How To Calculate The ROI Your Services Generate
Would you love to be able to show your potential clients just how much more money they could make after working with you, but haven’t got a clue how?
Ever wish that you could tell your potential clients, just how much more money they could make by working with you?
It's like the ultimate dream, right.
But, it doesn't have to be an empty dream. It's actually not as hard to give them that number as you may think.
I ask all of my clients know a lot of the clients this one question, "How valuable is your service?"
Often, I get a blank look in return. They don't know how valuable their services are.
After all, how do you put a dollar figure on the change you help your clients make?
Well it is possible. I have three simple steps that will allow you to work out that figure. And all you have to do is keep reading…
Putting A Value On Your Services
It's actually pretty straightforward to put a value on your services. This process works best when you have a B to B service. So, when you work with other businesses, rather than when you work with consumers.
There are three simple steps that can allow you to work out how much money you help your clients to make.
The great thing about being able to give them this figure is that it can really help potential clients overcome some of those buying hurdles - the things that are stopping them from investing with you.
So, here are the three steps to working out just how much money you help your clients to make.
So, step number one is where you want to establish a baseline. It’s about noting down some metrics and stats so that you have a starting point. From there, you can then compare what they have been doing and how things are performing after working with you.
So, let's say you are a marketer. I know there are lots of ladies out there who help other business owners with their marketing. You might do it through videos, social media, content creation, strategy, websites, or a mixture of these activities.
As a marketer, the first question you want to ask your clients is “how many sales calls or leads would you have in a week?”
Then, a follow on question would be, “what would be your average conversion rate of those calls?” So, for every ten people who you get on a sales call with, how many of those actually convert into being a client?
And question number three would be, “what's the average lifetime value of that client?”
We talk about the average lifetime value of the client rather than a one-off purchase because sometimes one purchase can lead to an ongoing relationship.
A good example of a profession that experiences lifetime value might be an accountant. So, the first time an accountant brings a client onboard, it might be worth $1,200 to their business.
However, as an accounting firm they might usually retain clients for an average of three years. So, the lifetime value of that one sale is actually worth $3,600 - three times as much as what they get in the first year.
Understanding the lifetime value of a client is really helpful for helping to evaluate just how much of a return your clients get from your services.
Alright, these three questions make up step one of the process. If you have an onboarding questionnaire, that's a really simple place to ask these questions.
If you don’t currently have this in your onboarding process, then it’s time to include it!
Let’s move onto step two…
Right, so step one established a baseline understanding of how your client is currently performing. That will give you something that you can evaluate against little bit later on.
Step number two is all about follow up.
When you work with your clients, they may not get instant results from the second they start working with you. It might take some time until they start to see results.
Often, when you implement change in a client’s business, it can take a few months before the returns start to show.
That is why it is important to check in with them at appropriate intervals. It could be six weeks, three months, six months, 12 months, or maybe all of the above until the impact is felt. So, regularly check-in with to see how they are going.
Checking in does not have to be a big event. Put the dates in your calendar and then it can be as simple as touching base and saying… “It's been three months since we worked together. I'd love to hear how everything is going.”
This is also a great way to restart a conversation with the client and open up the opportunity to maybe do some more work with them.
If they come back and say, actually it's going really well, don’t just leave it at that. You want to get some specifics out of them! Say things like, “Tell me, I'd love to hear more.” “How is it going well?” “What are you seeing?”
Try and dig into how many sales calls they might be getting now. And, what their conversion rates are like.
The more specific information you can get on their results, the easier it is going to be to compare with your baseline info and see the progress that has been made.
The added bonus with this process is that you also get a really exciting testimonial. AND, you can then turn it into a case study to maximise the marketing exposure.
A 10 minute conversation to drill down and get a little bit more information about what's going on behind the scenes means that you get a real world example of just how powerful your service actually is.
Once you have the baseline information and the results in hand, then the last step is pretty straightforward…
Step number three is to just do the math.
You can now look at what the differences are from before your client started working with you and after they have experienced your services. Then, calculate what that return of investment is.
So, here's an example.
Let's say, when you onboarded your client they mentioned that they were currently conducting two sales calls a week and were converting half to paying clients with an average lifetime value of $2000.
Their baseline stats before working with you showed they were generating monthly revenue of around $8000, and an annual revenue of around $96,000.
After checking in with them after three months, you learn that they have gone from an average of two sales calls a week to three.
That's an increase of 50%!
Now let's say that because all of the work you've done, the quality of those leads has also gone up. So, instead of converting 50% of them, they are now converting 75% of them.
That's another increase of 50%!
Also, because they are now getting a higher quality client, they were also able to increase their price a little bit. That would mean, the actual lifetime value of a client could have gone from $2000 to let's say $2500.
That results in an increase of around 25%.
I know that it doesn’t sound like your clients are making massive shifts, right?
But when you add all of those small increases together they make a massive impact.
If your client is getting an average of three sales calls a week and they are converting 75% of them at a lifetime value of $2500, their monthly revenue goes from being $8,000 to $22,500! That is a massive increase.
And their annual revenue would have gone from being $96,000 to a whopping $270,000!
That's nearly a 300% increase in revenue just by making relatively small incremental improvements in their sales pipeline. All thanks to you and your business.
The Importance Of The Three Step Process
Being able to tell your clients the return on investment they will get by working with you is a powerful marketing tool. And, you wouldn’t be able to give them this figure without the 3-step process.
If you hadn’t established what your clients were doing before they started working with you, it would have been hard to actually pinpoint where you had made the difference.
So, asking those questions at the very beginning is a really important first step to being able to establish just how valuable your service is.
Without the right information, you wouldn’t be able to share with the world about how much more money your clients could actually make after working with you.
This method is great for marketing businesse