How to Raise the Lifetime Value of Your Customers

Copyright (c) 2013 Painter Marketing Solutions

Let's discuss a powerful, yet rarely talked about method of increasing the profitability of your painting business...raising the lifetime value of each customer.

Very few painting contractors or any business owner for that matter, realize that there are only 3 ways to grow any business. Almost every business puts their focus on the most difficult, costly, and labor intensive, new clients. Focus more effort on the other two and you greatly reduce your need for new clients. The three ways are: 1) more new customers, 2) increase the transaction value, and 3) increase the frequency with which they purchase. That's it! Everything is a permutation of one of those 3.

I urge you to sit up and pay close attention to this. Acquiring new customers is not a new concept to you. How to do it most efficiently might be. But the mere act of acquiring a new customer has likely been a goal of yours for years. i certainly hope so!

However, increasing the value of each customer is a rarely thought of as a deliberate means of increasing profit in most industries…including ours. Most painting contractors spend 90%+ of their marketing resources on getting new tenants and virtually ignore existing customers from a marketing standpoint. I don't care if we are talking about websites, print advertising, yard signs, or t-shirts and hats. They all focus on attracting the attention of the next customer.

I'm not talking about raising your fees here either. That's one way (and highly recommended) to increase their value, but not the only or most lucrative method.

I'm talking about cross-selling, up-selling and forming alliances that each put hard cash into your bank account each time your customers raise their hand and accept these valuable offers.

I believe, and I think you ought to seriously consider believing, that your customer base is the single biggest asset you have. Yes, even bigger than your vehicle and equipment. Your equipment and vehicles don't have credit cards or checkbooks. Your customers do. And, if you're a contractor with even one vehicle, never mind 3 to 10, you likely have hundreds of credit cards and checkbooks just itching for you to give them a good reason to make a deposit into your account.

In order to fully understand this concept, you need to start thinking of each customer as somebody with more needs than just painting. Let's explore a few ideas…

Since most painting decisions take place around some motivation to upgrade and maintain a home, your customers probably need:

A roofer, HVAC repair, a carpet cleaner, a landscaper, window replacements, gutter repair, chimney repair, etc. The list can go on and on but I'll stop there for ease of understanding.

Like you, each of those professions has a significant cost to acquire a new customer. Some in the thousands! Do you think they would pay you a finder's fee of $100 if they're accustomed to paying $200?

Of course!

Or, equally as good, do you think they'd send you a new customer if you sent them a customer? Multiply this out in a few industries and you have bigger profits either way.

Is this too complicated? Not really, but let's simplify this one step…

You already have the vehicles, equipment, crew, insurance and time in your calendar that needs to be filled. How many times, after the painting job "pitch", do you offer window cleaning, minor repair, carpet or hardwood cleaning, or your referral program to your customers? If you're anything like most painters the answer is a deafening NEVER!

Do the math; take your total number of existing customers over the past year and sell a small percentage of them $250-500 worth of extra services. What does that do to your bottom line? More importantly, what does that do to the valuation of your business? Sell another percentage of them an upgraded or premium service, what does that do? Get a few of them to give you one or two more referrals, what does that do? Not only does that increase your profits but it self-perpetuates this entire process and it starts all over again.

Are you starting to see the HUGE possibilities?

I don't want to belabor this point so I'll wrap this article up by saying this: Your customers are absolutely, positively willing to pay you more than they currently are. Spend time everyday thinking about this and put automated systems in place to capitalize on this truth - it might be one of the most profitable decisions you've made since you decided to get into the painting business!

I challenge you to take the next 30 minutes thinking about this article. Make a list of ideas and beta test a few of them. Next time you and your team focuses on marketing, consider what can be done with your existing customers…even if it's just making a phone call to thank them for their business, sending them a thank you card, or sharing with them your referral rewards program. We've proven time-and-time again that simple effort will result in additional referrals and purchases.

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