posttrib
OMINOUS 
Weather Updates

Attention to metrics can help build client base

Leanne Hoagland-Smith. | Provided photo~Sun-Times Media

Leanne Hoagland-Smith. | Provided photo~Sun-Times Media

storyidforme: 63190999
tmspicid: 6294841
fileheaderid: 2920042

To secure new business requires people finding out about you, your company and your solutions. This discovery process is called marketing. Without solid marketing, you will remain pocket poor.

What is interesting is the lack of established metrics by small businesses specific to how much does it cost to acquire a customer. So here is a quick way to begin to understand your average client acquisition costs from a 30,000-foot perspective:

1. List your annual membership fees for Chambers; professional and industry associations; civic and business to business networking groups

2. List any expenditures such as food and travel costs associated with attending these weekly, monthly and even yearly meetings

3. Determine the amount of time in dollars you invest in attending these events including drive time by assigning a dollar value to your time such as $50/hour ($100,000 annual salary)

4. Add these first three totals together for a broad and general cost to acquire clients

5. Divide that sum by the total of clients for the current year

6. This is your average client acquisition cost

Then look at your sales for the same time period and divide your sales by your total clients. This figure represents your average client sales value.

What may happen is the client acquisition cost is far higher than the average client sales value. Until this activity is actually executed and the results measured against each other, many small business owners fail to realize their current marketing efforts are costing them money. Marketing should be an investment in that it generates more revenue than it costs.

This activity does not reflect additional marketing costs such as website hosting, business cards, signage, tradeshow or one on one meal costs along with other fixed business costs. The goal here is to quickly see the big picture.

Another measurement activity is to take a specific marketing action such as direct mail or even email and work through the cost analysis process. By knowing how many clients were obtained through this action along with their sales allows for a separate client acquisition cost. This new cost may be far less than the general, big picture cost as noted above.

For me, speaking historically has generated one executive coaching client. Depending upon the solution for the client, I can quickly determine my client acquisition cost. Usually for me, the cost is my speaking time, my travel costs and any handouts. This marketing activity for me has one of the lowest client’s acquisition costs.

Content marketing also has worked very well for me especially considering the long tail approach. Articles that I wrote in 2005 are still delivering to me passive income on a monthly basis. The client acquisition cost is close to zero when factoring in the cost of my website hosting fees.

For first column of 2014. I wrote about trends for small business and that included Big Data. By identifying key metrics, then small business owners can work with all the data generated through their current marketing efforts especially inbound (generated from social media, blogs and referrals).

When small business owners and sales professionals start embracing metrics beyond the bank balance, they will see improved results as well as increased profitability.

P.S. Shout Out: Allen’s Landscape Center and Chesterton Feed and Garden are two places to start your lawn and garden activities.



© 2014 Sun-Times Media, LLC. All rights reserved. This material may not be copied or distributed without permission. For more information about reprints and permissions, visit www.suntimesreprints.com. To order a reprint of this article, click here.