Read the following excerpt from my book ‘The NZ Small Business Superhero’s Internet Web Marketing Handbook’ and discover how you can start finding customers profitably…
Finding a steady flow of new customers is a key challenge for most businesses. There are many options available: newspaper and radio advertising, traditional directories like Yellow Pages, networking groups, telemarketing, sales reps, word-of-mouth referrals and of course the internet.
The big news for small businesses is that the traditional methods of advertising like Yellow Pages and media advertising aren’t working as well as they used to. Most people realise – and all the research confirms it – that consumers are now using the internet to find local businesses.
Despite this, many small businesses have had disappointing results from internet marketing. They have found that simply getting a website is no guarantee of success. On the other hand, other businesses are getting great results from their web marketing.
Therefore the key marketing challenge for the modern small business is to make a success of their website and internet marketing.
Success in web marketing (as in any area) is not a matter of chance, magic or guesswork, but comes down to understanding and implementing the key fundamentals. Customer value, acquisition cost and return on investment Regardless of the tactics chosen, marketing activity to find new customers inevitably involves an investment, which then hopefully translates into a return from the new customers that eventuate. Looked at this way, finding customers is about generating a return on investment. You are essentially “buying” customers, and the challenge is to buy as many as you need for as little investment as possible.
How much is a new customer worth to you, and how much should you be willing to invest to get one? By this, I don’t mean the amount of your average sale, although that is another key statistic you should monitor. I am talking about what your average customer will spend with you over the course of their lifetime as a customer of your business. Say, for example, your average customer spends $100 each time they visit and they visit five times per year. That’s $500 per year, and if they stay with you an average of five years, then they’re worth $2500.
Your average customer lifetime value gives you an insight into how much you should be willing to invest in finding a new customer. A general rule of thumb says you should invest 10% of your customer lifetime value in acquiring a new customer.
This means that if your average customer lifetime value is $500 then you can pay up to an average of $50 in advertising costs to get a new customer. Therefore – under this scenario – if you spend $100 in advertising, you should expect to get two new customers – otherwise you’d have to question the value of the advertising.
Unlike most forms of advertising, the response from internet marketing is easy to measure, so you soon know whether the return you earn on your investment has been worth it.
To read more, you can purchase my book ‘The NZ Small Business Superhero’s Internet Marketing Handbook’ by clicking here.
