For most companies, marketing to get new customers is the biggest expense outside of labor costs, but very few owners can ever be sure their marketing actually delivers a return on investment.
The late, great business guru Peter Drucker once said, “The purpose of business is to create a customer,” and “Buying Customers” reveals in very simple and easy-to-implement terms just exactly how businesses can generate a return on their “marketing investments” by “buying customers” at “value” prices – by knowing what it costs to generate a new customer for any business, and by knowing how to price offers to generate larger profits and repeat business.
From targeting a market, to segmenting current customers, to incentivizing referrals to profit margins and everything in between, "Buying Customers" goes through the step by step process of building and growing a profitable, commercial enterprise that works ... without the business owner needing to be in the business every day.
Business owners should know their numbers so well that they should be able to predict within a certain margin of error what marketing campaigns and referral strategies will bring in the largest amount of profit.
The ultimate goal for any business owner shouldn't be to just have a well-paying job. It should be to build a business that runs so smoothly and systematically that if they left for a month or even for a year, it would run profitably without the owner being there.
Most owners say, 'I'm on the radio, I have an ad in the paper,' but how are those ads growing their business? They aren't, they are just an extra expense. But if those same business owners understand why customers buy from them and how to get the right customers in the door, over and over again, it can make a huge difference for their company, and their life.
Turning an old adage upside down
There’s the old advertising and marketing adage that half of all marketing budgets are wasted, the trick is knowing which half.
While most companies (and their ad agencies) have relied on a subjective “branding” approach to lead generation that is difficult to measure and too expensive for most businesses to undertake, “Buying Customers” focuses on a “lead generation” approach to building a “brand,” one that is based on “testing and measuring” campaign results, and matching those results to numbers that are first estimated, then benchmarked as a baseline once they become known.
Generally, “Buying Customers” guides businesses to view customer acquisition as a value investing strategy, one where:
- Companies can confidently invest dollars to generate more leads … with a measurable return on investment (ROI)
- Each customer is a real asset that returns revenues and profits to the business over time
- The best customers are “bought” at a fair price via paid or referral campaigns, and generate profits via repeat purchases, ideally at ever higher dollar purchases
- “Customer Care” programs take on whole new meanings because companies now have a very profitable incentive to ensure their best assets are maintained and taken care of over the course of their “lifetime”
So … how can the average business start buying customers like assets, much as they would any other type of asset?
First, I suggest starting off with your current customer base, or data base.
For most companies (especially those in a service category), your customer data base is your most valuable asset a company can own – next to the relationship they have with that data base.
The ultimate value of a company data base (as well as business profitability long term) is the amount of repeat business generated from customers over a length of time.
Because most customers aren’t profitable until the fifth or sixth purchase, a company’s marketing goal should be to buy the best customers at the lowest possible price – customers who will buy repeatedly over the course of their “lifetime” as a customer.
From this perspective, the “Lifetime Value” of a customer base is simply how much repeat business can be expected or generated from them over their lifetime as a customer.
The goal then, is to retain your company’s best customers for as long as you can.
What this does is help re-frame most company’s “customer acquisition” program from a costly lead generation campaign to a “repeat business” and “added value” campaign – because discounting is the literally the death of any campaign or business.
Re-positioned, focus can now be placed on using existing resources to market to an existing customer base.
The strategy shifts from a question of, “How do we get more new leads or more new customers?” to “How can we sell more to our current customer base?” or, “What can we do to keep our customers happy?”.
“Buying Customers” guides readers through the “5 Ways to Profit” (building on profit multipliers that exist in every business), through simple-to-follow formulas for “Lifetime Value,” “Allowable Acquisition Costs,” “Investment Acquisition Costs” and “Conversion Rates,” as well as proven strategies to boost and leverage set of numbers.
With a goal of creating a referral-based business, “Buying Customers” shows readers step-by-step what it takes to build a business that profitably “creates customers,” and gives readers a unique perspective on an alternative set of rules and guidelines for customer acquisition that sets it apart from conventional books on marketing and advertising.
By doing so, “Buying Customers” gives businesses a proven set of tools, systems and strategies that help drive down customer acquisition costs as new, referral-based customers arrive solely on the basis of company name and reputation.
In “old school” marketing circles, these strategies formed the basis of “word-of-mouth advertising.”
These days, a referral-based marketing strategy delivers the same results: namely, the least costly (yet most effective) type of marketing there is – and one that consistently delivers new customers and repeat business at a fraction of the cost of conventional branding campaigns.
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