things that you don’t normally have time to do – such as watch the Lord of the Rings trilogy … and we did!

Not only are they great stories, with fabulous cinematography filmed in stunning locations, but there are also some great lessons within the movies.

Gollum (or Smeagol) is absolutely focused on his Precious – no effort is wasted and nothing can deter him from his single minded-determination to get back his ring.

In a business context, this got me thinking about how we are often wasting our precious resources on ‘shotgun’ marketing to try and attract new customers.

Here’s two questions you have to ask yourself:

• What do people really want to buy from me?
• What related products are they already buying from someone else?

Once you figure out the answer to these two questions, you can look for other businesses with an appropriate customer base who might make a good incentive partner. You can then come up with an incentive arrangement to encourage both of your customer bases to shop with both you and your incentive partner.

The incentive that you might want to offer to attract a new customer will vary for each business, so, how do you figure this out?

There is a great formula that you can follow with real success;

LV = (P x F) x N – MC

Here’s what it all means:

• LV is the life time value of a customer
• P is the average profit margin from each sale
• F is the number of times a customer buys each year
• N is the number of years’ customers stay with you
• MC is the marketing cost per customer (total costs/number of customers)

Once you understand the lifetime value of a new customer, you will know how much of an incentive you can offer to an incentive partner business to help attract new customers.

So, here’s your simple step-by-step process:

1. Find companies who already have the customer base you are looking for.
2. Negotiate an incentive for them to share that customer base with you.
3. Focus your marketing resources to this group of predisposed customers.

This simple process will help you to guard and preserve your precious financial resources and really focus your efforts in places where the rewards are likely to be greatest!

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In the early 1900’s, US Banker John Wanamaker first voiced those immortal lines widely quoted in business now, “I know that half the money I spend on advertising is wasted; the trouble is I don't know which half”

It really doesn’t have to be that way.

We can help you to be as focused on your business as Gollum was on his Precious (without all the Orcs and Uruk-hai, of course!).

And if you need help working through this process, take a FREE test drive for the most powerful D.I.Y. client attraction programme ever created.