Let’s talk about a very important business concept: Lifetime Customer Value (LCV).
What exactly is LCV? Quite simply, it’s the amount of money you can expect a single customer to spend with you over the entire life of their business relationship with you.
Quick tax return example: A customer with a simple 1040 return comes to you every year, and you charge them $200. If they come back year and year, and you never raise your rates (which you should, by the way!), then this customer is worth $2,000 over the course of a decade….$6,000 over the course of 30 years in tax practice.
Instead of looking at a customer in terms of a single transaction, LCV as a concept forces you to look at each of your clients as a long-term business ally. On a balance sheet, your client list should literally exist as the single most valuable asset in your entire tax practice.
Most tax practitioners I speak with think largely in terms of either their seasonal tax customer base, or their monthly accounting clients. Most tax professionals do absolutely nothing to foster long-term relationships with their clients, and simply view them as a tax return that walks through the door once a year.
There are a number of problems with this thought process.
First of all, if you view each client as “just a tax return”, then you are obviously caring more about yourself than your client, and this is just a bad business mentality. Legendary sales trainer (never forget, you *ARE* a salesman, no matter what the initials after your name say) Zig Ziglar is quoted as saying, “You will get all you want in life if you help enough other people get what they want.” What Zig is saying here is that if you look out for your clients, they will reward you financially.
Second, if you only think about any particular client in terms of doing their tax return once a year, or doing their books once a month, or handling their payroll every two weeks, you are missing out on a MASSIVE opportunity to be of greater VALUE to your customers. You are in a position to offer money saving tax advice to your customers and prospects. If you aren’t doing this already, then why not? Do you do mid-year or quarterly reviews for your clients to discover new tax savings? Are your monthly accounting customers spending … Continue reading