Happy Saturday! I hope you’re somewhere with a coffee and a notebook scribbling out all the ideas that come from staying out of your inbox for a morning.

LETS GET INTO IT.

I started my business, at least it’s current form, in earnest, in 2021. I didn’t leave a practice with clients in tow. I started with exactly zero. I scratched and clawed one customer at a time figuring things out, growing, stacking each sale on top of the next.

I took HUNDREDS of sales calls. Years of sending proposals.

And FINALLY, I hit 7-figures in revenue.

A client of ours also launched in 2021. They sell similarly structured services to a similar client profile.

They hit 7-figures… in months. 8-figures in a couple of years. When we hit $1m, they hit $20m.

Most people hear that and think they out sold us 20x. But they didn’t.

Their average product is 3x mine.

Their average customer? 5x the revenue.

Their customer value is not a little more than mine. It’s a LOT more than mine.

Which means if they do 2x the number of sales… they get 10x the revenue.

Think about that.

Which is why we need to talk about the power of your customer value.

Sneaky Growth

There are only so many ways to grow. Revenue is a function of:
Number of customers x what a customer pays.

The default growth lever founders run to is more sales. It’s intuitive and probably in part because media is full of marketers selling growth that way. That’s what a marketer can drive.

So if you hear the “experts” talking about how they grew a business, it’s almost always going to be how they increased sales.

But if you look inside the companies making big strides in growth, and I do, you’ll see that some of it is likely in sales. But some, and probably not a small part, is from increasing the value of a sale.

It’s a sneaky lever that amplifies the work that the other levers do.

I’ve seen clients stall with neutral sales growth for a period but keep adding revenue because they’re customers continue to get more valuable.

Here’s an example of a business that grows its sales 10% month over month. Then I add a second example of that business growing it’s customer value also by 10% month over month.

The first one increases revenue by 177%. The second one? 313% increase.

If you’re reading this there is a HIGH likelihood you are engaged in at least one initiative aimed at adding more sales to your business.

What if that initiatives output was turbo charged and got double the yield on the same effort, the same cost? What would that do to your ability to fund more growth?

Pair your new sales initiatives with a customer value initiative.

Better Growth

Not only will increasing the value of your average customer boost the top line, but there’s also the opportunity to grow that top faster than the bottom and increase your margin.

And if that’s not enough, just think about the impact of adding more customers and the strain on the business. Growing the average value usually puts a lot less pressure on the delivery and administrative infrastructure.

To top it off, instead of just applying to new customers, it can be applied to existing customers which are generally easier to convert (they already bought into the value proposition, work with you, hopefully like you…) and so now you’ve got cheaper cost of acquisition growth.

Price isn’t the only option

Now this obviously isn’t some secret I’ve discovered and you’ve probably thought about this a lot already. But the common solution I see applied is:

Raise prices.

And that’s great. Definitely a good place to start. Certainly the best for increasing the bottom line and adding “cheap” growth that doesn’t strain the infrastructure.

But if that’s where you stop, let me tell you there’s a lot more to explore here.

Price - certainly where you start, a lot of businesses, arguably MOST businesses I talk to, are under pricing. You think what you do is easy, you price based on your ease and perceived value… but you don’t take into consideration (or at least enthis isthithetough) the perceived value of the customer.
Number of units - you can sell more units to a customer as well. Think about not just raising the prices on your t-shirts, but also working to increase the cart size and get customers to buy 2, or buy 1 and a hat, or whatever.
Types, levels, and scope - this is where you add another tier to the work, add in additional services, increase the overall work being done.
Time or recurrence - for service businesses on monthly retainers this is increasing the tenure of your average client. For projects its increasing the number of times they come back for more or different work.
Referrals - this one isn’t usually talked about here, but this ABSOLUTELY adds to the value of a customer in a big way.

My issue with focusing on price is it’s where your work meets most directly the pocketbook of the customer. It’s what they most easily quantify and evaluate value on. Raising the price is the quickest way to churn an otherwise happy customer. It works. But it often comes at a… well a price.

There are other ways to increase the value of a client and here’s the biggest thing to take from this:

Focus on increasing the value you DELIVER

…and then charge more for it and possibly in a different, more agreeable way.

Let’s go into some specifics.

Number of Units

This is for things like seats, licenses, users, physical products, usage or tokens, hours worked.

First and foremost, don’t let the “value” of a customer right now outweigh the value of them forever. And what I mean by that is don’t do things that optimize your dollars right now at the expense of a long term returning and referring customer.

Don’t just hammer adding work, especially if it’s not actually needed. Don’t do it. Ever.

How to do it:

Sell in tranches. Instead of by the hour, sell in blocks of 5 hours for example. Use the extra time to go above and beyond and deliver a better outcome or experience. If you’re average time is 7 hours, you just added on average 3 more AND the customer is happier with the outcome/experience.
Give escalating discounts on larger deals. Per unit pricing drops at certain levels.
Up or Cross sell additional or different services. Sold the t-shirt, prompt an offer for the hat. You sold the tax return, throw in a discount on next year’s planning.

