Your Business’ Most Important Number
ByWhether your business is online or off, the most important number you need to know is what a new customer’s lifetime value is to your business.
If you spend X amount of money on marketing…PayPerClick, SEO Consulting, PayPerClick, radio or TV time, etc. you simply can’t base your decision for spending marketing dollars on how many initial sales come in.
Here’s what I mean:
Say you have an ice cream shop and you spend $500 on a marketing campaign one month. The campaign brings in a new set of 100 customers who each spend an average of $3.00. That’s $300 earned on the $500 marketing investment.
A short-sighted business owner sees a “loss” of $200. But in reality, 25 of those 100 new customers will return…over and over again in the coming year(s). The lifetime value of each of those 25 new customers could be many hundreds of dollars!
The short-sighted owner vows never again to “waste” his money like that. Imagine the money being left on the table with that type of thinking.
If the market was large enough, just think of the profits that shop owner could be reaping in a few years if they consistently had those types of returns on $500 marketing investments! I for one would be HAPPY to “lose” $200 in trade for those new, long-term customers!
Now think about your own business and what the real value is for gaining a new customer. Only then can you make effective decisions about how and where to spend your maketing dollars.
Marketing is the evil necessity of small business. You’re right; too many small business owners cheat themselves when it comes to marketing their business. Afraid to lose a little money now on worthwhile marketing (online), they pass up opportunity to grow.
Until you have the clientèle built up to thrive, you must have, at least, an online marketing plan to attract new business.
Spend money to Make More Money!