But let's look beneath the surface...

What if you looked through your records to calculate your customer's lifetime value. You'd calculate that by adding up the total sales of all your customers divided by the number of customers. If they spend an average of $3,772 each—then that's their lifetime value to you.

From the example above, the $1,00

In today's business climate, Og and Bamboo are still around. Nowadays, they carry laptops instead of clubs. But they still get steamed when the numbers don't add up. And they're quick to snatch defeat from the jaws of victory.

But not you...

I'm convinced you don't conduct business like Og or Bamboo. I bet you're a seasoned pro when it comes to sales and marketing. You know the final result is what determines profit or loss. And you look beneath the surface to mine for hidden assets.

Here's a prime example:

Advertising is expensive. Especially if it doesn't bring in enough sales or leads to cover costs. But could you lose money on ads, and still make a sizeable profit?

Absolutely.

Suppose you ran an ad for your $49 product in a trade publication. The ad costs $1,000 per week, you get an average of twenty-one leads, and three become customers. You made $147 in gross sales, and your total profit is $100.

Would you run the ad again?

You're surmising, "No way. This isn't smart business. Besides, I'd lose my shirt."

But what if your friendly consultant told you this was one of the smartest investments you've ever made. Then wouldn't it make great business sense to run it again?

Because if you're looking at the surface, your loss is $900 ($1,000 — $100 = $900). This will raise red flags with your accountant, your banker, and your spouse. And you're thinking out loud, "I knew advertising doesn't work."

But let's look beneath the surface...

What if you looked through your records to calculate your customer's lifetime value. You'd calculate that by adding up the total sales of all your customers divided by the number of customers. If they spend an average of $3,772 each—then that's their lifetime value to you.

From the example above, the $1,000

But not you...

I'm convinced you don't conduct business like Og or Bamboo. I bet you're a seasoned pro when it comes to sales and marketing. You know the final result is what determines profit or loss. And you look beneath the surface to mine for hidden assets.

Here's a prime example:

Advertising is expensive. Especially if it doesn't bring in enough sales or leads to cover costs. But could you lose money on ads, and still make a sizeable profit?

Absolutely.

Suppose you ran an ad for your $49 product in a trade publication. The ad costs $1,000 per week, you get an average of twenty-one leads, and three become customers. You made $147 in gross sales, and your total profit is $100.

Would you run the ad again?

You're surmising, "No way. This isn't smart business. Besides, I'd lose my shirt."

But what if your friendly consultant told you this was one of the smartest investments you've ever made. Then wouldn't it make great business sense to run it again?

Because if you're looking at the surface, your loss is $900 ($1,000 — $100 = $900). This will raise red flags with your accountant, your banker, and your spouse. And you're thinking out loud, "I knew advertising doesn't work."

But let's look beneath the surface...

What if you looked through your records to calculate your customer's lifetime value. You'd calculate that by adding up the total sales of all your customers divided by the number of customers. If they spend an average of $3,772 each—then that's their lifetime value to you.

From the example above, the $1,00

Absolutely.

Suppose you ran an ad for your $49 product in a trade publication. The ad costs $1,000 per week, you get an average of twenty-one leads, and three become customers. You made $147 in gross sales, and your total profit is $100.

Would you run the ad again?

You're surmising, "No way. This isn't smart business. Besides, I'd lose my shirt."

But what if your friendly consultant told you this was one of the smartest investments you've ever made. Then wouldn't it make great business sense to run it again?

Because if you're looking at the surface, your loss is $900 ($1,000 — $100 = $900). This will raise red flags with your accountant, your banker, and your spouse. And you're thinking out loud, "I knew advertising doesn't work."

But let's look beneath the surface...

What if you looked through your records to calculate your customer's lifetime value. You'd calculate that by adding up the total sales of all your customers divided by the number of customers. If they spend an average of $3,772 each—then that's their lifetime value to you.

From the example above, the $1,00

But what if your friendly consultant told you this was one of the smartest investments you've ever made. Then wouldn't it make great business sense to run it again?

Because if you're looking at the surface, your loss is $900 ($1,000 — $100 = $900). This will raise red flags with your accountant, your banker, and your spouse. And you're thinking out loud, "I knew advertising doesn't work."

But let's look beneath the surface...

What if you looked through your records to calculate your customer's lifetime value. You'd calculate that by adding up the total sales of all your customers divided by the number of customers. If they spend an average of $3,772 each—then that's their lifetime value to you.

From the example above, the $1,00

But let's look beneath the surface...

What if you looked through your records to calculate your customer's lifetime value. You'd calculate that by adding up the total sales of all your customers divided by the number of customers. If they spend an average of $3,772 each—then that's their lifetime value to you.

From the example above, the $1,000 ad cost divided by three customers means you paid a bit over $333 for each new customer that week. That's a lot of money to invest trying to sell a $49 product. Especially at a $900 loss.

But wait...

If a typical customer spends an average of $3,772 with you over the course of a lifetime, then you'd want to run that ad every single week. Because you know you will earn an average of $3,439 ($3,772 — $333) in gross sales from those three new customers over time.

This negates the initial loss. Soon you'd go from red to black. You'd watch your CPA jump for joy. And your customer's lifetime value should increase over time.

Here's why:

1) Stronger pulling ads. When you've tested a better pulling ad, your response rates will soar. Let's say you test another ad in the same publication the following week. This time you get 54 leads, and seven become new customers instead of three. Your customer acquisition cost plummets and profits increase.

2) Advertise mid-range products. Instead of advertising a $49 product—you advertise a $299 program and five bought. You have now recouped your advertising costs, and then some. Consumers buying at this price range are more open to buying other mid- and high-end products.

3) Customer loyalty. If you've been in business for five years and their lifetime value is $3772—it's only logical that their value will increase as they stay with you through seven years. As long as you continue to give value in return. Or like the cable companies (that increase revenue with customer retention), offer them an option to upgrade to higher-priced subscriptions.

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