Customer Lifetime Value
If we have a repeat customer, one that buys from us on a regular or semi-regular basis, then a customer has a lifetime value as opposed to being a one-off sale. To give an example, if an accountant gets and keeps a client for ten years and charges them $3,000 a year, then the lifetime value of that client is $30,000.
Most members will have clients that are regular customers. A single referral to a repeat client can be worth a lot of money over time and many referrals to repeat clients over a longer period can build a large, profitable client base. Long-term members often look at their client base and see many BNI referrals that have turned into regular clients. When considering the Return on Investment (ROI) of your BNI membership, a referral to a repeat customer is the gift that keeps giving.
Leverage occurs when an effort is multiplied by a lever and a pivot point. In business, it’s when an input, say an hour, is multiplied somehow. An example is that when you sell your own time for an hour there is a direct relationship between the hours you sell, your hourly rate and total sales.
If you leverage your time, say by employing staff, you can make money from selling their time multiplied by as many staff as you have that you can keep productively busy. This is how a business with employees can make more money than someone who is self-employed.
Leverage in BNI happens in different ways. Your weekly presentation is given to as many members as there are in the room, so your time is leveraged by the number of members. Going back to the lifetime value of a repeat customer from BNI, the effort you make in getting that referral is leveraged by the repeat sales value of all the clients referred to you. The return on time can be very high over the long run.
One-to-Ones and Leverage
Leverage and the lifetime value of a client need to be considered in the context of the value of a one-to-one. One-to-ones may not immediately result in a referral and because of that might be regarded as of secondary importance to a meeting with a prospective client. Members might not have many one-to-ones or cancel or postpone them because they don’t seem a high priority.
The reality is that they are a way of leveraging your time to gain referrals to clients that will give you a Return on Investment (ROI) rather than meeting a single prospective client or selling an hour of your own time. Remember, a one-to-one could be a foundation step towards a client worth $30,000!
BNI is a way of leveraging your time. A single referral to a repeat customer has a lifetime value that is a multiple of the hours spent in BNI.