In the last post, I described how to determine the lifetime value of a customer (LTV).

This week we are using Mike Michalowicz’ Get Different experiment from “Get Different”.

You can get the experiment worksheet for free at: 

gogetdifferent.com/#resources

Now let’s consider the close rate. This is how many people who enter a sales process with you actually make a purchase. 

If you do one on one sales calls, you know this number. If you sell a product, this is how many people who come to your website who actually buy.

Let’s say you have a product business, where repeat customers buy $50 worth of stuff every 3 months for 5 years. LTV= $1,000

To keep the numbers easy, let’s say that 10% of people who come to your website make a purchase.

How much- on average- is it worth to you to get interested people to your website? 

If you get 10,000 people, roughly 1,000 will buy. Let’s be simple and say most of them won’t become repeat customers. So if they spend $50 and stop, you’ll make $50,000.

That’s a rough estimate of a low end, some will stick and become repeat customers.

So now it is time for a value decision. How much are you willing to spend to try and get 10,000 people to click to the website?

Break that into chunks and perform experiments.