Sadly, many marketing organizations don’t know what the lifetime value (LV) of a producer is to their business. Nor do they know what it costs them to recruit a new producer.

If you are among the few who do know, it makes it much easier to determine not only what you spend on marketing, but how to calculate the services, value-adds and incentives used to recruit producers, retain them longer and prevent them from ever leaving your company.

If you don’t know what a producer is worth to you, you are shooting in the dark with everything you do (from commissions to staffing to incentives to retention to advertising and marketing).

How do you determine what a producer is worth to you? It’s simple. Evaluate the producer’s average annual production, calculate your overrides and extend this for an average life expectancy of 3-5 years. Above you will see a simple worksheet that you can use to calculate LV.

In this example, the lifetime value of a producer is $53,125. If this were the case, how much could you afford to invest to recruit a new producer? While it would be obviously foolish to spend the entire amount for one producer, it sure makes spending $500 or even $1,500 sound like a bargain.

“Before you can begin grabbing market share and start producing the profit windfalls you desire, you must understand ‘the lifetime value of your customer’ … better than anyone else.” – Jay Abraham

With a firm grasp of your producers’ LVs, you are free of the unknown and can more confidently budget your marketing initiatives. Armed with this knowledge, you will be in a position to profitably outspend and continually outperform your competition.