Who are your business’ best customers?
What types of projects make you the greatest profit?
Is your time underutilized?
What can you do about it?
Every business should know the answers to these questions. Do you?
For owners and managers of businesses that provide and sell services to clients — charging for your time and expertise rather than exclusively selling tangible products — one of the greatest challenges is identifying the most profitable projects and types of customers, understanding the real costs, and putting that knowledge to use when determining how to target and sell to potential customers.
That’s what we’ll address here. …
Every organization should have a method that guides its core operations in a way that is easy to communicate and simple to apply within its business. Individuals could benefit equally. Through research, experience, and modification, the most effective method we’ve found is a Plan — Do — Measure cycle (PDM), a goal-oriented process that takes a hands-on, practical approach to problem-solving.
Of the many values held by impakt Labs, our learning processes have been among the most constructive to us personally, as startup founders. We are experimental and critical in our approach. …
Customer lifetime value (CLV) — or customer profitability, customer profitability analysis, or simply “figuring out who makes you the most money” — is an essential metric that can help optimize your business so that it makes you the most possible money while wasting the least possible time and resources. CLV simply calculates the net profit attributed to your relationships with customers and is a common consideration within large corporations that is often underutilized, or given no consideration, in small businesses and startups.
A straightforward example of the relevance of customer lifetime value is to examine customer acquisition in an e-commerce company. When acquiring customers through digital channels like Google Adwords, Facebook Ads or Youtube Ads, the most basic, common sense approach to optimizing your spending would be to invest more where it is cheaper to acquire new customers. …