I Hate To Say Goodbye...

I hate to say goodbye to any client. I know you do, too.

We work so hard to find them. Then we put massive effort into nurturing them as prospects and converting them into clients. It’s often a long process in which we’ve invested much in financial and other resources. So when they leave us, it’s not an easy thing to take.

A CHALLENGE FOR 2011

With increasing competition and noise in the marketplace, focusing on capturing our audiences’ attention, attracting them, converting them into clients, then retaining them long-term is more important than ever. That last element--retaining--is the one that seems to get too little attention.

My challenge for you in 2011 is to understand and act on, more than ever, your awareness of the value of an existing client. What measures can we each take to ensure our client bases will increase in the coming year--not just through new client acquisition, but because of aggressive client retention activities as well?

I will propose one possible direction to get your mind going on this subject:

Imagine offering your existing clients better deals than you give prospects to get them to become first-time clients. This is backwards from most companies’ approach. In the scenario I’m proposing, your absolute best deals would be available to your longest-term clients.

Can you take this concept and create a culture among your clients in which it becomes something of a competition to be an ongoing client who gets the premier deals from your company?

Of course, this is just one of many possible directions. Pull your team together and share this message with them. Then dig deep and find the best way(s) for you and your people to keep your clients actively engaging with you this coming year.

Here’s to your client loyalty success!

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