Knowing Your “Cost Of Customer Acquisition” Can Turbo-Charge Even the Tightest Marketing Budget.

What can businesses do to increase sales and improve profitability, without spending more money?

One of the questions I always ask clients is, “What is your cost per customer acquisition? And in about 95% of the cases I get a blank stare or silent voice, followed by “I don’t know.”

Now this triggers multiple tactical and strategic thoughts of how I can help them, but for this article I will cover the one that addresses, “Maximizing Your Current Spend.” That is, if you are spending say $5,000 a month in advertising (on and offline) are you spending it optimally?

Real World Offline Example
Cut Per Customer Acquisition Cost by 400%

To help set the stage, I will use a couple real companies without disclosing their names. The first example is offline. They are a health services company that drives in leads via print. And they have been doing this for years with success…but at what cost? Well, they first had to evaluate what it was costing them to drive in leads and close clients from each lead generation source.

After doing this, they found that Method 1 – via a specific newspaper ad, cost them about $300 a client (not looking at “lead” by the way because all lead sources do not convert the same). In contrast, their bulk campaigns (mail pack and postcard campaigns) were costing over $1,100 or almost 400% more per client!

So, opportunity 1 is to reduce their marketing cost by $2,500 a month (we call that a profit), or Opportunity 2 is to reinvest the $2,500 into marketing that produces a far greater result (we call that turbo leveraging your marketing to increase revenue by over 50% without spending a dime).

Real World Online Example
Increase New Clients By 300%

Ok, now let’s look at an online example. Another client is in the consumer services business and generates about 50% of their business via the Internet…mostly using PPC.

Now for them, this is something relatively new (they wanted to get hip and join the Internet Revolution). Now in addition to the Internet, they also use TV, print and direct mail (yes, letters, can you imagine).

Well, their analysis was shocking, to say the least. The marketing method that was by far the least expensive based upon client acquisition cost was……the direct mail campaign to tightly targeted prospects by 200%+.

Cool, but that is not online. True. I share this with you because it is easy to get caught in the trap that offline is dead (or real expensive) and online is inexpensive.

Anyway, as for online, they were running their new found PPC program and spending over $10,000 a month…with no clue what the cost per client acquisition was. Therefore, they could not properly evaluate where they should be spending the dollars most effectively.

They have five geographic areas they service. And the cost per client acquisition in one vs. the other varied by over 300%. So can you see how shifting dollars to higher positioning in the ranking would be a smart move?

In addition, the cost per client based upon keywords can be massive. And it is not always the top term that makes the most sense…But of course you cannot possibly know that without tracking and trending the client acquisition cost per top keyword, can you?

I previously talked about Conversion is King. And that is true. But you need to understand how these twin-strategies work together to create the greatest result. Without this, you can get in real trouble. We found that this company generally did best in average position near the top of the paid listings in Google (for their top keywords). But, in one of their markets, the CPC was a whopping $40+ for the top term. So they deleted these both and made way more money in a much lower position.

Coupling conversion with which lead source produces the lowest client acquisition cost enables you to bury your competition and maximize both your profits and your revenues.

Often awareness alone can produce results and I hope that I have stimulated your mind to focus on what your clients, customers or patients are costing you to acquire, because the difference in your bottom line is massive if you effectively deploy this implementation technique.

As with Conversion is King, for most of you this simple process can produce $10,000-$100,000 a year in added profit. So go for it and Profit NOW™.

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