How to build long term value and increase your prices with White Label Suite

Created by Joanna Love Mojares Panizales, Modified on Mon, 07 Aug 2023 at 03:08 AM by Joanna Love Mojares Panizales


All good, man. Thanks for your time. Hey, could you give me some best practices ideas, for example, like how to leverage average lifetime value when giving presentations so we don't get stuck in the mode of a fixed price and leave money on the table?

Yeah. Give me a little bit more context there. So you're talking to a client, you're asking them for a value of their customer so that you can justify your price tag for doing business with them. Give me a little bit context.

Yes. B asically, just for example, instead of just having a fixed price, just the questions you would ask to be able to back into a price, I guess guess using average lifetime value instead of just a fixed price of whatever. Just trying to find the best wordage, the best questions to ask to be able to get that information.

You're talking to a customer. Who's normally your customer, David? What businesses are you approaching?

A realtor.

A realtor, yeah. Cool. We can say to a realtor, what's an average customer worth to you? Again, if we're role playing, I would say, What's an average customer worth to you? They're going to say, Well, I don't know. Commissions are anywhere between three and a half and seven and a half thousand. It's okay. So three and a half, seven and a half thousand. Do you have customers that buy and sell through you multiple times over? Yeah. I've got this lady who's sold four homes for me. Oh, wow. That's amazing. Average 5,000 realtor commission, she's actually been worth $20,000 to you as a client. So you're just building the value of what that client's worth by stacking on the years. So the thing with real estate is that a transaction will happen in a long cycle. So it's like somebody sells their house right now or buys a house right now. It's four or five years minimum before you'll see them again. But if you've been in real estate for a long time, a good friend of mine, Neil, he's been in real estate for 40 years. He has clients now that have bought and sold eight houses with him and nine houses with him.

So he doesn't need to look for listings anymore. He's just got that refodex. But that's the steps for you. So you're literally, so what's an average client worth to you? Amazing. And how often do you see them back? Oh, well, I've only been doing real estate for six months. Okay, cool. Well, typically what you'll see in the industry is that a client will stay with you or come back to you if you treat them well every five to seven years. So how long are you planning to stay in real estate? Oh, the rest of my life. Okay, amazing. Well, looks like you've got a 40 year career ahead of you. You could see that same customer six times in your career. So if we've got a $5,000 commission and they come back to you six times, that client can actually be worth $30,000 to you. So to build that lifetime value, you got to understand how much is the customer worth and how often will they be a customer? That's your way of building that value. And then it's just maths. It's like, Okay, so it's $5,000. You're potentially going to see them six times in your career.

Amazing. This is a $30,000 customer and I guess the trick there, David, not the trick, the key is to get that prospect that you're talking to to agree with you. That's as simple as, am I maths right there? You know it's 6 times 5,000. It's not hard maths, right? So 6 times 5,000, like on a pad, $5,000 every six years, 30, 40 years. Is that right? A customer can be worth $30,000 to you? And the realtor is going to go, Yep. Oh, wow. Put a big circle around the $30,000. $30,000. Wow. Amazing. Let me help you get 1,000 leads a month. So suddenly what you've done is you've taken that transaction value and you've multiplied it it by the amount of times you're going to see that client. So in different niches, it's going to be different. Example, you're talking to a... Let's go with a beauty salon. You're talking to a beauty salon that does nails, lashes, and that stuff. What's an average customer worth to you? $150 per appointment. Wow. How often do they see you? Every six weeks. Wow. So you could literally, I'm trying to do the math quickly in my head.

You'd see that client 10 times in a year? Now, that's not accurate. That would be 60 weeks in a year, but my math is pretty close, right? So you see them every six weeks? You see them 10 times a year? Wow. So they spent $150 a time. That's $1500 a year. Wow, that's amazing. How many years are you planning to own this salon? Five? Wow. So that client's actually worth $7,500 to you. Is that right? One client could be worth seven and a half thousand dollars. Let them tell you a story. Yeah, I've had this client that's come back and seen me every six weeks for the last three years. Wow, that's so great. Let me get you a thousand leads a month. Yeah. So it's just how much is the customer worth? How often do you see that customer? How long you're planning to stay in business? Do the math and then go, Wow. So am I math right? You're actually $100 a time every four weeks, 12 times a year. This is a $1,200 customer per year. You're staying in business for the next five years. This is a $6,000 program for one customer.

So if I get you one customer in the next year, this has paid for itself completely. Yes. Wow. Amazing. See, what you're trying to do.

On an annual basis is your price at the annual or some fraction thereof?

I would build it up as much as I possibly could because your key, what you're trying to achieve is you're trying to make your service look cheap. That's the key. That's what we're trying to achieve. So what we're trying is what we're trying to do is to show a client a prospect that we're talking to, that what I'm about to embark on with you, Mr. Client is not just to try and get you $150 through the door. Because if that was the case, like, we're never going to say this to a client, but if that was the case, it would be real hard for me to justify doing business because it's like, I need to get you $150. I'm going to charge you $1500 a month. I got to get you 10 clients a month. Oh, my goodness. But what we're trying to do is show them that I get a client through the door, you're going to service them and look after them for the next five years. That one client is worth seven and a half thousand dollars to you. Man, I only need to find you one client in a year, and I've paid for my whole service, and I'm going to try and find you five clients a month.

