Ponder for a moment, if you will, how much each lead costs you. Then ponder again for a moment, if you will how many of those leads turn into sales – and then estimate the cost per purchase! For an increasing number of businesses I talk to the cost per transaction is higher today than at any time in the history of the business – meaning that the pressure on margins is higher than at any time in the history of the business.
Now, ponder for a moment if you will, the cost of each repeat business sale. Then ponder for a moment, the cost of each referral. If the outcome of your pondering is similar to mine, then I am sure you will have concluded that:
One study found that – the probability of converting an existing customer is 60-70% while the probability of converting a new prospect is 5-20%.
In addition, research has found that:
These are just some of the thousands of findings that point to the significantly higher return on investment that can be secured by focusing on repeat business and referrals. Combined, these ponderings and statistics provide an insight into the importance of repeat business and referrals and alarm about research suggesting that only 3% of businesses have documented a repeat business and referral strategy.
Do you have repeat business and referral strategy?
For me, these ponderings and statistics point to the critical importance of focusing on the lifetime value of each and every customer and having a documented strategy to maximise both. A recent survey in the United States confirmed the old maxim that 80% of profits come from 20% of clients and that 20 % of clients invariable represent repeat purchasers and refers. The 80/20 rule is alive and well – but may not be operating the way you think. Another study found that referred customers have a 16% higher lifetime value, consumers are 4 times more likely to purchase when referred by a friend and referral tools can boost revenue by as much as 3 times
So, what does this all mean to you, and how should it impact your approach to marketing and in particular digital marketing? In my view it the implications of these findings include:
A comprehensive strategy focusing on lifetime value needs to address:
The job of marketing does not stop and indeed must not end with the enquiry or even initial transaction.
With all of your marketing, it is important to ponder, or indeed pose for your consultants, questions like:
In the digital marketing context, it is essential to be sure that:
Getting these things right before you start advertising for new customers will in addition to maximising the lifetime value of each customer – significantly reduce marketing costs. Focusing on lifetime value is one of the keys to maximising the return on investment in your marketing.
1 – Know your reader Firstly, understand who you are targeting and what they are interested in. And then deliver exactly what they are interested in rather than what you would want to write about. 2 – Engage your reader...READ MORE