Do you know what it costs you to get a new customer? Not a lead, but an actual customer.
If you don’t know, you’re flying blind and probably wasting a lot of money or leaving a lot on the table.
Many clients I work with have some idea of what it costs them to get a lead but have no idea what it costs to get a customer. You can’t assume that your leads convert to a customer equally from all lead sources so you must track this.
Here’s a good example of how bad your decisions can be without tracking this carefully.
In the early 1990’s I founded an Internet business selling a business opportunity in the promotional products industry. I was basically putting people and businesses into the business as distributors for only $1,000 while the franchises and others were charging $20,000 or more.
Because my margins were a lot thinner than my competitors, I really had to watch my costs to acquire a customer from each source carefully. I had an advantage though – my business was strictly online and I’d create traffic to my web site and then people would read my sales letter and send me $1,000 – sometimes without even talking to me.
I did like that aspect of it!
When I started advertising in the classified sections of national magazines to get traffic, I was using 12 different magazines.
My tracking told me that the leads I was getting from Entrepreneur Magazine were my most expensive leads and some other magazine whose title I’ve long since forgotten was bringing me leads at 1/5th the cost of Entrepreneur.
Had I looked only at lead cost, I would have naturally cut out my most expensive lead sources and put my money where my leads cost the least.
But, when I analyzed the cost to get a customer, not just a lead, Entrepreneur turned out to be my least expensive source of customers and that cheap lead source was the most expensive. Even with hundreds of cheap leads, NONE of them ever became customers!
Without proper tracking and analysis, I would have put more money into what wasn’t working and stopped doing what worked!
Do you know your cost per customer from every advertising method you use? If not, you are making decisions based on bad information. You spend money to get new business, so don’t blow it by not tracking the results properly!