This gem comes from Phillippa Goodwin of Essential PA – one for all the MultiVA businesses or simply for someone looking to outsource work on a permanent basis.
How to “sell” a virtual assistant client
Having asked around about how to assess a client’s ongoing value, Phillippa got a variety of responses – 100% of turnover? A percentage of their ongoing bills over the next 3 years? A one off fee? But all of these methods have a number of variables attached… For example, let’s say the client did loads of work last year because they had a member of staff off on maternity leave – would that continue next year? Or perhaps there are loads of in costs for one client, and none for another – the actual value of those clients would be hugely different in terms of profit.
Anyway Phillippa being a resourceful lady went in hunt of the definitive answer and agreed to share it with us:
“The first lesson I learned is that this valuation is not based on turnover but on the contribution rate.”
So for example:
Client brings in a £/value pcm £100.00
Associate costs £ pcm £80.00
Contribution rate £ pcm £20.00
Then work out the current lifetime value.
Let’s say 2012 – 2015 3 years @ £20 pcm £720.00
Then work out the anticipated lifetime of the customer let’s say another 3 years.
Total value/cost to associate £1,440.00
So the variables are: profit earned on the client, length of client relationship, expected lifetime of the client. So in our example where the client has only temporarily upped their spend due to maternity leave, this calculation would take that into account. Likewise it would account for time intensive clients where the profit level is low.
Great calculation – thanks Phillippa!!!