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Other Added - 3 Strategies to Profit When Click Prices Increase (Part 3 of 3 Series)
“Making money online quick and easy” seems to be the buzz word today in the home business and money making arena online these days. It would seem at first glance that making money online seems to be a very simple thing. However, as most internet marketers would tell you, this is not true as making money online is a serious business and hard work has to go into it.This article aims to help anyone trying to make money online with a website by suggesting ways to increase your online money making profits today.1. Increase your website trafficIncreasing your website traffic today can and will increase your online profits because the more people that you get to visit your website, the more chances of a sale being made. The more qualified the website traffic the better meaning that it would be best for someone to get “Biscuits” if they were searching for it online. Some ways to increase your website traffic are found below.Firstly, traffic exchanges today are used by many people to increase website traffic to their websites. While this is not wrong, you must know the type
Unlike the first example, let’s say you have only been in business for one year and you have little customer purchasing history; therefore, you are not confident that your initial customers have made their final purchases.
In this situation, you need to estimate how long you expect a customer will remain loyal and continue purchasing from your business.
In this example, assume that your customers will remain loyal and continue making purchases for three years. You have generated $250,000 in revenue during your first year from 800 customers.
First, calculate your average customer lifetime value using your known one-year revenue and customers data.
Average Lifetime Value is $250,000 / 800 = $312.50
Now, you need to calculate the approximate value based on your expected customer lifetime of 3 years. Convert your years into months and divide the number of months an average
Effectively present all of your IT skills with the IT Technical Skills Summary - an exceptionally powerful document that should form part of every resume submitted.The IT Technical Skills Summary ensures that every IT skill you have acquired - computer software, computer hardware, applications software, and so on, will be indexed in resume databases or viewed by hiring managers or recruiters. It will prove to be a valuable tool in helping you to get the job interview that will lead to the right job.The layout uses 4-columns to allow you to effectively present a complete, quantified, qualified, very easy to read, summary of the IT technical skills and experience that you have acquired over the course of your career.The 4-column layout enables an employer to quickly scan, in a matter of seconds, the complete document to see if you have the technical skills and experience that they need.Resume databases are used by most recruiters, headhunters and employers. Every word - every skill - that is included in a resume is indexed when your resume is added to the database. If the skill or ex
Traditional business philosophy is that “it is often more expensive to acquire new customers than it is to generate repeat sales from existing ones and that existing sales are more profitable due to the reduced marketing expense.” This strategy is very effective for offsetting the affects of rising pay-per-click costs.
While most businesses consider only the value generated from a customer’s first purchase, a business using an average customer lifetime value considers the value generated from all of a customer’s purchases.
Customer lifetime value is the average time period a customer has a relationship with your business and the total revenue generated during that relationship. A relationship is defined as the time between the customer’s initial purchase and their final purchase from your business.
For newer businesses, the “life-time” number is estimated based on loyalty expectations while older businesses with years of customer purchasing history can generate loyalty measures from their actual internal statistics. In either case, understanding your customer lifetime value is important regardless if you rely on relative estimates or historical stats.
How Do You Calculate Your Average Customer Lifetime Value?
To calculate your average customer lifetime value you will need to gather the following:
• How long you have been in business.
• Your best estimate of the time between an initial customer purchase and their final purchase. (Typically a year or two but ideally based on your unique business cycle.)
• Your total sales.
• Your total number of customers.
Although not covered in this article, you may also want to gather the costs you incurred so that your customer lifetime value shows your breakeven point.
The basic formula for calculating your average customer lifetime value is:
Average Lifetime Value = (Total value of all sales) / (Total number of customers)
For new businesses without ample customer purchasing history, your formula may be more like:
(Time length estimate for how long your average first time customer will remain a customer) (Length of time you have been in business)
Example of an Older Business With Vast Customer Purchasing History:
For example, you have been in business for three years and through studying your customer purchasing history you have discovered that on average, your customers make their first and final purchase within one year. So, one year is your “customer lifetime”.
Over the past three years you have generated $760,000 in revenue from 2,300 customers. Before moving forward, you ideally want to remove any new customers who have not yet exceeded one-year “customer lifetime.” To do this, just take your average sales value times all less than one-year customers and deduct it from your total revenue. Then deduct the less than one-year customers from your total customers.
Let’s say your average sales value is $175 and there were 500 “less than one-year” customers. Now take your adjusted revenue of $672,500 ($760,000 - $105,000) and your adjusted total customers of 1,800 (2,300 – 500) and perform the calculation.
