Ep 61 Insane Client Posse

So lifetime value.

Okay.

Lifetime value says that you bring on a new client.

And I think this is true at a place like kind, like, or, you know, it's true in the financial services business or it's true in banking or whatever, but, or it's true for mechanics that, well, in fact, I can use my mechanic here.

So I have like a local, like a neighborhood mechanic.

Okay.

A few blocks from my house.

And I have been going there for, it would be 18 or 19 years now.

Wow.

And, you know, I go there sort of a good predictable three or four times a year, right? So, you know, tire changes, most of my oil changes that I get done there when I need some actual work done.

And now, you know, the one car we have is 17 years old, so it does occasionally need some real work.

Right.

You know, so I would be, I'm going to guess, I should know this number, probably about 1400 bucks a year that I spend at that mechanics shop.

Okay.

Yeah.

So you could do a sort of lifetime value.

It would roughly be, and this depends on the industry, but typically you're going to use three, five or 10 years of kind of value for that customer.

So I would be, if it's 10 years, which it may be for mechanics, I don't know, I'd be about a $14,000 customer for that business, right? Now you could discount it a little bit.

You can say like some of that 1400 bucks doesn't get paid till next year and some of the year after and some of the year after.

So if you apply the discount to that, it's maybe $12,000 or $11,000, something like that.

So that's lifetime value.

And there's sort of an overlay on lifetime value called churn.

I think you know churn.

That's a common one.

Yeah.