As business owners the bar is set incredibly low, ridiculously low in fact, for us to dominate our target markets.
If you’ve gone through my Small Business Bootcamp, if you’ve heard me speak, or if you’re one of my clients you’ve heard me preach about Customer Acquisition Cost. It doesn’t matter if the customer was acquired via Facebook Ads, Search Engine Optimization, Google AdWords, or your cousin’s girlfriend’s brother flipping a sign on the side of the road. All we’re concerned with is how much was spent to acquire one customer.
Marketing Expenses = $1,000
New Customers = 10
Customer Acquisition Cost = $1,000/10 = $100 per new customer
Over the last five years I’ve successfully bootstrapped businesses from $0 to the mid 6 figures (Don’t believe me? Click Here) and scaled businesses to 7 and 8 figures + using Customer Acquisition Cost as one of the main KPI’s (Key Performance Indicators). Too many times we as business owners, as digital marketers, as strategists, focus on the Next customer, the Next transaction. Again, if you’ve heard me speak or if you’re one of my clients you know I call this “Spinning Tires” “Working for the Weekend” or whatever clever analogy I come up with in the moment.
You see in a consumer vacuum you would be able to scale your AdSpend and your Revenues ad infinitum, but that’s not where business takes place. Populations are finite, service areas are defined, and competition ever present.
*I know you came for the turn $20 into $10,000 trick, it’s coming I promise. The backstory is important stay with me*
Let’s change the conversation and look at Customer Acquisition Cost as a KPI for a metric I came up with in the parking lot after a dinner with one of my clients RAC (Relationship Acquisition Cost). My core philosophy is simple and every business I own is built on this premise, businesses are built on people. The people you serve and the people you employ. Take a moment and let that sink in. One more time for the people in the back Businesses are built on the people you serve and the people you employ. Do not forget it. Do not stray from it.
Instead of looking at each transaction as a one and done open and closed invoice. Let’s look at them as relationships. People by their very nature do not like change. I’ve been going to the same barber shop for 7 years now, using the same mechanic since I was 16, and so on. So, let’s use this to our advantage.
Here’s How I Consistently Turn $20 into $10,000
The large players in the service industries, rely on a consistent and steady stream of new customers and for the most part they have the budget to sustain that model. However, the strategy I implement for my businesses and clients is a little different. I’m looking to turn that new customer into a lifelong relationship, I’m looking to become their “guy.”
Here’s How You Do It.
Step 1: Answer your damn phone. (It’s half the battle, seriously not being able to get someone on the phone is the #1 complaint homeowners have)
Step 2: Provide a quality service
Step 3: Follow Up
Every. Single. Monday. I sit down and write, write not type, a thank you note to the customers from the previous week. I don’t care if they spent $50 or if they spent $10,000, because honestly it doesn’t matter.
Dear Ms. Johnson,
I just wanted to take a moment and thank you for your business. As a growing business in (insert your city) we rely on customers like you. If there’s anything you need call me directly at (phone #). We look forward to earning your business again in the future.
Alexander A. Laldin
Sometimes I include gift cards to Starbucks or local restaurants, but I always include 5 referral cards. You can offer a kick back if you’d like; experiment with what works.
“In God we trust; all others bring data.”
― W. Edwards Deming
These numbers are based on one of my clients, that we’ve tracked over 12 months.
(32) Thank You Cards – $4
(32) Stamps – $15.68
Total = $19.68
Clients Average Ticket = $375
50% of Clients Call Him Again = 32 * .50 = 16 * 375 = $6,000
50% of those clients call him 2 or more times = 16 * .50 = 8 * 375 = $3,000
10% of clients referred AT LEAST one person = 32 * .10 = 3.2 * 375 = $1,200
50% Repeat = 3.2 * 375 = $600
50% 2 or more times = $300
Total = $11,100
I’m going to get all Jon Gruden on you guys for a minute and talk about the intangibles. This strategy snowballs, it starts small and gets large Fast.
1. By sending these cards, you increase the chances of receiving a positive review online while simultaneously decreasing the chance of a negative review. Our businesses are built on people and people aren’t perfect. Not every transaction will be a smooth one. Generally, people go online and leave poor reviews because they want to be heard. Our thank you cards give them a different avenue to be heard.
2. Your past customers will become your biggest advocate, become their person and watch the business come to you for years whether it be family members, friends, or themselves.
3. If the only thing you bring to the table is price, you will be out of business at the first economic downturn. Having quality reviews and recommendations from trusted sources allows you to charge a premium and that’s OKAY.