In my industry the best way to grow your business is via referrals but this will only build the business to a certain point. Marketing needs to take place to promote and call in new business. But at what cost? How much does each customer cost? Do you know?
Purchasing Customers – which one would you like?
All the customers have different price tags as all have come to you via a different method, maybe flyers, radio or local paper.
But how much did your campaign cost?
The best way to work out your cost is to look first at your static costs, these are the costs that stay the same, they consist of the expenses accumulated with doing a quote.
For example:
Brochure: $0.40
Petrol for quote: $2.50
Quoter/Staff: $20.00
Static Cost $22.90
Next look at the lead generation cost, this is the total expense for a particular marketing campaign.
In this example we are placing an advertisement in the local paper for $350.
Lets say we had 10 quotes from the campaign with 7 new customers.
Our price per customer is:
Static cost x #of quotes + lead generation costs/new customers
Our example brings this to:
$22.90 x 10 = $229 +$350 = $579/7 =$82.70
Our new customer has cost: $82.70 this is the purchase price per customer.
In the repeat business industry like I’m in, we can than work out the breakeven time frames by dividing the purchase price per customer by the average clean profit.
For an example lets base this on a $25 profit per clean. In this case if the customer was a fortnightly customer it will take 6 weeks until you hit break even timeframe. (3 cleans)
$82.70 / $25 = $3.3
Always monitor your campaigns, know your numbers and recognise what needs to change to bring the numbers down. This could be the marketing method, conversion rates or static costs.
Quote: ‘Make measurable progress in reasonable time. ‘ by Jim Rohn
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