How much would you pay for a new customer?

[Jack May]

Firstly, I've been a bit scarce round the BB's latey... I've been busy, although my staff are quiet, as well as taking up a new hobby, hunting...

Anyway, one of my mentors asked me on Friday, 'what would you be willing to PAY for a new client?'

Followed up with 'How much is each client worth to you?'

Now that got me thinking, I bagged the Groupon idea because you're essentially PAYING (by loosing money on the first deal) to get a new client base... I still don't agree with it totally because of the mindset of the client that you get, but enough on that, I see Brian's doing a backflip over that one in the CR.

So what incentives do you give to say a refferer and/or a new client coming in your door? Free bedroom with any other work? Free hallway only without any additional work etc etc

This guy had used complimentary month long fitness memberships in his business. It cost him nothing, but he was giving away something of value whether it was used or not.

John

 

[Royal Man]

If you do it right you don't have to pay squat!!

Do you have to pay people to be your friend in your personal life?

And if you do pay for friends in you personal life. Would they be true friends or are they just friends cuz you are paying?

Why don't you use the same skills you use in your personal live to also develop long lasting business relationships?

 

[Bob Foster]

Well first you'd have to have a personality...

 

[NobleCarpetCleaners]

Gaining customers cost money no matter how you slice it. It's all part of the cost of doing business. Even the pop up referral you get from a repeat customer cost you some amount of money. If you're considering a marketing path to gain new customers I feel you first need to decide what kind of repeat customers you want for the future. What level of average net profit you might expect (or want) from this customer and then calculate what % of that overall net profit over a realistic period of time you are willing to part with to gain that customer.

This can be a pretty simple and fast calculation and really forces you to critically look at your business and what kind of customers are helping you achieve your business goals. The real question is what YOU are willing to pay for gaining the customer? Don't look at an initial % of the first job you do for them but rather the overall future profit that customer will give you.

 

[Royal Man]

Gaining customers cost money no matter how you slice it. It's all part of the cost of doing business. .

Not true. I have client streams that are free.

I just started a new one last week that has 2500 members.

listings on thir member sites and they even send out monthly e-mails to their members -All free!!

 

[ruff]

John,
I offer $25.00 off of each category of cleaning (Carpet, upholstery, oriental rugs etc....) only to new clients that come through referrals.
The client who referred gets $25.00 off or 10% of the total I got from their referral, applied towards their next cleaning.

Dave, it is not buying friendship, it is showing gratitude.
When I started I had my doubts. Am I buying their referrals?
Will it cheapen their act of referring?

So I asked the clients that I knew and trusted the most:"If I give you a referral reward, will you feel that it cheapens it or that I am buying your referral?"

The answer from all my clients without exception was:
1) We will not refer anybody to you, regardless of the reward, if we did not really like your work.
2) We love the referral reward. It is a nice way of saying thank you and showing your appreciation.

So, that is what I do. Everybody wants to be acknowledged when they do something for you.
I call each referrer personally and thank them + give them the reward.

 

[Jack May]

Gaining customers cost money no matter how you slice it. It's all part of the cost of doing business.

Don't look at an initial % of the first job you do for them but rather the overall future profit that customer will give you.

Hi Scott,

These two points are what my mentor was trying to make. That the cost of getting a new client in the door is already something, whether it's YP, web, referral sources, they all have a cost, sure devide that by the total new clients a year and it'll get pretty low, but it's still a cost. What he's suggesting is upping that a little and see if you can up the total new clients even more so.

Likewise you're second point, it's not like buying friends, more like accepting a slightly lower value for the first appointment and gaining a client for a longer period. (value adding by throwing in a free bedroom clean, not discounting like GroupOn.)

Dave, I sort of knew you'd jump in on this thread, and no I don't buy friends. read my points above agreeing with Scott, EVERY new client has a cost. Even your 'free marketing' takes TIME, and TIME IS MONEY. Take your total sales for a year that you turnover, now divide that by say 1500 productive hours a year, and you have what your time is worth in a dallor value, you just might be shocked that your free marketing systems aren't so free after all.

Bob, my quiet, reserved on board persona is not to be confused with a lack of personality, it's just that while most are vastly (over the top) different on a screento in person, I'm probably the other way around.

Thanks Ofer. Do you advertise that so they know to expect the reward or is it a surprise when they get notice of it?

John

 

[ruff]

Thanks Ofer. Do you advertise that so they know to expect the reward or is it a surprise when they get notice of it?

John

I let them know in advance.
If I remember, when I'm done cleaning, I let them know.
After about ten days, I send them 2 referral cards (for their friends) asking for their referrals with a letter explaining everything in short (what they get, what their friend gets.)

And when I get the referral I call personally to tank them + a send 'thank you for referral' letter with their future savings in writing.

I am truly very grateful (there is no compliment more sincere than a referral) and I want them to know how much I appreciate it.

 

[ruff]

Well first you'd have to have a personality...

