Read our latest news!
How Much Is A Customer Worth?
Friday 2nd December 2022
No business would operate well without a good customer base. However, what a customer is worth to a business can be difficult to measure. Part of determining how much a customer is worth involves taking a close look at how much your business spends to get them onboard.
Consider your marketing spend against the value of the customers it gets you. Customer acquisition cost and lifetime value calculations will give you an idea of each new customer's worth against their expected purchases and potential lifetime value.
Marketing spend versus new customer value
The nature of your business will determine what you should consider a reasonable customer acquisition value, factoring for customer retention rates, how likely they are to make more than one purchase and how much profit you make from each sale. Each business's CAC will vary, and the per-customer rate reasonable for you should be considered against the value those customers bring overall. The longer a customer stays with you, the more value you gain from the marketing spend that captured them.
How do I work it out?
Suppose business A spends £1000 on marketing and attracts one customer who makes repeated purchases, spending £10,000 over the year. This equals a high customer acquisition cost, yet it could still be considered worthwhile when sales value is considered.
For business B, the same £1000 spent attracted ten customers, but each one only made a one-off purchase of £100, giving a lower acquisition cost but less value overall when the overall return on investment is considered.
It's essential to find the right balance to ensure you maximise your return on investment by working out the following:
Customer yearly value = average spend x amount of purchases on average each year
Lifetime customer value = customer yearly value x average amount of years a customer stays with you
Leveraging the best from your marketing budget in today's crowded marketplace makes door-drop marketing even more effective and relatively low-cost to reach targeted and mass audiences getting your business noticed.
Your business lands directly in the homes of a targeted audience and can be used to highlight free gifts, incentives and new services, opening times and locations, and you can direct customers to your shop, office or website and social media accounts where customers can reach out, buy or engage with your business hassle-free.
Leaflet drops and door drop marketing works
Of course, we believe in the power of a leaflet or brochure landing directly in the home. After all, we have built a business on it and helped many of our clients succeed, whether we handle the design, print, distribution or entire campaign. Some impressive statistics back up their effectiveness for us.
Modern-day door drops offer highly cost-effective, sophisticated audience targeting. Including a scannable QR code and CTAs on the leaflet or brochure that your audience to your products and services will remove the luck element of them finding you have their attention. We even use eye-tracking technology to determine where that is on the page!
The effectiveness of such campaigns is highly impressive, especially when you work with us to handle the distribution, as our tracking software and analysis will report to you the effectiveness of your campaign. 83% of door drop items are engaged with, a figure that is doubtful to be achieved on the internet. 5% are shared with other people, getting you free attention, and the customer has a tangible reminder of your presence.
If you're interested in increasing your ROI on your marketing efforts, we could help. Why not get in touch to find out how a door-drop marketing campaign can help make sure obtaining each and every customer is financially worthwhile?