Think about Life Time Value when Purchasing Merchandise
When making a decision around budget we have been trained to think about a specific event we are working on, we are going to Field Days, the total budget for the event is $40,000, $2,000 of which is for merchandise, sound about right?
I don’t know how many people go to Mystery Creek, but it is ten’s of thousands, and it runs over multiple days. So let's say you do 1,000 pieces of merchandise, so that is $2.00 per plastic pen.
Your goal would be to make sure you got to the end of the event and you had no merchandise left, meaning you got your brand in the hands of 1,000 potential clients. Collect 1,000 business cards, add 1,000 names to your database.
We think that philosophy needs to be flipped, you need to be coming at your merchandise and apparel from the view of Life Time Value.
On average what does a good client spend with you each year, $10,000? If you have a good + loyal client they will stay with your company for what, 10 years? That’s $100,000 Life Time Value.
So we put these to scenarios together, and you are attempting to onboard a $100,000 account with a $2 pen?
Based on $100,000 Life Time Value how many clients do you need to onboard at Mystery Creek for the event to pay for itself, two, maybe three depending on your profit margins?
You are at Mystery Creek for 5 days x how many staff, so you are probably looking to sign 20 new clients? At $100,000 each, we are looking at 2 Million in sales.
Now let's ask the question again. For 2 Million in sales, what is your budget for merchandise?