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Key Concept
Key Concept #1: Be Willing to Pay to Get New Customers
Unless you’re counting strictly on word of mouth or your good
looks to bring you business, you’re going to have to pay to generate
a steady flow of new customers.
If you buy an ad in the yellow pages, in a coupon pack, or in the
local newspaper, you are spending money to acquire new customers.
If you send a postcard to hot prospects, the cost of the card and the
postage buys you new customers. If you’re paying big bucks for rent
at a high-traffic mall, you’re spending money to get new walk-by
customers.
Even if you’re banking on your good looks to get you new customers,
you’ll probably have to spend on gym membership, tooth
whitening, hip hairstyle, and stylish clothes. They’re all costs of acquiring
new customers using the good looks tactic!
And if the lifetime value of Sam’s customers is only $63, then
paying $50 for a new one seems way too steep. Remember the old
adage you get what you pay for? Cheapest is not always best. You
are sometimes better off spending a little more and getting better
customers (those who will spend more and continue to buy from
you again and again) than spending less and getting low-quality
customers (one-time buyers of your lowest-priced products or
services).
The trick, obviously, is to buy the most good quality customers for
the least amount of money. Just because you can afford to spend $500
to buy a customer doesn’t mean it’s not better to spend less. And
there’s no doubt that most of us can’t afford to spend that much.
That’s why the next section of the book is focused on lower-cost,
highly targeted ways to acquire new customers.
Check out Figure 1.1. This gives you a visual frame of reference
for thinking about your marketing tools.
Everything in the lower left section is low-cost and very personal.
For an independent retail store these tactics are most likely
to give you the highest ROI (return on investment). The upper
right section is most likely to put you in the poorhouse—very expensive
and very impersonal.
Take a look at the four Xs and see if you can figure out which
one is:A billboard.
• A referral.
• A bag stuffer.
• An endorsed mailing (more on this later).
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