By Stefania Aulicino

All businesses have a growth strategy, but too many pursue bad growth. Growth without profit is bad growth.

Profitable growth requires a sustainable business model. For entrepreneurial business builders, that’s doing what you love for people who benefit most from what you do best. When you pursue your passion, a sale is not the end; it’s the beginning of a cash annuity.

What is your customer annuity?What is the life-time value of your customer? You are not alone if you are saying “I never thought about my customers as an annuity.”

Mic’s average sale was $300,000 for his high pressure/high temperature components business. His total focus was on converting prospects. His 2.8% lead conversion rate was consuming lots of advertising resources. His process of finding customers was very expensive, so profits were very low. Plus, many of these customers were just looking for a commodity solution and demanded deep price cuts.

Talking with Mic, it became obvious his passion was not just selling component, but creating “green solutions” using his mechanical solutions to replace toxic ingredients, to deliver the same desired viscosity and flow qualities required by the customer’s production process. He had made it a lifelong pursuit during his 30-year career. I reminded Mic that this differentiated him from competitors.

Passion caused Mic to educate customers about using heat and pressure as the foundation of improved profits cascading from safety for their own workers and reduced liability in the marketplace. Working together Mic ended up with a significantly expanded list of all the different services he had to sell; now totaling up to $500,000.

To earn that annuity, Mic discovered it was his job to move his customers through a cycle of awareness which he labeled: from PAIN, to SAFETY, to DESIRE.
Formalizing this cycle into a custom, laser-targeted marketing message for each customer would enhance the value and speed of his customers’ life-time annuity:

  • PAIN was typically the starting point when a prospect’s facility had to cope with toxic byproducts and needed  solutions to address an urgent need.
  • SAFETY could be discussed once the immediate problem was addressed, up-selling in common language. Did they need back up components or emergency 24-hour on-call service?
  • DESIRE is the ultimate step; creating demand! This was Mic’s favorite topic, helping his customers enhance their own profits and worker safety experience while protecting the environment.

Turns out the value of a customer at the PAIN level was that $300,000.
SAFETY could raise the annuity to $500,000 with the various equipment and services he had.
DESIRE is where Mic’s customer annuity income was without limit as he liberated his entrepreneurial genius to create demand which only he could satisfy. Forstarters, taking over his customers’ recycling burden, by providing his proprietary process as an outsourced solution, increased this customer‘s potential lifetime value to $750,000.

With a referral rate of 60%, clearly lots of Mic’s customers already enthusiastically share their satisfaction at the PAIN level. Building on this realization, Mic could turn these referring customers into a full time unpaid sales force! Customers who make referrals receive a thank you- an annual “green audit”, worth severalthousands of dollars. It also affords Mic an opportunity to check in on his satisfied customers to see what new services he could offer them: a win win!

Historically Mic concentrated his sales in the automotive field. Now he could see how his business model easily applied across numerous industries. He could pay fordiversification with the dollars he freed up from his less than efficient expensive advertising. Customer annuity is the solution to increase good growth without increasing costs. Profits increase when you can lower the cost of new customers while expanding the lifetime value of the ones you keep across yourbest industries.

Once he got focused on the concept of customer’s lifetime value, Mic noticed he could replicate this customer annuity with his mechanical contractor-customers who used his proprietary products for customers beyond the reach of his own home office. Mic set up web pages for key in-house gurus to make their diverse expertise available for purchase by a) phone/email support b) on-site in-depth analystsupport. He offered:

  • His IT guy for
    web and on-line automation processes
  • His best installer, particularly intuitive about how to solve technical problems, for easy ways to execute for contractors in the field
  • Himself, capitalizing on his reputation as an industry guru

Looking back, Mic noticed contractors’ calls for help had been previously perceived as a diversion; now, by packaging his expertise, it was a welcome cash annuity!

Profit starts with the customer. Not the original transaction, but the passionate relationship you tap into. Your job is to profitably grow the lifelong value of that customer. A sale is not the end; it’s the beginning of a cash annuity.

That’s why I say there is currency in your passion.

All businesses have growth strategies, but not all growth strategies deliver good growth. For profitable growth you need a sustainable business built on your passion: Doing what you love for people who benefit most from what you do best.

Passion driven growth creates a self-selection business model which attracts like-minded players. A Customer annuity increase sales and profits. Profit is enhanced when you acquire new customers each year, PLUS increase sales to existing customers. Don’t you deserve clients that want what you have to offer and are willing to pay for it? The right growth strategy for you is one that delivers good growth-profitable growth!

Stefania Aulicino, president of CapitalLinkUSA ensures business owns get cash to keep control of a bigger, more profitable company, faster, safer than they ever thought possible- in any economy. Let us help you become a magnet for non equity and equity sources to fuel your growth. Please explore our tools, solutions and consulting options tailored for different growth stages and different budgets: www.CashAndControl.com