Marketing is buying customers
Marketing your jewelry business is nothing more than buying customers.
That’s it, and the sooner you understand it, the more comfortable you’ll be investing money in everything from advertising to sales training and from public relations to customer relationship management tools.
When you think about it, anything and everything you do to attract a new customer, or get an existing one to do business with you again, is marketing. And everything you do to achieve any of those goals has a cost associated with it.
Place an ad in the local newspaper or major industry magazine… it costs money.
Some companies hire a salesperson and put him out on the street. Even if he is a direct commission guy and you don’t get paid until after the sale is made, he still has the cost of recruiting and training. And while he doesn’t pay a salary up front, in this case, he still pays that commission on every sale he makes.
PR… that’s FREE advertising, right? Don’t tell that to companies that pay PR firms or in-house PR specialists to get that press coverage. Even if you do it completely yourself, you have to invest time, and we all know that time is money.
No marketing is free
No, there is no free lunch in the world of marketing. You want new clients or the old ones to return, it will cost you.
This fact cannot be avoided, but it can be quantified. You can find out how much it costs you to attract a new customer and how long it takes to keep existing ones coming back.
And while most companies can’t tell you what the specific numbers are for these two acquisition costs, anyone with half a brain can see that they should.
How else can you make smart, informed, and wise decisions about marketing your business?
What was your advertising budget last year? What percentage was spent on attracting new prospects, customers, customers, or patients? How many did you really bring?
The formula
If you spent $100,000.00 on advertising last year, but $30,000.00 of that was on programs designed to keep existing customers coming back again, your new The customer acquisition budget for the year was $70,000.00. If you brought in 1,000 new customers with that budget, each of those new customers will cost you $70.00.
Whether that is 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. But the important thing is that you now know something fundamental that will help you make future marketing investment decisions.
If you run an ad campaign that attracts customers at $83.27 each, you know it’s not 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 mediocre headline, or you may not have bought your media well. But you know you’ve got a problem if it didn’t at least match your average acquisition point cost, and you can look to make changes to improve your results.
On the other hand, a campaign that generates customers at $64.23 a piece is a success. You spent less than normal to bring them. It’s a keeper and should probably be tried again, assuming all else is equal, like the average ticket and the willingness of these new customers to return for future purchases at the typical rate.
Power of testing and tracking
Tracking these numbers also strengthens your bargaining position with the media.
“Look Bob, I know you have a rate card, but the truth is your station costs me $97.30 per customer, while KBS across town brings them in for $68.20. If you want me to keep doing business with me , you’ll have to get me a price that will generate new customers at no more than my $70.00 average.”
Now Bob can work with you on the price, or he can’t. If he does, his acquisition cost prices stay in line. If not, he can stop doing business with Bob’s station and not lose a second of sleep. It was too expensive for what you get. Move that marketing investment somewhere that hits your numbers.
Of course, to figure this out, you need to track your results on a regular basis. That means making specific offers and a specific call to action in your marketing efforts. It asks people to come in, mention a specific ad, bring a coupon, call a specific number or extension, or mention a specific code.
Example
We have a client who is testing local radio. He is looking at three different radio stations. After a week he has gotten responses from only one of the stations. How does he know? Because he made different offers at each season.
Next, you’ll change the ads so that offer #1, which aired on station “A,” now runs on station “B.” Offer #2, which was at station “B” will now be at station “C”, and the offer at station “C” now goes to station “A”.
If the replies still come from the same station, our client knows that it is the station that is reporting the reply and can spend more money there, and less or nothing with the “losing” stations. If responses follow the bid, you know you’ve found a winning bid and can replace the losing bids and still use all three stations.
Of course, the number of ads that air on each station is the same, as are the time slots in which the commercials air, so you’re trying to eliminate variables other than station and offer. This is kind of like a simplification of the process, you get the idea.
Bottom line
The point is, you want to be aware of what it’s costing you to attract a new customer to your jewelry business. Naturally, the goal is to “buy” them for as low a price as possible, and then, ethically, make the most of them by holding onto them over time.
Not unlike stocks…buy low, sell high. Only when it comes to buying customers can you have much more control over the market.