Been a bit quiet on here of late, but I assure you it is not without good reason.

I have been working on a new model of business, one that I am sure you can benefit from. It is a model that some people have been following with great success for decades, but is only coming into mainstream view now as everyone becomes super connected, has instant access to unimaginable resources of knowledge and skill for creating websites and knowledge products online become easier to learn and more widespread.

Hey, and it even has an acronym. SPOKE

The SPOKE system is going to present people with a way of developing sustainable online businesses, that provide long
lasting income (some of it passive) and creating meaningful work. It is about utilizing the skills that you currently have to start to
break the cycle of trading dollars for hours, and which skills that you should be developing to be successful in an ever changing world.
It is about  making the most of this connected, fast paced world that we live in, and using it  to support rather then overwhelm you.

A NEW VIEWPOINT

Over the last few years I have studied and worked closely with many bloggers, entrepreneurs, business managers and internet marketers. I have also lately been doing a lot of work with social media marketing and consulting, as well as studying a lot of material about social networks, the future of the internet and business, entrepreneurship and work.

While doing a review of my business plan last month a number of these pieces started to click together, and a picture began to form out of the confusing puzzle that we call our modern working life. I saw how it was possible to have meaningful work, escape the 9-5 office based - always the same drudgery and also make a decent living. It is like freelancing, contracting or even “making money online” but more then that. I will develop and share the SPOKE system with you over the next few months

REDESIGN TIME

Also I think I need to modernise this blog (once again) and develop it into a world class resource of information. Design for this site is a continual process with me, but inspiration has come in short bursts. While design isn’t everything, it is important that you quickly convey what the site is about and your level of professionalism as soon as people hit the page.

One of the key concepts to learn if you want to successfully run a sustainable online business is the idea of lifetime customer value. I define LCV as how much the customer is worth over the lifetime of your relationship with your business.

HUNTERS & FARMERS

Some businesses can be seen as hunters, and some as farmers. The hunters are focused on a single sale, and will do everything the can to get a customer perform one specific action, buy their product. Once purchased, they don’t perform any specific actions to get that customer to purchase from them again. They are not interested in having to provide long term value or in retaining the customer.

Farmers however understand the importance of building long term relationships with clients. They want to nurture and grow relationships with their customers so that they can continue to provide more products and services with ever increasing value to them. The cost of retaining your existing customers if often far less then the cost of acquiring new “cold” ones via advertising and other marketing methods.

LCV is all about keeping customers as YOUR customers, stopping them being tempted to look at competing products, and when they do look elsewhere they retain a loyalty to your brand that makes them come back, based on the relationship that you have developed with them.

Real farmer businesses realise the LCV as so important that they will give their first sale away almost for free in order to get that customer into their sales funnel. I will leave the concept of sales funnels to another time, but in short a sales funnel is a range of different products that you can provide a customer after the initial purchase. In general, these products are a) more expensive and b) more closely tailored to the qualified customers needs. So by giving away the first sale profits to those that promote their business (affiliates, retailers) the very top of the sales funnel acquires a lot of customers that you can then promote other products too.

A REAL WORLD EXAMPLE

A real world example to consider would be the sale of inkjet printers. You can go and buy one from your local office supply mega warehouse for $100, which at the time seems to be a bargain. You use the printer for a few months, printing off photos, documents and CD labels, and all of this goes well until one day a flashing icon tells you that the ink has run out.
It is only when you go back to the store and look at the price of the ink cartridges that you realise that it is going to cost you $120 to refill the ink for your $100 printer.
The printer company now has extended your LCV with them by giving away the printers for near cost price, and now make all of their costs back on the ink.

While this example does not really do the sales funnel model justice (it only has one tier to the funnel, which is buy more ink), it does show you how lucrative it can be to develop a business model with LCV as a key factor.
WHY IT IS IMPORTANT

When you understand lifetime customer value the importance of mailing lists, social networking and making sure that everything you produce has real value to it becomes apparent.

This is why membership sites, online courses and mentoring are such great opportunities online. You are constantly in front of the customer, providing real value and a service which they would rather get from you then anyone else.

There are lot of terms and specific theory around Lifetime Customer Value such as churn rate, retention rate, retention cost, discount rate and a lot more which I will cover in some detail over the coming weeks.