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CHAPTER 5 MULTIPLYING YOUR BUSINESS PROFITS

Your Business is Profitable When the GROSS PROFIT
earned on the FIRST PURCHASE is GREATER than
your ACQUISITION COST.

By Focusing on Your Customer’s Lifetime Value, Your
Investment Will Become Even More Profitable

Let me give you an example from one of my businesses, Adam
Khoo Learning Centre. Many people wonder why I would
spend so much on advertising and promotions to acquire new
customers. Well, it’s because I have done my calculations and
found that by placing ads in the right media, my initial
acquisition cost was $150 per customer.

The fee that each student pays to attend my weekly enrichment
programs is $150 per month. So at first, it may seem that I
am spending too much on advertising. However, I don’t look
at the $150 received as the true value of the customer.

From my experience, I know that on average a student will
spend at least two years in my enrichment centre before
graduating (some who come early spend as long as 4 years
with me). So, $150 per month x 24 months = $3,600!

For every $150 it takes for me to buy a new customer, I get
additional revenue of $3,600. This is how my business got
so profitable!

What if I told you that my acquisition costs have been continually
declining and it now costs me less than $60 to buy a new
customer? You are going to learn how to continually use more
effective advertising and marketing strategies to keep reducing

SECRETS OF BUILDING MULTI-MILLION DOLLAR BUSINESSES 143