So let's get to work. So that's what we're trying to retrieve. We're trying to make the service look cheap. So I appreciate your question because building out that lifetime value is your best way of showing your client. There's no business that likes to think of themselves as a one and done business. As in customer comes to me, they buy something from me, they'll never see them ever again in my entire life. Realtors are the closest thing because the buying cycle is so long. But even they don't like to think of themselves as a one and done sale. I'm getting a client, they're going to come back to me. So that's your opportunity to build that out. What's a client worth to you? $5,000 as an average commission? That's fantastic. How often do people sell their homes in this location? Every 4 to 5 years. Wow, amazing. How long are you planning to be in real estate for? The next 30 years. Wow, amazing. You should see this client six times. Yeah, I could. Six times five is $30,000. Man, we got to get to work from this for you. Every client I bring you is potentially a $30,000.

Now you've gone from a $5,000 commission to a $30,000 lifetime value. Your question, David, is perfect. Building that lifetime value makes your service look cheap. Good job. Does that help?

It helps me frame it better. Yes.

That's literally my system. I literally go, What's an average client worth you? How often will you see them? And how long you plan on to be in business? One times the other times the other gives me a big number. That is actually what the value of every client I can bring you.

That allows me actually to close for an annual sale and I can always get them.

Hell yes. Absolutely. When I'm doing annual sales, like I've said on recordings before, getting somebody, getting anybody to commit on a monthly basis is actually hard because, hell, we pay for Netflix and Amazon Prime and all that stuff. And every time it hits my credit card statement, even it's like, I don't know what Netflix is these days, it's like or something. But I'm going through my credit card statement and I always pause on that little Netflix, that little 12 bucks. I'm like, little 12 bucks. And it's only 12 bucks. I'll let it go. But every time there's a monthly cost on my statement, I question it. I don't like it. But if it's a business expense and I paid that once and I forget about it for the next year, I'm good. I don't think about it because I've seen the value, I've committed to it. I'll make my decision on whether it's worthwhile in 12 months time. That means you got 12 months to impress. You're not being asked to impress on every 30 days. So it's actually easier to make an annual sale than it is a monthly. So I would lay this out for a client and literally here's my picture.

How much is it worth? That's $5,000 commission. Man, you're going to see this client six times in your career. Wow. So this client is worth $30,000 to you. Wow, that's amazing. The service that we're going to provide you, we're going to find your ideal prospects. We're going to email them out. We're going to follow them up. We're going to look for people who are interested in selling their homes. We're going to get them into your system. We're going to send out a postcard if they want a valuation. We're going to do this, this, and this, and this. We're going to do that for you a thousand times a month. Now, am I going to find a client for you in your first month? I don't know. We'd have to be lucky. That's my commentary, right? We'd have to be lucky to find someone in this neighbourhood that wants to sell their home by this method in the next 30 days. But it can be done, let's get to work. What I'm more likely going to find is that that person is going to be in our system and they're going to want to sell their home in 3 to 6 months.

Now we can get them into a calendar, we can get a valuation, we can get them booked in. Say already I'm building the time frame for them to make a judgment on my service. So more likely in 3 to 6, we're going to find someone who's looking to sell in 3 to 6 months. So now we want to be able to nurture them. Doing what you do, Mr. Realtor, we're going to find this. So we're going to approach 1,000 people a month. We're going to approach 12,000 people in this next 12 months. We're going to do this. We're going to follow them up. We're going to get them in here. We're going to get them in your calendar. We're going to provide you this as a service and a reminder and backup system. And we're going to do that for you. It's $1,000 set up. It's 500 bucks a month, whatever your service is. So total cost is 7,000. If we can do business today, I'm going to lock this in for you for 49.97. So for $5,000, I'm going to give you this for the next 12 months. Are we good to go? One client is worth $5,000 as a commission.

I need to find you one client that sells their house in this first year to be completely in front. Good to go? Makes sense. Then I'm saying, Oh, $5,000? It's a business decision. I've said this on a recording before. I can spend $5,000. If I can justify the service, I can go, Yeah, sweet man, here's my credit card taken. Let's go. I can spend $10,000 in the business. I'm like, Yeah, cool. What are we doing? We're doing this. Okay, cool. I can see the value. Great. $10,000, no problem at all. $20,000, I'm like, Whoa, hang on a second. I need to talk to my business partners. I can't just write that check and nobody will bat an eyelid. I need to think about it. But as a business cost with zeros on the end, it's easy for me to think about. But if you're telling me $500 a month, damn, 500 a month payroll, I'm just going monthly, monthly, monthly, monthly. I can't do it. If it's an annual, it's a yes no. But monthly it's like, damn, man, I need to do my numbers here. Again, this is me, David. I find annuals much easier to sell.

