What is a new customer worth to you?
When you spend money to advertise, a critical issue is the value of a new customer. The "game" is to make more money from your ads than you paid for your ads. If you spend $50 in advertising to sell a bottle of perfume that yields a $45 profit, have you won or lost? You can't tell unless you know the customer's LIFETIME VALUE.
In brief, if you spend $50 in advertising to make a "$45 in profit" sale to a new customer who will never buy from you again, you've lost $5. You would have done better not to have advertised.
But, if your new "$45" customer makes a second purchase from you which yields another $45 in profit, you've made $40 in profit off this customer. If he or she buys from you again, your profit from that customer will be even greater and the $50 you spent to acquire this customer has more than paid out. This "customer value" metric is what guides your advertising program.
This issue of "customer lifetime value" is shouted by bloggers and ebook writers all over the internet. But their wisdom may be of little value to you. One issue stands in the way of your using customer value to accurately guide your advertising program: your lack of data. New in business, you don't yet have the customer histories you need to establish the lifetime value of a customer.
So what can you do?
The first essential step is to develop a purposeful customer database. This, in time – maybe in just a few months – will allow you to begin to establish the lifetime value of your customers. Here's how I've done it and how you can do it.
Every order you get goes into a database. You'll want it to be on a computer so you can sort and manipulate it. Every order that you post is posted with the product purchased and the revenue received. From the product you can extract what amount of the selling price is profit. Every entry will also include a customer name, address (when possible and practical) and some sort of unique customer identifier.
This customer identifier is essential as gradually you will develop two databases -- one of individual invoices (sales) and the second of the customer's cumulative history. This second database will show the total amount of money the customer has spent with you, the sum of individual purchases. This second database may also be able to show how often each customer has ordered from you.
The "trick" to setting up this system is to find a unique identifier to allow you to aggregate each customer's individual purchases into their cumulative history.
In the past I have assigned a unique customer number of each new customer based on name, address and zip or postal code. If you're selling digital goods, you might not get a name and address but you will get an email and that can become your unique identifier.
If you are a retailer, you'll ask for a phone number. Most people today have their personal mobile phone and thus a unique phone number.
I realize that for the average new marketer, setting up this sort of system can seem overwhelming. I came to it from the advantage of having IT people to do the programming so all I had to do was specify what data I wanted captured and what manipulations I wanted to be able to make on that data. If you're just starting out you'll probably be reluctant to spend time setting up systems when, at present, you're just desperate to make sales.
But keep this in mind. As you begin to collect orders, by organizing them into at least an invoice (sales) database you'll be making a start. And, for this database, collect at least one identifier be it cell phone number or personal email.
Don't wait too long before you do it. Your data will start to show you what each new customer is worth to you and that number will begin to show how much you can spend on advertising, to acquire a new customers.
FOOTNOTE: If the concept of a database is new to you, here are some ads for databases you can look over. Looking costs you nothing. And, if you are going to become a marketer, you'll find databases are an essential tool. I've developed my own marketing database but before I could do it, I learned a lot from our IT professionals. Regardless of timing, a database for your business is an important "something" to keep in mind.
Homemade perfumes generally lack commercial value, regardless of how wonderful they may be, because their creators fail to record how their perfumes were made. To profit from a perfume, to sell it, to sell the rights to it, or have somebody sell it for you, you must be able to make more of it. To make more you need the formula, the record of how the perfume was made: what materials were used and how much of each material was used. While the formula is nothing more than a recipe, a simple piece of paper, it is the key to unlocking your perfume's commercial potential. With the formula in your hand you have the ability to make a few dozen bottles more or, like the celebrities, tens of thousands of bottles. How to create an international production formula for your homemade perfume is a guide to getting you started on the right foot, correctly documenting everything you do as you are doing it, and then using these notes with some basic mathematics to write a simple, accurate, universal formula for your perfume. Writing formulas for your perfumes can change the way you think about them. With your formulas in hand your creations are no longer "here today, gone tomorrow." Now, thanks to your library of formulas, your perfumes become immortal!
