Impressions - August 2014 - 44

For the customers who have made multiple purchases, divide the number of jobs
into the annual amount spent to get the
average order size from these customers.
Compare their average order size to the
average annual order size from the ﬁrst
calculation. The second calculation is to
compare their annual order size during the
total time you have been doing business
with them. You are looking for increasing
year-over-year average orders. If they are
erratic or declining, you may be at risk of
losing the client.
There are two objectives here. The ﬁrst
is to increase both the frequency and the
value of each order for your existing customers. This is about optimization. You
can sell more and sell at a higher price. A
good example of this would be to add additional garment styles, or items complementary to the sale. If you were selling to
a 10K running event, you might suggest
adding sports water bottles for the top ﬁve
ﬁnishers in both men's and women's age
categories, or perhaps tech T-shirts for the
top ﬁnishers. Or suggest printed goodie
bags for each preregistered runner. Both
are good margin items that don't require
much work on your part.
Without getting too far off track,
the real goal of this is to determine how
much you can afford to spend on a new
customer. These front-end incentives can
range from free artwork or screens, order
discounts, referral fees or any number of
other creative enticements to get the order
and prove your worth to the customer.
New customers like to have a reason
for doing business with you. One of the
most effective methods for establishing
this is to create a "New Customer Package." This includes multiple incentives on
the ﬁrst order. Don't be afraid to get creative, as there are many things that have
perceived value that do not cost you much
money. Some of them are just so simple,
but no one thinks of them - things like
boxing delivered shirts by single size, or
by classroom if it is a school job. A tiny
amount of additional effort can have big
value to a new customer who is looking
to reduce the amount of time spent on
his project.
Here is the really important part of
acquiring new customers that has been
proven repeatedly across all industries,
not just our own: In every instance, the
market leader in any given business is the
one with the most customers and the one
with the highest average customer value
44

Impressions | August 2014

compared to its competitors. Simply put,
more customers are doing a higher level of
business in its market.
Fortunately, digital marketing is making this happen much faster and more
effectively than conventional methods.
One of the things we discovered over time
is that our best customers increase their
business with us as we prove ourselves to
them. This makes sense on the most basic
level. The process making a customer become a client.

CUSTOMERS VERSUS CLIENTS
A customer is what we get at the beginning of the process. They typically purchase
products or services on price and have very
little loyalty or connection to us. Clients
put themselves under our protection. Doctors, lawyers, accountants, engineers, etc.,
typically have clients. What makes a client
different from a customer is the absolute
trust they place in their service providers.
This also is one of the reasons that those
providing services to clients typically
charge much higher fees than they do to
someone shopping on price alone.
Our experience has been that customers enter their engagement with use at
a value of 1x. This means that whatever
the order size is, it represents the starting
point. Suppose a new customer comes in
with an initial order of $200. This is the
starting point. With a carefully planned
growth model, this value will increase

over time on four distinct levels. They are
1x, 4x, 10x and 100x.
In our example, the progression of annual orders would be $200, $800, $2000,
$20,000. You may not achieve this in four
years. It may be a shorter or longer period
of time. Only a small percentage of your
clients will reach 100x their original orders, but a signiﬁcant number will reach
10x. The greater your service reputation
and performance increase, the higher the
starting value for new clients will be and
the faster they will ascend to the 10x and
100x levels.
This is where it gets really interesting
and where nearly all decorators miss the
point. Your focus needs to be on lifetime
customer value, not the value of the initial
order. By taking the long view, you massively increase your proﬁt potential of
each customer you take on as you migrate
them to the ultimate client level (100x.).
Think of the Columbia Record & Tape
Club. They offered an incredible deal
of 11 albums for $1, plus shipping and
handling. This was when albums were retailing for $8-$10 each. On the surface, it
looked like a ridiculous offer. How could
they make any money? The answer is that
their hard cost to make and package the
albums were 15%-20% of the retail selling price. The rest was margin. They were
willing to break even or lose money on
the initial order because customers were
agreeing to a continuity program. If you

The concept of becoming a client instead of a customer can have enormous implications for
your business's growth. This graph is based on my company's own experience during a 40-year period of
analyzing our client base.
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Impressions - August 2014

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