Average Lifetime Value is $672,500 / 1,800 = $373.61
Your average customer lifetime value is $373.61! So while many businesses under this example may consider their customer value at $175 (the average value of a sale), a business using average customer lifetime value considers a customer worth $373.61. This perspective opens new strategic opportunities.
Example of a New Business Without Vast Customer Purchasing History:
Unlike the first example, let’s say you have only been in business for one year and you have little customer purchasing history; therefore, you are not confident that your initial customers have made their final purchases.
In this situation, you need to estimate how long you expect a customer will remain loyal and continue purchasing from your business.
In this example, assume that your customers will remain loyal and continue making purchases for three years. You have generated $250,000 in revenue during your first year from 800 customers.
First, calculate your average customer lifetime value using your known one-year revenue and customers data.
Average Lifetime Value is $250,000 / 800 = $312.50
Now, you need to calculate the approximate value based on your expected customer lifetime of 3 years. Convert your years into months and divide the number of months an average
Smart networking is critical to career success. Master it, and you master your destiny. The following tips will help you become a pro:1. If unemployed, print your own business cards to use at networking events. Include your contact information with your target market. Example: John Q. Smith, Sales Management.2. Put your resume on the Internet with its own web page. Many Internet service providers give you a free page for personal use. Then, add your resume page's URL to your business card.3. When you collect business cards, follow-up! Note on the back of each card where you met the individual and something noteworthy to help you remember him. Schedule a time to meet for coffee to continue building the relationship.4. Make networking a process to do for the life of your career, not just something to do between jobs. Continue growing your career by building and maintaining your relationships.5. When at a networking event, offer first, take second. Determine the value you have for others before asking for their help. This way you will leave a memorable impression.6. As a
How Do You Calculate Your Average Customer Lifetime Value?
To calculate your average customer lifetime value you will need to gather the following:
• How long you have been in business.
• Your best estimate of the time between an initial customer purchase and their final purchase. (Typically a year or two but ideally based on your unique business cycle.)
• Your total sales.
• Your total number of customers.
Although not covered in this article, you may also want to gather the costs you incurred so that your customer lifetime value shows your breakeven point.
The basic formula for calculating your average customer lifetime value is:
Average Lifetime Value = (Total value of all sales) / (Total number of customers)
For new businesses without ample customer purchasing history, your formula may be more like:
(Time length estimate for how long your average first time customer will remain a customer) (Length of time you have been in business)
Example of an Older Business With Vast Customer Purchasing History:
For example, you have been in business for three years and through studying your customer purchasing history you have discovered that on average, your customers make their first and final purchase within one year. So, one year is your “customer lifetime”.
Over the past three years you have generated $760,000 in revenue from 2,300 customers. Before moving forward, you ideally want to remove any new customers who have not yet exceeded one-year “customer lifetime.” To do this, just take your average sales value times all less than one-year customers and deduct it from your total revenue. Then deduct the less than one-year customers from your total customers.
Let’s say your average sales value is $175 and there were 500 “less than one-year” customers. Now take your adjusted revenue of $672,500 ($760,000 - $105,000) and your adjusted total customers of 1,800 (2,300 – 500) and perform the calculation.
Average Lifetime Value is $672,500 / 1,800 = $373.61
Your average customer lifetime value is $373.61! So while many businesses under this example may consider their customer value at $175 (the average value of a sale), a business using average customer lifetime value considers a customer worth $373.61. This perspective opens new strategic opportunities.
Example of a New Business Without Vast Customer Purchasing History:
Unlike the first example, let’s say you have only been in business for one year and you have little customer purchasing history; therefore, you are not confident that your initial customers have made their final purchases.
In this situation, you need to estimate how long you expect a customer will remain loyal and continue purchasing from your business.
In this example, assume that your customers will remain loyal and continue making purchases for three years. You have generated $250,000 in revenue during your first year from 800 customers.
First, calculate your average customer lifetime value using your known one-year revenue and customers data.
