There are two aspects to increase the value of your marketing which in turn creates profits in your business. What are these two sides of marketing? In short, they are Acquisition Cost and Lifetime Value.

The goal of Marketing in the business should be to reduce the Acquisition Cost and increase the Lifetime Value. So, we will reserve Acquisition Cost for a later discussion and focus on how you develop the Lifetime value of your customers.

Based on the knowledge that it is six times more expensive to acquire a new customer than to sell more products and services into your current customer base, ActionCOACH has created a system to build customer loyalty. The concept I discuss in my book, “Instant Repeat Business,” is to increase lifetime value by using the Ladder of Loyalty:

Raving Fan

Advocate

Member

Customer

Shopper

Prospect

Suspect

The concept is to categorize each and every name in your prospect and customer database into levels according to their loyalty to your business.

You start with SUSPECTS which are businesses that fit into what you have defined as your target market. Any name that you obtain through marketing efforts that fits your criteria enters the Ladder of Loyalty at the SUSPECT level.

Once the SUSPECT becomes interested in your product or service and makes an inquiry, you would move the business up to the PROSPECT level.

Next, a SHOPPER would be a business that buys once from you, but has not yet determined that you are a vendor he or she wants to do business with again.

If the business buys more than once, then the SHOPPER becomes a CUSTOMER.

Once the CUSTOMER becomes a consistent buyer of your products and services, you may begin offering incentives and privileges to them so that they become MEMBERS, and no longer look elsewhere for competitive products or services.

MEMBERS do business with you because of the relationship and trust that you have developed.

An ADVOCATE is where your MEMBERS begin selling for you through testimonials and referrals.

An ADVOCATE becomes a RAVING FAN when he/she cannot stop selling for you. Anytime a RAVING FAN is out in the community they are promoting you to everyone about how wonderful you are.

Now, here are some important questions: How many RAVING FANS do you have in your customer base? What would happen to your business if you moved everyone in your database up one level?

Massive profits do not occur by bringing more SUSPECTS or PROSPECTS into your database, but rather moving MEMBERS to ADVOCATES and then to RAVING FANS.

Massive profits occur at the RAVING FAN level. As an assignment, go into your prospect and customer database and determine how many businesses you have at each level. You will create a world of opportunity once you begin to implement strategies for each level on the Ladder of Loyalty.