SFN160: Aaron Vidas on Customer Acquisition

Aaron Vidas is the founder and CEO of Strategy Box, a company that helps others companies find their most profitable customers and creates radically simple plans to help them grow.

 

In this interview, Aaron talks to us about how he transitioned from moving back into his childhood home and working with low leverage clients to working with companies ten times as big and quadrupling his rates.

 

 

In This Interview I ask:

5:09 - What did you study in university?

6:04 - Knowing what you know now, [would] you go back and do that university program?

8:23 - What are some of your ongoing takeaways from backpacking through China?

17:31 - How did you go about firing your own clients?

24:50 - What shift did it take to go from calling companies making under a million in revenue to companies that were 10x-ing that?

29:08 - What does simplification actually mean?

33:28 - What are people doing wrong when they’re tracking the lifetime value of a customer, and how does that affect what they’re able to do with that information?

38:23 - What do you define as great leadership?

 

 

How to Calculate Lifetime Value of a Customer

Lifetime value is an estimate of how much a customer would bring in over the lifetime they are with the company as a customer.

 

Lifetime Value of a Customer = [How much money do you earn per month for a customer, over a period of time (usually 36 months for younger companies)] MINUS [the customer acquisition costs]

 

Discounted Cash Flow is understanding that a dollar spent today is not a dollar three years from now.

 

When calculating customer acquisition cost:

• INCLUDE any expense related to marketing, including half of what you pay yourself (if you perform marketing tasks)
• INCLUDE Development costs and other variable costs such as hiring customer service or an account executive
• DO NOT include employee salaries

 

 

How to Cold Email Clients 10x As Big As the Ones You’re Currently Serving

When reaching out to prospects, make it abundantly clear that you’re not going to sell them anything and you just want to learn about their problems. It just so happens you might actually solve those problems and if they feel inclined to they may want to hire you later on.

 

You can use this script:

“This isn’t a sales call. [This] is what I do. [These] are some of the clients that I work with. [So and so] suggested I get in touch with you. I solve [these types of problems] for [these companies]. Can I have a ten minutes of your time? I really just want to know what your situation is, and if this is a fit for you or if it isn’t, and just why.”

 

In The Foundation, we call this process “Idea Traction.” Alternatively, you can say this:

“Hey, I’ve got nothing to sell you right now. I want to understand some aspects of your business to see what types of services you’re lacking, and to see if I could potentially develop a solution in the future. Can I have ten minutes of your time?”

 

 

Pre-Qualify Your Clients Before You Contact Them

Ask yourself, over two or three years, how much could this client spend with me? If the answer isn’t a big number you need to ask, should I be going after them in the first place?

 

 

How to Simplify Your Business

Ask yourself, a year from now, what do you want to be doing? Then work backwards from that. Some other questions you can ask is how much would it cost to acquire a customer or how long would that customer stay around for?

 

 

How to Fire Clients

There comes a time when you might have to fire your least profitable clients to grow your company. Firing your client doesn’t mean you’re leaving the relationship in a negative way. Take the extra time to help your client continue their business without you.

• Step One: Have an open and honest conversation about the relationship. Explain why you are unable to serve them to the best of your abilities. An example might be that the client is self-sabotaging themselves by not doing their part in the collaboration to accomplish agreed upon goals.
• Step Two: Refer your clients to alternative service providers so there’s no interruption in their services. 

 

Show Links:

AaronVidas.com, website

Strategy Box, website

Customer Acquisition Cost, slides