Average Lifetime Value is $250,000 / 800 = $312.50
Now, you need to calculate the approximate value based on your expected customer lifetime of 3 years. Convert your years into months and divide the number of months an average
It’s frustrating when your co-workers, teenager or even your dog won’t listen. While you can’t control how they receive what you say, you can control how you send it. Here are a few tips on why people don’t listen and what you can do to change it.1. Short Attention SpansProblem: When asked to guess the average adult attention span, most people say around thirty minutes. According to statistics, however, the average adult attention span is actually only seven seconds. That’s right! Every seven seconds you go away somewhere. You think about something else. In fact, you could actually be taking a mental break right now. It is a normal part of how the brain integrates external stimuli – like when your computer starts defragging for a moment while you type.Solution: It helps to pause from time to time when you speak. This allows people to integrate your information or ask a clarifying question. Also, include examples to anchor your concepts. For example (see--I’m doing it now!), a concept without an example is like tree without roots, a house without a foundation, or Sonny without Cher. It j
The basic formula for calculating your average customer lifetime value is:
Average Lifetime Value = (Total value of all sales) / (Total number of customers)
For new businesses without ample customer purchasing history, your formula may be more like:
(Time length estimate for how long your average first time customer will remain a customer) (Length of time you have been in business)
Example of an Older Business With Vast Customer Purchasing History:
For example, you have been in business for three years and through studying your customer purchasing history you have discovered that on average, your customers make their first and final purchase within one year. So, one year is your “customer lifetime”.
Over the past three years you have generated $760,000 in revenue from 2,300 customers. Before moving forward, you ideally want to remove any new customers who have not yet exceeded one-year “customer lifetime.” To do this, just take your average sales value times all less than one-year customers and deduct it from your total revenue. Then deduct the less than one-year customers from your total customers.
Let’s say your average sales value is $175 and there were 500 “less than one-year” customers. Now take your adjusted revenue of $672,500 ($760,000 - $105,000) and your adjusted total customers of 1,800 (2,300 – 500) and perform the calculation.
Average Lifetime Value is $672,500 / 1,800 = $373.61
Your average customer lifetime value is $373.61! So while many businesses under this example may consider their customer value at $175 (the average value of a sale), a business using average customer lifetime value considers a customer worth $373.61. This perspective opens new strategic opportunities.
Example of a New Business Without Vast Customer Purchasing History:
Unlike the first example, let’s say you have only been in business for one year and you have little customer purchasing history; therefore, you are not confident that your initial customers have made their final purchases.
In this situation, you need to estimate how long you expect a customer will remain loyal and continue purchasing from your business.
In this example, assume that your customers will remain loyal and continue making purchases for three years. You have generated $250,000 in revenue during your first year from 800 customers.
First, calculate your average customer lifetime value using your known one-year revenue and customers data.
Average Lifetime Value is $250,000 / 800 = $312.50
Now, you need to calculate the approximate value based on your expected customer lifetime of 3 years. Convert your years into months and divide the number of months an average
A postage rate includes the value and service individuals get from the agencies offering postal services, and the amount of work they are willing to do to prepare mails for individuals.A lot of agencies providing postal services offer discounted postage rates, because they believe that individuals do some of the work that would have been done otherwise by the postal service agency. This involves sorting the mail, according to zip code or taking the mail to a postal facility.On the whole, the more work that is done by individuals, the lesser the postage rate they will have to pay. There are some aspects that are essential to be weighed before individuals decide to send a mail. Some of the factors that will affect the postage rate are the amount of work the individual is willing to do, and how much is left to the postal service bureau. Other factors on which postage rates can be based are the class, size, weight, quantity of the mail, the distance the mail travels, and the speed of delivery, whether Express Mail, Priority Mail, or First-Class Mail. Postage rate also depends on factors such as dest
Let’s say your average sales value is $175 and there were 500 “less than one-year” customers. Now take your adjusted revenue of $672,500 ($760,000 - $105,000) and your adjusted total customers of 1,800 (2,300 – 500) and perform the calculation.
Average Lifetime Value is $672,500 / 1,800 = $373.61
Your average customer lifetime value is $373.61! So while many businesses under this example may consider their customer value at $175 (the average value of a sale), a business using average customer lifetime value considers a customer worth $373.61. This perspective opens new strategic opportunities.
Example of a New Business Without Vast Customer Purchasing History:
Unlike the first example, let’s say you have only been in business for one year and you have little customer purchasing history; therefore, you are not confident that your initial customers have made their final purchases.
In this situation, you need to estimate how long you expect a customer will remain loyal and continue purchasing from your business.
In this example, assume that your customers will remain loyal and continue making purchases for three years. You have generated $250,000 in revenue during your first year from 800 customers.
First, calculate your average customer lifetime value using your known one-year revenue and customers data.
