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CHAPTER 5 MULTIPLYING YOUR BUSINESS PROFITS

The acquisition cost per customer is $1,000/ 36 = $27.78
per customer

As long as the ‘Gross Profit’ earned is higher than the
‘Acquisition Cost’, then it makes sense to keep on buying
more customers. In this case, it costs you $27.78 to buy a
new customer, which gives you an extra gross profit of $50.

Think of your business in a whole new way. It is not about
selling products and services (the traditional approach).
Instead, business is about buying customers at a price that is
less then the extra profits they will bring you.

As a smart entrepreneur, you should not just focus on the
gross profits you will earn from your new customer’s first
purchase. You need to think long term and focus on creating
customer loyalty so they will keep spending with you. After
spending time and effort to buy this new customer, you should
focus on the total amount you will earn as a result of their
lifetime of buying from you. This is known as the customer’s
lifetime value.

If you are a shoes retailer, don’t just think of the $50 one-
time gross profits that you will make from the first purchase.
Think of the fact that this customer buys a new pair of shoes
at least once every three months. As a loyal customer, this
buyer would be worth $200 a year to you and $400 over a
span of two years. In this case, isn’t buying the customer for
$27.78 more than worth it?

142 SECRETS OF BUILDING MULTI-MILLION DOLLAR BUSINESSES