Do You Sell to Trade or Invest: Part 3-FAQ

This topic has been really popular. A couple of email questions came in that I thought were worth sharing.

Can You Simplify What You Mean by Transact vs Invest?

I like what Todd Brown, one of the top direct response marketers in the United States, explained about their philosophy of acquiring customers.

“Our goal is to make a sale to acquire a customer, it’s not to acquire a customer to make a sale.”

He’s talking about the first sale they ever do with a new customer and how they don’t care whether its profitable or not, because they are confident about the profits in the 2nd and subsequent sales to that customer.

The first sale is a way to acquire a customer for a second and subsequent sale.

I think you can expand that philosophy across the entire customer’s lifetime with you. After the first sale, it’s no longer about acquiring that customer, but how you build on and deepen a profitable relationship with them.

So ask yourself:

Do you use Customers to make more profitable Transactions?
Or
Do you use Transactions to make more profitable Customers?

Remember the restaurant and how they squeezed me on two pieces of bread. Yeah, they made an extra two bucks off that ticket, but they lost hundreds from me in business I took elsewhere, from that day forward (and that’s not counting how many people I told the experience and put them off going to the restaurant).

Instead of focusing on how to exploit your customers, focus on talking to them and finding out what else they need. How are their issues evolving? What can you do to up your game in terms of the products and services you offer them?

You won’t have to hunt and hustle for each sale. Your customers will keep giving you their business because you keep giving them more value the longer they stay with you.

What do Customer Lifetime Value and Investing in Customers Instead of Maximsising Transactions have to do with Scaling and Growing your Business?

This question came up from a guy named Phil, who read my book, did a Business Value assessment, and is a subscriber to my emails.

I can’t really do justice and keep this relatively short, but here’s the main point.

To scale and grow your business effectively you need to invest money. Now this money you can get one of three ways:

1) The cash your business generates
2) Borrow from the bank (debt)
3) Bring on Investors (share equity).

I think the first choice is best because you’re not getting into debt (especially with rising interest rates) and you’re not giving away parts of your company to someone else.

When you scale from the resources your business generates, you’re using the “cheapest” money there is

So how do your customers come to play here?

Simple,

Investing in your customers and overdelivering on your service drives up their lifetime value. They will do business more often, in larger amounts, and refer others to you.

Having a loyal customer base gives you a dependable source of income that lets you grow faster and further than you thought possible.

It makes your business much more attractive and you can end up selling in a blockbuster deal – just like Barefoot selling their winery for big bucks (despite owning no vineyards, trucks, and other typical assets).

Just a passionate and repeatable customer base, good for 25 years.

It’s hard to think of another investment in your business that can pay off so well.