The Value of a New Customer

There is a line of thinking among business owners that all advertising must bring back an immediate break-even or 2x, 3x, 4x, or 5x the investment. Some advertising needs to do that. But for most small to medium-sized, local businesses, that's usually not how you should look at advertising.

Think about this with me for a moment.  Your 10 best customers.  How much revenue did they bring you in the last year, 2 years, 3 years, etc.? Maybe 10 years?!  For a lot of businesses, that number is probably quite a bit.  And how many people have they referred to you?  Now, what would you be willing to spend in order to find 10 new customers just like them?

In my opinion, that's why you can't think of advertising ROI as a one-and-done scenario. If you're advertising effectively, each advertisement is a chance to gain a new, happy, profitable customer.

If you have products to sell... is there anything different about them? Does the customer service you provide pleasantly surprise people? Or is it lack-luster? 

Are the services you offer just like all of your competitors'?  Or do your customers feel happy that they contacted you every time you leave? 

There are many ways that advertising can fail, and many ways that it can succeed.  And when it succeeds, it's when you talk about more than just your products or services.  It's usually when you talk about how you can help people and how you'll make their life better, easier, etc. "What's in it for me?"  "Why should I choose YOU?"  "How do I know that I won't regret doing business with you?"

When your advertising is better, when your customer service is better, when your products or services do not lack in quality... then you will begin to attract and keep those really good customers.  And when you run a good business like that, you should think longer-term when you're trying to calculate your ROI on advertising. Because your ROI is probably much bigger than what you think it is.

I'm not here to say there's only one way of thinking about this.  Or a one-size-fits-all kind of marketing and advertising.  There are many different situations.  Such as how long is your product / service purchase cycle? 

If it's short, you see returns faster - and it's easier to see your ROI - but don't forget to remember how often that customer visits you then. Their value keeps growing.  Even if it is only one or two small purchases at a time.  

If the purchase cycle is long, and the purchase price is fairly considerable, then your return on advertising investment can't really be calculated in the short term.  You may get 5x your investment or more... but you might not see that for 8 to 12 months.  This is when great branding of your business will bring you great success.  Not "sale" ads.  But branding ads.  Or "bonding" ads.  Ads that make people feel like they know you and can trust you.

No matter what kind of advertising you want, need, or are curious about... I'd like to help you understand more about all of it.  There are many ways to get your business "out there"... and many ways to lose money at it.  Let's discuss all of it, and figure out a plan to make more of your advertising efforts WINS.  There are ways to make any kind of advertising better.  There are kinds of advertising that are right for your business and kinds that are not. 

And that's what I love to do - figure out a plan just for YOU.  A plan that gives you the best opportunities to snag those really good customers that will love you for what you offer and how you treat them... and tell others about you.

Thanks for listening.  :)

Duane Christensen
9 Yards Marketing
Sioux Falls, SD
​9Yards-Marketing.com