MindValley Labs Internet Marketing Blog

Whilst in Los Ange­les, I met Brad Antin, Direc­tor of Mar­ket­ing for Cen­ter­pointe Research Institute.

He works with Bill Har­ris, and after lis­ten­ing to both these guys, this is the first of a series of posts in which I’m going to share some key points and inter­est­ing things these guys are doing with Centerpointe.

Our part­ner, Larry Benet “The Con­nec­tor”, was nice enough to intro­duce me, so I had sev­eral con­ver­sa­tions with Brad Antin.

Allow me to share Centerpointe’s sta­tis­tics again. Though you’ve likely heard them before, it’s worth repeat­ing before dis­sect­ing some of their num­bers with you.

In 2007, their total sales were over $17M, and that is just from the main prod­ucts they sell. There’s much to learn from them because $17M is VERY good. Through­out our dis­course, some very pow­er­ful data points came to light.

50% of Centerpointe’s sales come from refer­rals. I will bet you that today, on any of our web­sites, I sus­pect, from gut instinct, that our fig­ures are far below where these guys are.

A refer­ral sale is a sale that’s gen­er­ated from a friend’s refer­ral, via word of mouth. It means some­one picked up a phone and told their friend, “I’ve been try­ing out this new Holo­sync® stuff, it’s amaz­ing! You have to give it a shot because it’s help­ing me have a stress free life, I’m enjoy­ing myself more… I’ve found a Mir­a­cle cure, you have to give it a try.” 

That’s what a refer­ral is. And Cen­ter­pointe is get­ting half of their busi­ness from peo­ple pass­ing it on.

When you break it down, that means they gen­er­ate $8.5M worth of sales because of word of mouth mar­ket­ing (WOMM). That’s a tremen­dous amount, by any standard.

If your remem­ber, they sell their front end prod­uct for $180. Their aver­age life­time value per cus­tomer (CLV) is $800. This means that they are get­ting $620 on the back end. That’s another large figure.

They do a pro­mo­tion twice a year, where they send a let­ter to their back end –their exist­ing cus­tomers – almost like a mini launch to their own list. Their back end pro­mo­tions bring in between $4M to $-5M per year.

In addi­tion to that, they have set up a spe­cific follow-up sequence for every cus­tomer. This sequence includes upsells that they get in the mail, based on which of Centerpointe’s 12 cus­tom made lev­els the cus­tomer is at… (You can buy from them 12 times…that is cool)!

When you dis­sect this pic­ture and do the math, you start to see that if you take away the back end and the refer­rals, you end up with $1.5M.

Ask your­self, how can you improve your busi­ness in order to get these kinds of results? Do you have enough back end prod­ucts to increase your cus­tomer life-time value?

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About the Author

Prior to MindValley Media, Mike was the Head of New Ventures Strategy at eBay where he conceived of the strategies that led to the investment in Craigslist, the launch of Kijiji.com and the acquisition of Skype. Mike has an MBA from Stanford and previously worked for the Boston Consulting Group. He is also a certified Google AdWords Professional.

Check out other posts by Mike Reining

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