Increasing Touch Points Increases Revenues

Are we bent on getting single impressions with as many people as possible, or do we focus on achieving enough interaction through multiple touch points to help convert prospects into clients, and clients into loyal advocates?

Here’s a quick illustration of two scenarios I see over and over:

Business person #1 has enough money to make 10,000 impressions, so he makes a single impression with 10,000 people. His conversion rate is 0.5%, so he gets 50 new buyers.

Business person #2 also has enough money to make 10,000 impressions. She chooses to make five impressions each with 2,000 people using the same budget. She achieves a 5% conversion rate, yielding 100 new clients—twice the number for the same money.

As impressive as that is, here’s where the real difference comes into play…

Business person #1 does the same thing again to get the revenues he needs for next month. Sure, some of the people who have bought from him in the past make additional purchases, but he doesn’t do much to foster a long-term relationship with them. His focus is always on bringing new people through the doors (literally or virtually).

Business person #2 knows if she keeps a large percentage of her clients active, that’s good for her business in the long run, so she reallocates half her marketing budget for client retention activities. This means she’s only bringing in 50 new clients a month now through her initial acquisition activities, but well over half the clients she brings into her fold stay and keep buying from her because of her proactive relationship-building efforts. Furthermore, they become her ambassadors, bringing new clients into the fold with simple incentives that add to their positive experience with #2 and her company.

Over the course of just a few months, #2’s client base is multiple times that of #1’s. Over the course of years, you can image the difference.

Simple? Yes. Easy? Apparently not, since business person #2 represents an extremely small percentage of the business owner population.

In the end, #2 isn’t #2 at all. She’s #1 in the minds of her clients. She’s their #1 choice for what she provides. And her company is #1 in client acquisition, client retention, revenues, and profits.

Here’s to our being #1!

Bryan Waldon Pope

What Am I Really Spending to Get New Customers and Clients?

Last week I shared a formula for determining the lifetime value of customers and clients (LTV). This is useful in helping us decide what we’re willing to invest to engage and keep our audience as repeat clients. Today I’m going to share another useful formula: Client/Customer Acquisition Cost (CAC). This formula will tell us what we’re actually investing, on average, to gain each new client.

Although there are methods of getting down to very specific numbers, it’s more important to have a good idea of our CAC than it is to have it down to the penny (at least to begin with). Determining our current CAC is accomplished by gathering information on all our marketing-related expenses for new customer/client acquisition over the past 12 months. Using a 12-month period is good for coming up with a true average. Leaving out expenses specifically directed at retention and loyalty campaigns is good since these are not part of initial acquisition.

Once we have our 12-month expenditure number, we need to find out how many new customers or clients we have acquired during that same 12-month period. Once that number is known, we simply divide our investment by the number of new clients we’ve gained. Here’s the formula:

$ Invested in Acquisition Marketing Activities (past 12 months)
/ # New Clients in the same period
____________________________________
= Client Acquisition Cost (CAC)

As an example, if we’ve invested $10,000 in new client acquisition marketing activities over the past 12 months, and we’ve gained 100 new clients, our Client Acquisition Cost (CAC) is $100.

In conducting this activity, many will find their CAC is far too high, calling for a need for more targeted marketing efforts. Others will find they can afford to invest more in each new client, allowing them to accelerate client acquisition rates.

Questions? Comments? Let’s hear them!

Here’s to your marketing success!

Bryan Waldon Pope