Marketing Is Buying Customers
Marketing your Jewelery business is nothing more than buying customers.
That’s all it is, and the sooner you understand that, the more comfortable you’ll be investing money in everything from advertising to sales training and from PR to Customer Relationship Management tools.
When you think about it, anything and everything you do to bring in a new customer, or to get an existing one to do business with you again is marketing. And everything you do to accomplish either of those goals has a cost associated with it.
Run an ad in the local paper or top industry magazine… it costs money.
Some businesses hire a salesman and put him on the street. Even if he’s a straight commission guy and you don’t pay him until after the sale is made, you still have the cost of recruiting and training. And while you don’t pay a salary up-front, in this case, you still pay that commission out of every sale he makes.
PR… that’s FREE advertising, right? Don’t tell that to the companies who pay public relations companies or internal PR specialists to get that press coverage. Even if you do it entirely yourself, you have to invest time, and we all know, time is money.
No Marketing is Free
No, there is no free lunch in the marketing world. You want new customers or the old ones to come back, it’s going to cost you.
You can’t avoid this fact, but you can quantify it. You can know how much it costs you to bring in a new customer and how much it takes to get your existing ones coming back.
And while most companies can’t tell you what the specific numbers are for these two costs of acquisition, anybody with half a brain can see they should.
How else can you make intelligent, informed, wise decisions about marketing your business?
What was your advertising budget last year? What percentage of it was dedicated to bringing in new prospects, customers, clients or patients? How many did you actually bring in?
If you spent $100,000.00 on advertising last year, but $30,000.00 of that was on programs designed to get existing customers to come back again, your new customer acquisition budget for the year was $70,000.00. If you brought in 1,000 new customers with that budget, each one of those new customers cost you $70.00.
Whether that’s good or bad is relative. It depends on what your average ticket is and what your margins are, and how often and how many times a typical customer comes back to buy again. But the important thing is, you now know something critical to help you make marketing investment decisions in the future.
If you run an ad campaign that brings customers in at $83.27 each, you know that isn’t an effective campaign. It may have been a weak offer, or it may have been delivered to the wrong audience. It may have been a sub-par headline, or you may not have bought your media right. But you know you’ve got a problem if you didn’t at least match your average cost of acquisition point and you can look to make changes to improve results.
On the other hand, a campaign that yields customers at $64.23 a piece is a success. You spent less than normal to bring them in. It’s a keeper and should probably be tried again, assuming everything else is equal, like average ticket and pre-disposition of these new customers to return for future purchases at the typical rate.
Power of Testing and Tracking
Tracking these numbers also empowers your negotiating position with the media.
“Look Bob, I know you’ve got a rate card, but the truth is, your station is costing me $97.30 a customer, while KBS across town is bringing them in at $68.20. If you want me to keep doing business with me, you’re going to have to get me a price that generates new customers at nor more than my $70.00 average.”
Now Bob can work with you on price, or he can not. If he does, your cost of acquisition prices remain in line. If not, you can walk away from doing business with Bob’s station and never lose a wink of sleep. He was just too expensive for what you get. Move that marketing investment to a place that hits your numbers.
Of course to figure any of this out, you’ve got to be tracking your results on a regular basis. That means making specific offers and a specific call to action in your marketing efforts. You ask people to come in, mention a specific ad, bring in a coupon, call a specific number or extension, or mention a specific code.
We have a client who is testing local radio. He is looking at three different radio stations. After one week he has gotten responses from only one of the stations. How does he know? Because he made different offers on each station.
Next he’ll switch the ads so the offer #1, which ran on station “A”, now runs on station “B.” Offer #2, which was on station “B” will now be on station “C”, and the offer on station “C” now goes to station “A.”
If the responses still come from the same station, our client will know it’s the station that is accounting for the response and he can spend more money there, and less or none with the “loser” stations. If the responses follow the offer, he’ll know he has found a winning offer and he can replace the loser offers, and keep using all three stations.
Of course, the number of spots running on each station are the same, as are the dayparts in which the commercials are running, so he’s trying to eliminate variables other than station and offer. This is something of a simplification of the process, you get the idea.
The point is, you want to keep close tabs on what it’s costing you to bring in a new customer in your Jewelery business. Naturally, the goal is to “buy” them for as little as possible, and then ethically get as much out of them as you can, in servicing them over time.
Not too different from stocks… buy low, sell high. Only when it comes to buying customers, you can have a lot more control over the market.