While much is written about perfume – the beautiful fragrances... the beautiful bottles – little is available on the "mechanics" of perfume production – the steps that take place on the "factory floor" where a beautiful vision is turned into a finished product, a "ready to sell" perfume. Now you can experience all of these steps, hands on, by making just one quart of your own perfume. If you follow each chapter and do what you are instructed to do, you will end up with from 8 to 64 bottles of your own perfume, depending on the capacity of the bottles you select. Along this "insiders journey," each step is profusely illustrated with professional color photographs and you'll learn — • Exactly what alcohol you'll need and where to get it • Why you'll want (just a little!) water in your perfume • What type bottles you'll need and why you cannot use others • Why you will use a spray and not a cap • How to fill and seal your bottles • How to label your bottles with the correct information so they will be legal for sale • How to select a name for your perfume that will allow you to acquire powerful trademark rights free. If you are a developer of scents you are encouraged to use one of your own for this project. If you are not a scent creator yourself you'll learn how to get a fragrance oil that is exactly right for this project. Online sources are given for all required supplies and materials. Nothing can hold you back from starting your project immediately!
Perfume is famous for the markup it can achieve, even for a middle market fragrance. While "everybody knows" that perfume costs next to nothing to make (not completely true) the making of it is often considered an esoteric secret. "Creating Your Own Perfume With A 1700 Percent Markup!" details how a 3-person company with no experience created their own fragrance in response to a marketing opportunity that was too good to pass up. The book explains exactly what was done to create a fragrance for that opportunity but it is far more than a history of the author's project. "Creating Your Own Perfume With A 1700 Percent Markup!" lays out every step in the process of creating your own perfume, either as a do-it-yourself project – and without the benefit of automated equipment some compromises and workarounds are required – or full bore professional production under your supervision. Either way you will be producing a quality fragrance at a remarkably low cost. Do you have a marketing opportunity that would be wildly profitable if only you could obtain your fragrance at a ridiculously low cost? "Creating Your Own Perfume With A 1700 Percent Markup!" is the guide you need to do it.
Now when you make your own perfume you can make it fully "commercial" meaning you will be creating a product ready for regular, continuous sales to friends, relatives, and the public! If the fragrance you've made has already won praise, why not share it with others? Some might pay you for it and want it for their web stores or retail boutiques! Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics guides you through steps that can turn your hobby project into a perfume business. Discover how close you are now and how little more you must do to take what you made with essential oils and dropper bottles into a business of your own! For an introduction to this book, watch this video.
You can build a perfume business of your own using this business plan as a guide. By following its detailed strategy you learn to identify motivated groups of potential perfume buyers. Members of these groups are near the tipping point of desire for a new perfume. You don't know these people and they don't know you but you know a marketer they trust, one who does not currently sell perfume and might never think of selling perfume were it not for your approach. Here is where you step in with a professional plan, promotion, and perfume to take advantage of this ripe opportunity for mutual profit. Before your first promotion has peaked, you will already be developing a relationship with your next marketing partner. Following this plan, you will gain more and more profit with each new marketing partnership.
A really great name, a special name that is just right for a particular perfume or perfume marketer (or entrepreneur with money to invest!) can be worth a ton of money. But few individuals with great ideas ever manage to cash in on those brilliant ideas. Instead they wait while others "discover" their idea, acquire legal rights to it and make all the money while they are left out in the cold without a penny having been earned for what was once THEIR idea.
If you are struggling to name your perfume and are looking for a name that will have real value, "Naming Your Perfume And Protecting Your Name" will help you weed out low value names and point you to names that have better marketing value plus the potential to become valuable assets in themselves.
If you have a great name you want to protect but no fragrance, "Naming Your Perfume And Protecting Your Name" will guide you through the simple steps you must take to acquire a legal right to that name before someone else grabs it! Best of all, "Naming Your Perfume And Protecting Your Name" shows you how to gain strong legal protection for your name without a lawyer and without spending more than pocket change.
Never had an idea for a product name? Never thought much about perfume? "Naming Your Perfume And Protecting Your Name" may stimulate your interest in a whole new game that, when played well, can make you lots of money without your having to leave the comfort of your home office.
When you name a perfume you create a valuable asset – the name itself. To sell your perfume you want the most effective name possible. But a good name can have value beyond the edge it gives your sales. In naming your fragrance you are creating a trademark and a trademark can have value independent of the product. The value of that trademark can vary. Much depends on how well, in naming your perfume, you follow the trademark "rules." How To Create A More Valuable Name For Your Perfume first helps you develop a name that will be effective in selling your perfume. It then prods you to make use of certain techniques that can turn a good name into a great trademark, strong and valuable. If you have questions about how to protect a name, How To Create A More Valuable Name For Your Perfume will answer many such as:
- Can you protect your name yourself or do you need a lawyer?
- Can you register a trademark without a lawyer?
- What does it cost to register a trademark?
- How do I enforce the rights I have established?
How To Create A More Valuable Name For Your Perfume covers both state, federal, and international protection.
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Philip Goutell
Lightyears, Inc.
