How much should I spend on marketing?
This is one question I get asked a lot.
Q: How much should I spend on marketing?
A: Ask yourself these two questions and you will have an idea. Firstly, how much is the average customer worth to your business? Secondly, what’s your average lifetime retention rate for your customers?
Let’s say you sell a service that’s around £2000 per order. You sell this 3 times per year on average to each customer. And your customer retention rate is around 3 years. That customer is worth £18000, not £2000 to you.
Therefore, spending a £1000 to pursue one client is money well spent in the bigger scheme of things. Because you’re going to make more money from them further down the line – not just from their first payment.
Also, you might be able to spend more than a £1000 for customer acquisition, depending on your margins too.
If you can improve your customer retention rate further you’ll see an even greater ROI.
Wondering how to find new clients? There are lots of ways to find new customers: SEO, direct mail, email marketing, new website, pay per click ads, new copy on your sales pages. Combing a few of these methods often works best. And if done correctly, you should see a good return on your investment.
And provided you can do the business, and keep your new customers, you should make a tidy profit over their lifetime.
Contact me if you’d like me to pitch some marketing ideas for your business. It could mean the difference between you struggling to find work, or having a new paying customer who does business with you for years.
All the best