The Marketing Tip of The Week

by Ken Varga
Website: | Issue No. 07-1-7


Take The Loss Now and Smile...

How Repeat Customers Can Be Your Meal Ticket For Life!

Part 1


Hi again.

This week I’m going to go over a concept in which, as you read it, you’re probably going to say, “Has Ken gone off his rocker.”

No I haven’t, and as you read you will see why this concept will help you get droves of customers.

Concept: acquiring customers at a break-even, or slight loss, and making substantial profits on the back end.

This is one of the most overlooked and under utilized methods of customer growth and generation you have available.

But it can’t work for you until you first recognize a very important fact...

If your business is one that has a high probability of customers coming back over and over again to re-purchase frequently from you, you must do everything within your power to get customers into the buying stream as quickly and easily as you possibly can.

When I consult with companies, I have them do an exercise called the Lifetime Value of a customer.

This is a very important exercise for you to go through. Why? Because until and unless you first identify and understand exactly how much combined profit a customer means to your business for the life of that relationship, you can’t begin to know how much time, effort, and expense you can afford to invest to acquire that customer in the first place.

Many businesses, and I suspect yours is one of them, make a substantial amount of their profit from customers who keep repurchasing from you over and over again, over the years and even over decades.

All of those repurchases put a substantial amount of increased profit in your bank account, and ultimately into your pocket.

Very little of your profit would be there if you didn’t bring those customers into your business in the first place.

So let’s think about, not the beginning of the relationship, but the continuation and recurring purchases that result from bringing customers into your business is what adds substantial profit to your bottom line.

I’d like to ask you this question…

“How much would it be worth if you could bring in an extra 100, or 1000 customers this month and every month and you didn’t make a single solitary dime on the initial transaction, yet you will have enormous profits on all the repeat transactions you did with them over the future?”

So the concept is this…

I want to give you a method you could use to acquire as many new customers as you possibly can on a break-even or even a small loss, so long as your business is one that has a considerable high frequency of repurchases you can depend on getting, from that customer.

What I want to share with you now are some actual examples and stories of how a few interesting companies increased their customer or profits, merely by shifting their focus away from trying to make a huge profit on the acquisition of a new customer.

Instead they were content to make their real profit on all the repeat purchases that resulted from those new customers.

I bet you can think of many more than the ones I’m going to go over this week.

The classic examples that come to everyone’s mind are the Book of the Month Clubs, and the music CD clubs.

Why would you imagine a big, well-known company like the Columbia Club, or the Book of the Month Club, would be willing to send you six, or ten or twelve tapes, books, or CD’s, for six cents or a dollar?

Do you think it’s because they lose money long-term on you, or do you think it’s because they recognize that for every 20, or 2000 people coming in, that a large number will keep buying over and over again in the future at the full rate?

They want to do everything possible to make it easy and attractive to get you started buying and using their service in the first place.

They do tens of millions of dollars a year from the people that come in from that break-even proposition.

In next week’s tip, I’m going to go over a few examples of some of my consulting clients and how I helped them increase their customer base many times over, just from breaking even on the initial sale.

Till then, keep healthy.

Best Wishes,

Ken Varga
  ...using experience from my 35 businesses to help you generate millions of dollars from yours

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Copyright 2000-2006 by Kenneth J. Varga. All rights reserved.