Today we will be discussing the customer lifetime value in the marketing funnel. Many people sometimes ask how to find your first niche, how to find your audience, and how to get your funnel.

But what we’re really been focusing on mainly has been just a very small slice of the story. It’s really the starting point, getting your funnel going, getting your first kind of revenue generation and lead generation system together.

It’s important to always be thinking bigger, thinking kind of long-term and the kind of metric.
What we use to follow this is what the lifetime value of a customer is.

What Is the Definition of Customer Lifetime Value?

The standard definition of customer lifetime value is speculation of expected net profits from the relationship with a customer in the future. Of course, this model can be complex or crude, depending on the predictive analytics techniques used.

Why We Need Customer Lifetime Value

If you’ve got a simple funnel setup going, you’re selling a $17 eBook on the front end and maybe a forty-seven dollar OTO afterward. You have the potential of making something around 65 bucks. Take out the transaction fees you’re down to maybe $60. Subtract how much you paid in traffic to get that user, the cost of your email subscription, and your funnel service. And you’re not left with much at the end of the day.

Now we want to let you know that it’s incredibly important and powerful. It’s a job well done when you get to the point that you have that front end of the funnel.
But that’s just the beginning point. Russell Brunson is one who we first heard it from, and it was in his book the dot-com secrets. Essentially he says that amateurs focus on the front end of the funnel and pros focus on the back end of the funnel. Because professionals get that all the money.

The Long-Term Money Is Really in the Back End of the Funnel

It’s not what happens in that first few interactions, it’s not what happens in the first sale, it’s what happens in weeks, months, and years. So in business what does this mean?
You have people who are coming in every day, who are still purchasing your products when you launched them, who purchased products from you. What is the value of a customer, who continues to purchase $17 or $197 or $495 products from us? In the future, the lifetime value of that person is thousands of dollars.

Now, if you average it out across everyone, your new customers who showed up today, this morning, or last night, and people who should have earlier this year; and those original customers, who are still with you– your lifetime value of a customer is somewhere around $150.

So it doesn’t matter what they purchase upfront. Someone who becomes a customer is ultimately going to spend on average about $150. As long as you’re not spending near $150 right?

If you’re spending $30 per customer, even if you’re only making seventeen on that first sale;
you know because of your customer lifetime value number that you’re going to be profitable over time. So it’s an investment in your traffic spent when you’re paying to get leads and customers. Because you know you’re going to get that money back.

This is similar to what Russell Brunson calls the value ladder in the dot-com secrets book.

Marketing Funnel Example

Now again it’s important to remember that we’re using this as an example and you need to figure out what these different steps are for you, your niche, your business, and most importantly, for your customer.

What do they want? Where do they want to go in life? Not just solving this one problem we helped them with on the front end of our funnel, but stacking funnels together. This is getting into the funnel stacking idea, stacking those funnels together in a way that you take them farther and farther away from their fears, and closer to their desires, and their dreams.

The better you get at this the better off you are. This is what makes click funnels so powerful. You’re able to go create funnel after funnel in a few clicks. And it makes the technology required to do all of these things that took ages back in the day.

We mean, months to put together a free plus shipping book offer would take a week of developers, designers, and literally, you can go put this together in less than an hour.
What happens next?

Customers have never met you before they see an advertisement, they click on your ad to get your free book right? It’s a free book offer, they just need to pay for shipping, so they go ahead and jump on it. And then there’s a bump on it and they’re offering the audiobook. Most people pretty much always go for the audiobook upsells. It’s a great way to spend traveling whether it’s in a plane, a train, or a car.

This is the very front end of your funnel and you’re probably negative here buy a dollar or two and you might get to about $10 or $20 profit.
That’s not enough to make a business out of. It’s not until you get into these higher-level items that you’ll notice the values go up. This is where the actual money is made in your business.

Thousand Dollar Secrets Funnel – Sales Funnel Example

Person Counting Money With Smartphones in Front on Desk
Image Source: Kuncheek

These are generally designed to generate enough cash flow to spend more money on marketing, to bring more people into your offer. And what happens is it’s like a filtering system, it’s a funnel. Here’s an example:

20% – 30% of the people are going to buy Audiobook.
Of everyone who buys it, maybe 50% of people will buy a course. Of everyone who buys that maybe 10% of people are going to buy a 6-week certificate. At most 5% are going to buy a 3-day live event. And maybe 1% would buy coaching.

However, when Coaching is $30000 and a 3 Day live Event is $6000, you don’t need lots of people buying these products. So it’s a filtration system that allows your best customers to present themselves. And you’re always offering them the next logical step in what they feel like, or what they want in order to achieve their goals, or to get away from their fears right?

So, the free flow shipping, then the audiobook. A week later and a follow up you offer them the home study course. They went through the audiobook and the free shipping in the book.
It takes this material to the next level. They love it because they want more. They get the theory here and then they get how to do it, and this costs $197, $297.

Now they’ve learned this new skill, they want to go sell this skill to people in their local marketplace. They want to go out and they want to be a certified funnel expert or a certified pay-per-click person, or a certified Facebook marketer. So they could run Facebook marketing campaigns. But they want a piece, they want a certification for it. Now you’ve got a six-week certification course.
Now we’re talking a thousand dollars, right? You’re going to get a certification, you’re going to make your money based on that certification. This is now a thousand-dollar product.

Then, of all the people who go through this, some people run with it, they get excited and they’ve got their first five or six clients and they want to get to a hundred clients. They want to build a real business with it. You invite them to your 3 days live events. It is $6000 and you get the best of the best-certified people. You get keynote speakers in and they will teach you how to take your business to the next level. It’s not for everyone who gets the certification. It’s for the people who are the most ambitious and the most excited to take it to the next level.

Then, at the event, selling from the stage you offer access to the ongoing personal coaching. That costs $10,000. Again, we’re not saying you need to do this. We’re using this as an example and we think this is a very common funnel example. Ultimately, we think this is kind of bits and pieces of what some of the best internet marketers do in the world.

It can be done for your products. You don’t have to do live events. It’s just designed to help you see that as you build a long relationship and more time. If you spend more time with your leads and your customers, you want to be offering them more valuable products over time.
Now if your customers aren’t buying this, if this is converting terribly, you can try different offers.

Next Level: Separator Funnel

You could look at which funnels are performing the best, which are performing the worst. You let the best ones run and try to learn from them. And work on the ones that are performing the worst to try to improve them and optimize them.

Ultimately, something resembling this is logical for your niche and your kind of target market or your customer avatar. This is how you build a multiple six-figure to seven-figure and even eight-figure a year business, this is what people want as far as the customers. It takes a lot of time to get there, but we all start at the beginning and we add on larger higher-value products over time. It allows our customers to ascend to a higher price point, and all the while they love it. They are loving the one-on-one attention from the guru at this point. They’re loving the experience of going to the live event and are understanding the culture of what you do–they’re loving the certification.

Some successful websites get three to four million dollars per month with similar funnels to this. They have additional niches and are running these kinds of funnels in different niches. But that’s the power of learning how to create these funnels, and how to create these offers.
Because once you do this in one niche, you can go do this in a similar niche.

So you can do this in the weight loss niche, and then you could teach personal fitness instructors, how to build their businesses with a similar funnel. Angled at a different target market, still in the same niche, allowing you to leverage your expertise to the end consumer and to the coaches who are teaching something similar. That’s really how businesses scale.

It’s very important to understand the depth and the kind of length of relationship that you’re going to create with your customers. It’s okay that you’re starting, get click funnels started, and see how you can get these working. Once these are working and generating positive cash flow you can keep moving forward.

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