Average Lifetime Value is $250,000 / 800 = $312.50
Now, you need to calculate the approximate value based on your expected customer lifetime of 3 years. Convert your years into months and divide the number of months an average
With the internet connection getting faster and faster by the day, there's a "war" going on between DSL and cable internet. If you are still using the old dial-up connection, it is time to get rid of it and think about one of these 2 possibilities. But the eternal question is: which one?If you've been preoccupied by this issue, you have probably asked all your friends. The first one could have said "Get DSL" while the second one said "You really need to get cable internet." This only gets you go deeper into confusion, and as with all things in life, it really depends on what YOU want for your internet connection.First of all, let's take a look at the characteristics. What are the two most important issues that are on the agenda when it comes to choosing an internet connection? That's easy. They are called speed and security.In theory, when it comes to speed, cable modems seem to be faster. This is a no brainer, as they offer more bandwidth. But it has a catch to it. The speed very much depends on the number of people in your neighborhood who are using the same connection. DSL is not a str
Unlike the first example, let’s say you have only been in business for one year and you have little customer purchasing history; therefore, you are not confident that your initial customers have made their final purchases.
In this situation, you need to estimate how long you expect a customer will remain loyal and continue purchasing from your business.
In this example, assume that your customers will remain loyal and continue making purchases for three years. You have generated $250,000 in revenue during your first year from 800 customers.
First, calculate your average customer lifetime value using your known one-year revenue and customers data.
Average Lifetime Value is $250,000 / 800 = $312.50
Now, you need to calculate the approximate value based on your expected customer lifetime of 3 years. Convert your years into months and divide the number of months an average customer continues buying from you by the number of months you have been in business.
36 months / 12 months = 3
Now, multiply this number “3” by your average customer lifetime value of $312.50 to generate your expected customer lifetime value: $312.50 x 3 = $937.50.
Although this number is not as reliable as the one generated by a business with years of actual customer purchasing history, it does provide essential information for a marketer to determine customer lifetime value. The risk is losing your average customer before they reach the three year lifetime expectation – so be conservative when estimating this!
How is Your Average Customer Lifetime Value Used for Pay-per-Click Bidding?
Similar to how large businesses approach capital investments through calculating payback and return on investment - understanding your average customer lifetime value enables you to make decisions today based on longer term payback and returns forecasts.
Let’s look at an example that really shows the power of using your average customer lifetime value.
There are two companies: Company A. and Company B.
Both have been in business for the same period of time, 3 years and both sell the same product at an average sales price of $175.
Both companies perform pay-per-click using Overture (a.k.a. Yahoo Search Marketing Solutions) and want to bid on their primary but expensive keyword, “brand X.” The first eight bid positions in Overture for keyword “Brand X” are between $2.75 and $1.85 per click.
Further, Company A. does not consider average customer lifetime value while Company B. does. Let’s define the parameters for Company A. and B.:
Company A. Company B.
(Uses Avg. Customer LTV)
Average Sales Price $175 $175
Customers in Past 3 Years 4,000 4,000
Revenue in Past 3 Years $2.1 million $2.1 million
Lifetime Period Unknown, doesn’t calculate 2 years
Website Sales Conversion Rate 1% 1%
The Scenarios:
Company A. pulls out their calculators and figures out that for every 100 website visitors they generate $175 in revenue. At the current bid prices, an eighth bid position at $1.85 per click would cost them $185 to generate $175 sale. They decide that keyword, “Brand X” is too expensive and they drop out of the bidding competition.
Company B. though calculates their average customer lifetime value.
They researched and discovered that their customer lifetime is two years. They first remove any new customers that have not completed their two-year “lifetime” and calculate their average customer lifetime value. Assume there are 600 “less than two-year” customers and they represent $105,000 in revenue. They deduct these numbers from their totals and calculate the following…
Average Lifetime Value is $1,995,000 / 3,400 = $586.76
Company B. assesses their ability to bid for Brand X using their average customer lifetime value. Like Company A. they figure that for every 100 website visitors they generate a $175 sale. At the current bid prices, first position at $2.75 per click would cost them $275 to generate just a $175 sale. BUT, it’s OK! Their average customer lifetime value is $586.76 so they know they will make over $311.76 from that customer over their lifetime. Impressive!
This is a simple example however it proves the power of understanding your average customer lifetime value. The critical step for Company B. now is to implement customer retention strategies that increase their average customer lifetime value.
Do YOU Know What to Do as Your Pay-per-Click Bid Costs Increase?
If you have read all three
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