That's great. So then worst case, down sell to. And then I guess after that, if they don't bite for an annual, go to semi annually and then quarterly?

Yeah. So it's like, David, look, it sounds great, but $5,000 or whatever the cost is, $5,000 is a lot of money, man. Not sure if I can commit to that. I'd like to give it a try. Again, I would come back and say, look, what we find is when people give it a try is that they're not all in on the process. But I understand that you want to minimise your risk. So I get that. So this is what I promise for you in 12 months time. In 12 months time, you get to keep the database that we generate. Worst case scenario, I'm going to get you 12,000 names, emails, phone numbers, business information for people in this local neighbourhood that you can continue to market to. In 12 months' time, you're going to get to keep the process and the system that we've done. So in 12 months' time, if this is the worst case scenario is I'm going to give you a database of local businesses and a system to approach them. Now, if worst case scenario, that's not valuable for you, you don't want to carry on, you cancel the service, but you keep that asset.

That's me minimizing the risk. Yeah, but five grand, I can't really cough it right now. Look, I understand. I can do a payment plan for you. It's still a 12 month commitment, but I can do a payment plan for you. How about we split this over the next three months? $2,000 now, $2,000 in a month, final $1,000. Try and get as much as you can upfront. No, look, it's still... Okay, look, this is my last... I want to do business with you. If we do this on a month by month basis, it's going to cost you slightly more, but I will ask you to lock in a minimum of three months because whatever. And there's a set up fee. So it is minimum $2,000 set up fee and then $7.99 a month for a minimum of three months. This. Suddenly, the annual looks like a much... So that's going to work out 2,799. You're going to spend $4,100 to do this for three months, or you can do $5,000 for 12 months. Which one makes more sense for you as a business? Again, I'm always trying to push for that higher value sale, but I'm never letting them go.

Of course, downsell to whatever you need to downsell. Dude, I will run this for you in your system one time only for $1,000. If I'm sitting in front of you, I'm not letting you go as a client. I'll give you whatever I can to get across the line. But I'm always pushing back to the annual if I can. Please, please, please, from the bottom of my heart, please, please, please, never do a monthly service without a set up fee. Fastest way to drown in this industry. You need that set up fee upfront. You need to be able to hire a VA to do the fulfillment for you and do additional marketing and all that stuff. As soon as you get a client, it takes you off the shelf. What I mean by that is when you're on the shelf, people can buy from you. I'm available. Pay me money and I'm yours. But as soon as you get a client, you're off the shelf. People can't buy from you because I'm busy now. I've got a client. That sucks because that stops more money coming in. So what we always recommend from a business point of view, and again, guys, everybody's got their own business models.

But I always teach that the first sale you get, the set up fee is to hire a VA for the next 30 days. Now I've got a VA and you're like, Oh, man, I don't even know if I've got enough work for a VA. Yeah, you do. Because they should be posting in business groups. They should be connecting with you on LinkedIn. They should be generating the leads for you. They should be monitoring your inbox. They should be creating social posts for you. They should be doing all the stuff that you want to do as a business owner, but don't because you don't have time. So they should be fulfilling your customer's requirements, which is snapshots and custom values and set up checklist, simple stuff. They can get it done in a day. For the other 29 days that you just paid for, they can be generating you more work. My point is, when you get a sale, the most important thing for you as a business owner is to get back on the shelf as quickly as you can. And a set up fee allows that to happen. So Theresa said, What are you guys charging for a set up fee?

Theresa, when we started our business, and this is again coming from personal experience, when we started our business, we charged nothing. And this is why we nearly drowned. We were so desperate for the client that at $2.97 a month, we were just happy to get that client. But the workload that it took took us off the shelf and we nearly drowned because $2.97 doesn't buy anybody Ferraris. Your one client at 297, for us, it was three business founders. We were struggling. By the time we actually found our groove, it was a minimum $1,000 set up fee. Minimum. And if we were talking about doing a bit more for them, it was $2,000. But minimum $1,000 set up fee to set up GHL in the leads program, and a minimum of $2.97 a month. And then it's paid support and all that stuff. So we had that in place. But a minimum. Use that set up fee to hire a VA so that you can get back on the shelf. Give them a checklist of things that they can do to fulfill for the customer. Your income comes from your next conversation with a business owner.

So you want to do that as quick as you can. John, great to be working with you. Thanks for coming on board. Let me introduce you to Janel. She's my assistant. She's going to set everything up for you. I'm going to check back with you in a week. Janel, meet John. Janel, go and fix up John, make sure he's good and you're back on the shelf because now you got to go and speak to another business owner and keep that income coming in. That was a long answer to a short question, as is always the case here, David, but hopefully that's been helpful for you.

Good stuff. Thank you.

Awesome, man. Great to see you. Okay, Dora, I'm going to answer David Stone's question because.

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