Bob, my quiet, reserved on board persona is not to be confused with a lack of personality, it's just that while most are vastly (over the top) different on a screento in person, I'm probably the other way around.
John

John, I don't think Bob's remark was directed at you.

I noticed on your site that the Wools of New Zealand logo was huge on your van.
Do you find that it adds much to your business credibility (which I assume that is why it's there for) and is worth loosing that space to promote your own business' name and image?

 

[Bob Foster]

John. Just so you know, I wasn't refering to you. The remark was directed at Yoakum.

 

[Royal Man]

John,

Actually my Free marketing stuff takes very little time. Only a few hours a year.(The ones already set up take no time) Any time spent is usually offset by these client not being price shoppers and they usually get the whole house done.

Mainly I see from my experience that costly marketing can be low producing and some very inexpensive stuff like the Internet and different referral marketing strategies can be very inexpensive and produce quality clients for next to nothing. The more you spend on marketing can have an inverse reaction.



Yes Bob I have personality. Some say too much if that matters.

 

[Bob Foster]

The easiest, quickest and least expensive way to get a new customer is to do your very best work for the ones you have now. How much does that really cost? Less than any incentive or dollars put into advertising.

I would calculate that, for most people in this business, this is how most of the customers they have now were aquired.

 

[Jack May]

Bob. Exactly!! That's how I've run for the past 11 years. My referrals are only as good as your last job. We're just exploring ways of increasing this... try it, monitor it and then assess if it's worked or not.

Ofer, the WoolsNZ branding has done well for us. Low annual fee verses instant recognition and association with quality, espeically with regards to cleaning wool safely and effectively.

I did actually attempt a brand reduction and make my brand more prominant about 5-6 years ago, but it didn't work, and we've mainly reverted to the current situation.

John

 

[Bob Foster]

Too bad about Shrek. I think he must have seen a Wools of New Zealand publicity video and figured he was going to be put into a milling loom all in one piece and not just his wool.

0]http://www.youtube.com/watch?v=y0w50Zv6YF80]

 

[ruff]

The easiest, quickest and least expensive way to get a new customer is to do your very best work for the ones you have now. How much does that really cost? Less than any incentive or dollars put into advertising.

I would calculate that, for most people in this business, this is how most of the customers they have now were aquired.

Yes Bob, we know that and many here do provide high quality service.
We are trying to help it move along a little faster.

 

[FB7777]

all the revenue generating streams on the internet won't help you much regarding customer retention if you're a freakish looking dork that provides subpar work with a shitmount in a molestermobile like bRokUm


what do you gross Dave 100K after 30 years??? LMAO

 

[AJR]

has anyone tried Dave Yoakum's program?

 

[Steve Toburen]

Good to hear from you, John. I hope you are OK after the new earthquakes in NZ. (My geography is a bit shaky down there.)

I believe one of our really capable SFS members, John Mapes, calculated his "client acquisition cost" at around 125.00 each. But the point above re: cost being related to future revenue stream is dead-on. It is all about a) how long they continue to do business with you and b) how much future "good business" they send you through referrals.

Steve Toburen
http://www.SFS.JonDon.com

PS John, one other point that has been missed here is the "Cheerleader on Steroids" concept of gently suggesting to your happy customers that they praise you on social networking and referral sites instead of only to their friends and neighbors. Now obviously they first must be super delighted with you and your work. But I know you (and most on this board) already have this part down pat.

Then you must "make it easy" for them to share their experience with the world. We recently sent a QuickTIP out on just how to do this:

http://sfs.jondon.com/8036/resources/qu ... ng-reviews

Best wishes, John, for you and yours. Steve

 

[smastio]

Terrific Topic.... Steve T and John hit it on the head... retention is just as important, otherwise all you do is MARKET for new clients. Knowing your craft, having any kind of pleasant personality, and a client/prospect marketing system takes you to the top of any business.
But to answer the question... here's the numbers on the person running FittleBug in Seattle. had it roughly 135 days, has 55 new clients, costs has been roughly $900, so the cost to acquire a new client is roughly... $16.36 per new client (an good reviews on YELP)

 

[Brian R]

Right now I'm paying $27.50 for new clients with absolutely no time involved. Time is something that the freebie guys seem to forget.

How much would you pay for 100 or 200 clients RIGHT NOW instead over the course of a year or better?

Time was still money the last time I looked.

I'm a true "want it all and want it now" type of guy. I'll admit that it get's me into more trouble most of the time but that's the adventure I've chosen.

Reviews and referrals are the best things in the world but you have to have clients to get you there.

If you only get that 1 or 2 new clients and their referrals in a week ....Just think of the reviews and referrals you will get if you got 100 new clients in a week?

What would you pay for that?

If I pay $27.50 for a job and make $50.00 on top of that PLUS a referral that pays another $100 (these are low numbers) then I've just cut that $27.50 down to nothing.



EDIT: For the record....I too go for the freebie clients and so should everyone else. I also market to my customer base like a mad man. But there are ways to jumpstart you client and referral list.