Remember. And I’ll keep banging this drum. A customer is not coming to you with the goal of not spending money. They’re often not coming with the goal of spending as little as possible. They’re usually coming to you for value and they are willing to pay more for more value.

Types, Levels, and Scope

This is for things like monthly services, projects, and software.

Also it should be noted, a lot of products and services have opportunities for multiple of these.

For example, Saas companies are very familiar with this in selling more seats on a plan and premium plans. Service businesses tend to be bad at this and focus only on their rate cards.

For this type we want to change the product to a more valuable one rather than sell more of it or raise the price.

Examples: Accounting services > CFO services; Brand Strategy > Implementation; Instagram social planning > IG + LinkedIn + TikTok +…

How to do it:

Price to underlying GOALS, outcomes, or results, not the services they’re inquiring about. Look for how your product, its outcome, or its experience could be much much better and start adding to it. Don’t just raise the price like in # 1, raise the entire value proposition. Include more in the package and provide more certainty that they’ll get the result.
Price like an actuary. Gyms, insurance, and buffets all price a service you get “unlimited” use of… but are unable to use an unlimited amount of. The price is based on a mix of customers: the high utilization power users, the average user, and the “I forgot I even signed up for this” user. Yes. You are going to lose money on some. But the perceived value of “unlimited” can draw in a lot of people who will never fully utilize it but will appreciate the benefit of it.

I 100% understand that I “lose” money on my AMC A-List subscription. It pays for itself between 1-2 movies a month and while some I’ll see 3 or 4, most months are 1, and at least a few are zero. So why, being the math and financy dude that I am, do I pay for it? Because if i didn’t have it, I wouldn’t almost ever see ANY movie. But because there’s no additional cost for each one, I use it. I get more value out of seeing a few movies even at a higher price, than just going and paying the ticket price. Doesn’t make sense. But I’m saying it happens and I’m guessing you can think of services you feel this way about also.

Unlimited calls for example. If your customers are growing (read: busy) Saas founders (read: prefer slack or email), they might really appreciate the ability to jump on a call any time and not stress they’ll be billed for it… and then might never actually do it. Or at least not to the level you’re afraid of.

Build in achievement bonuses where you make more if outcomes are achieved… or maybe achievement discounts, where a product has a higher price but if you hit a target you get some back.

Duration

A client that returns or stays recurring longer adds a lot of value to you without changing the price at all for the customer. This in my opinion is the sleepiest of sleepers and a huge improvement to the numbers that seemingly come out of nowhere. Unfortunately, this added value doesn’t come with the same amount of fanfare and you only notice the absence or lack of this rather than the achievement of it.

How to do it:

Most of the time, this is in onboarding. So absolutely NAIL those first 30, 60, 90 days or maybe the first few hours. Think about every touch point, especially the ones immediately following the charge being run. You want that cash register bell to be associated with them with instant relief, satisfaction, amazement, awe, whatever.
Figure out where your most common exit points are - maybe it’s 18 months, maybe it’s after a specific event like tax filings, or maybe it’s seasonal. Whatever it is, look at the distribution of exit times and pull out the most common ones to target. Figure out ways to pre-empt the churn or deliver extra value right around the time customers start questioning it. Extra services, a client gift, maybe even a discount… although usually if they’re about to churn, I prefer to focus on the value, not the price since you don’t want to train that behavior and it is likely not the reason they’re staying. You don’t want someone staying just because, well, they made it cheap enough to stay with the crappy product/service.
Create a service or product that actually improves with age. Make it get better the more you know about them, the more data that’s collected, the longer they’ve been a member. Make it escalating so that stepping out not only means they’ll lose the next benefit BUT they’ll also have to start over if they leave.

Duration doesn’t feel as exciting or sexy but trust me. It shows up in your numbers.

Referrals

This one. THIS one is cool and usually overlooked.

Add value to a customer by making it really easy, and hopefully even valuable to them, to refer others to you.

If a client is worth $10,000 over the course of a year, you might work really hard to get another customer or get that average up to $12,000 a year.

Or. You can take that happy customer and turn them into 2 new ones over the course of a year and now they’re worth $30,000 a year.

These sales are cheap in that you didn’t have to spend ad dollars and those leads convert WAY more often than someone cold so the sales costs go down. They are more likely to stay long term because they have friends also with you. And they come in with generally higher satisfaction levels because they trust you more to start… which means they’re likely to refer more as well!

How to do it:

Make it easy. Create simple, easy to follow and easy to do ways to make the referral.
Time your asks. Reach out after a big win - yours or theirs - or maybe after they gave a compliment or were especially happy with the work. Be ready. Train your team to identify those windows. And don’t miss.
Reward them. Sometimes. I like offering incentives, it certainly worked for companies like Gusto. But sometimes people aren’t moved by it and it feels cheap. My favorite? Give them an opportunity to benefit… someone else. At Good Operator, if you had a great experience and leave us a review, we’ll send $50… to your Accountant. It’s a way for the client to “tip” our team for a job well done without using their own money. Win, win, win.

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Price isn’t the only option