How Many New Customers Do I Want to Buy – – Most Important Marketing Question For a Small Business

More often then not, the small business owner is looking for the cheapest way to market, and the cheapest way to market, or the cheapest marketing media may actually result in the most expensive cost to acquire a customer.

The right question should be that once we understand what it really costs to acquire a customer, and, assuming it’s a reasonable, and profitable cost, then we SHOULD be asking, “How many customers do we want to buy?”

I frequently show a new client how to acquire hundreds, and sometimes thousands of new customers using a pay per click campaign (it’s only one of many, but it’s the one that frequently gets the shocked, Oh my god! look. So I’m using that as an example. It applies to all forms of marketing, so don’t go running off saying that you don’t do pay per click. This applies to ANY kind of marketing.

The Most Important Cost of Marketing Isn’t the Up Front Cos — It’s the Cost to Acquire a Client

In any case, the first thing the client asks is, “what will a click through cost?” and I’ll tell them anywhere from $1 to $4 or so. Then I get the shocked look, and the “Oh my god! What would happen if I got a thousand clicks by tomorrow morning?”

To which I Always reply, “That would be great wouldn’t it? Isn’t that what you wanted, a whole bunch new prospects checking you out?”

You see, there is a mindset among most small business owners that “costs must be avoided” and spending money on marketing is just one of those costs.

However, IF every time you spent $1 on marketing it generated $100 in sales wouldn’t you want to crank up your spending? I would. And that’s the difference in the mindset of “marketing costs” versus “marketing multiplies” our dollars.

But let’s take this one more step so you understand another part that scares the @#@#@$ out of people.

The Marketing Response Rate Determines What It Costs to Acquire a Client

There marketing has NEVER worked. Therefore, spending a dollar almost always resulted in the dollar going out the door and never coming back. But that’s easily fixed. In fact, it MUST be fixed.

Right now you spend a dollar and it’s gone. But if you could spend a $1 and generate $100, or you could spend $10 and acquire one client that will spend $1,000 wtih you, we’d WANT to spend the dollar.

That’s when we say, “How many clients do we want to buy?” If we wanted to make $100,000 this year, and KNEW that every time we spent $10 we’d get a customer spending $1,000 we’d be aware that if we actually spent $1,000 we’d lock in $100,000 of new sales.

So, how much would we be willing to spend to acquire a new client?

Now, don’t get chincy on me here. I’ve seen people balk at spending $10,000 to make $100,000 because they say they don’t have the $10,000. If you are telling me that I’ll tell you that you’ve got your head in the wrong place.

When a client tells me that, I’ll point out that they COULD spend $100 now turning it into $1,000. We’d take the $1,000 or a part of it, investing it into the next marketing activity, that would generate $10,000, and reinvest that toward the $100,000.

Here’s a problem however. It’s why your marketing has NEVER really worked before.

Let’s look at the marketing formula. It states that:

  • Number of people who see your marketing
  • times
  • percentage of those who respond to your marketing (based on what you say and how you say it)
  • equals
  • number of leads, or sales you will get from that marketing

So, if you invest in 1,000 pieces of marketing, at $1 each, you spend $1,000. And if 10% respond, 100 people call you, then it costs you $10 each lead or sale. If you are selling something with a profit more than $10 you made an overall profit. So, it might be a good idea to ask, “How many of these am I going to buy?”

But let’s say that your marketing doesn’t work that well. In fact, a lot of websites, and other marketing materials only get 0.1% conversion because the marketing message just doesn’t connect well. At 0.1%, that means that we’d only get one lead out of 1,000. At $1 per letter, that comes to one lead for $1,000. This time, unless we are selling something with a profit of several thousand dollars, this won’t work.

I don’t think we want to ask “How many of these do we want to buy?” when a lead costs $1,000. In tis case, we have one option, FIX IT. It means that we HAVE to fix our marketing message to better connect with our market.

A response rate at 10% vs a response rate at 0.1% means the first gets 100 times more clients at a cost that 1/100th that of the 0.1%. Would you like to have 100 times more clients?

So, what does it cost you to acquire a client?

And what’s your next question? How many do you want to buy? or do we need to fix our marketing message right now?

To Your Huge Marketing Success

Alan Boyer

$100K Small Business Coach

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