#JAY ABRAHAM TAPES HOW TO#
For example, if the lifetime value of your average customer is $1,000, anything you spend under that in new customer acquisition costs will be profit-or the marginal net worth of your average customer.Ībraham also provides advice on how to calculate your clients’ marginal net worth. Once you understand the lifetime value of a customer, you can determine how much you’re willing to pay in new customer acquisition costs. “It’s the total profit of an average client over the lifetime of his or her patronage-including all residual sales-less all advertising, marketing and incremental product or service-fulfillment expenses,” says Abraham. So what is the lifetime value of your average customer? Do you know? In other words, the single most profitable thing you can do for your business is to understand the value of an average customer over the course of their relationship with you. He’s primarily known for successful direct marketing strategies he developed in the 1970s, but I think his insight into this topic is still incredibly valuable.Īccording to Abraham, “The most profitable thing you’ll ever do for your business or career is to understand…the marginal net worth of a client.” When this book was published, Abraham was considered by Forbes to be one of the top five executive coaches in the country. It’s not often that I pull a dusty old marketing book off my bookshelf to talk about a more current marketing topic, but almost 20 years ago I stumbled upon Jay Abraham’s book, Getting Everything You Can Out of All You’ve Got, and I think what he shared in 2000 is still relevant today. It may or may not be the “one metric to rule them all” in your business, but I think the cost of acquiring a new customer is one of those data points that is critical to understand in any business. Some data points have more value than others. In marketing, like baseball, there are lots of things to measure. If you win, you’ll have all the success that’s possible.” An Important Marketing Metric That’s Often Overlooked Beane knew if he could improve his team’s on-base percentage and hitting, he could win more games. “What’s your end goal metric? Is it revenue or is it bookings? In sports, it’s winning. “What’s the ‘one metric to rule them all’ in your organization?” asks Allen. That was a very important metric for him. Beane knew he needed runners on base to get points on the scoreboard and ultimately win. Beane’s data-driven approach was created to look at all those statistics and identify the data points that made the most difference in how many times the A’s won-so his team could better compete with bigger rivals with bigger budgets. In baseball, you count everything-hits, runs, times at bat, on-base percentage… and wins.
Like many of my peers, I grew up playing baseball. He compared what we as marketers do with data to the way Billy Beane approached managing the Oakland Athletics in Michael Lewis’ book, Moneyball: The Art of Winning an Unfair Game.
I recently spoke with Jeff Allen, a Senior Director at Adobe Analytics, about the role data plays within marketing. In other words, in addition to being a master at the fine art of persuasion, today’s marketer must also be part data scientist. Marketers spend a lot of time and energy looking at the metrics that illuminate the costs of finding new customers and keeping current customers. Marketing has become a very data-driven discipline.