The “Cost” of Doing Business — A Marketer’s perspective
About six months ago I received a call from a good friend with a referral for my consulting services.
The referral worked for a fitness company. Come to find out the owner of the company was someone I followed during my military career. I thought to myself, “Damn, this would be a pretty cool project to work on!”
For sake of the story we’ll call the referral, John (to maintain confidentiality and all that good stuff). So I get on a call with John and start going though my standard questions.
Things seem to be going well until I got to the question, “What does it cost you to acquire a customer?”
John, replied with, “Omari, I honestly don’t know.”
My response, “Well, John we have a different issue.”
You see, John wanted a new funnel built for the business. He originally started the conversation with talking about how sales seemed to be trending down. So, he wanted to build some new funnels to get sales back up.
Building a new funnel to acquire new customers is all well and good. But, without knowing how much it takes to acquire a customer based on the current funnels in place, we’d be shooting in the dark.
In my experience, building a marketing funnel from scratch with no previous data is like starting a new business. In John’s case he didn’t work for a new business. In fact, the business had been around for years. Yet, they didn’t take the time to build in the system to track their numbers.
It’s a lot tougher to get the numbers after everything is running, because you may not know where to start to collect the information you need to gain the data that matters.
One of the most important costs you can know in your business is…the cost to acquire a customer. Basically how much does is cost to get a person to buy your product/service.
Here’s a quote I want you to write down and refer to often…
“He or she who can afford to spend the most to acquire a new customer, wins.” — Dan Kennedy
Going in depth on how to determine your customer acquisition cost (CAC), might be a bit much for this post. But, don’t worry I got you…
Take some time to read an article from my friend and mentor, Molly Pittman (https://digitalstrategybootcamps.com)…
“How Much Can You Afford to Pay to Acquire a Customer? The 5-Step Customer Acquisition Cost Formula”
Now John and I never got the chance to do business together. However, I learned a very important lesson…
Knowing the “cost” of doing business goes beyond just expenses.
Founder, 10X Strategies Consulting
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