[ian harper]

In an effort to get people talking about marketing systems that work i have published part of my ROI numbers that show daily cost of a customer.

http://cleanonomics.cleaning-carpet.co.uk/cost-of-a-customer/

[Craigp]

Interesting, we only need the average though. Whats the average of those figures?

[Craigp]

Sorry I read that wrong, this is daily? not per customer?

So we need to know how many customers per day..

An average cost per customer would be a more useful figure.

[ian harper]

not giving full details and how many each day but that's each customer cost. so it might only be one or five, The point is when you know this number how many do you want to buy is the next question? Its also a great way to show how each marketing or selling method is doing.

we also have cost of providing the service for each customer this gets added after which is the right way to do these things. The advantage of doing it this way is you might want to reduce cost of providing service which can add to profit line. cost of a customer is not so easy as message to market match, media, etc are more of a science.

will give return on investment numbers for a different set of numbers soon.

sorry cant give them all together as dont want to give local comp all my info.

take care with averages as they are misleading. as you can see from this set it has a wide range and depending on how wide gives the wrong impression. For example if you took 20 carpet cleaners and did an average of the price they charge, its not helpful. its much more inlighting to know each price.

[maxcampbell]

Don't understand at all. Is that the cost of advertising, marketing, etc, divided by the number of customers? Are the different lines time (1 month or whatever) or marketing technique / type of advert? If not, what.

It may be interesting to divide £'s spent on google adwords by number of customers gained via same, and compare to similar figs for other ads / job sources. We routinely monitor percentage of turnover coming in through the various sources (leaflets, google, magazine ads, referrals, van wording, etc), but don't do the sum of spend/no. customers - we probably should.

[ian harper]

for me its the most important number apart from my return on the investment. i will put up a google docs version when i get time.

Customer are what drives any business so knowing what they cost and having marketing and sales system that work make life so much more predicable.

This number sets up a budget or spend for the month ahead.

we all know that the cost of say a leaflet and the returns we can work out the cost of each new customer and the cost of providing that service and then profit. but its drilling down and getting information on the predictability of that message. pink leaflet is a great example of this. but the numbers have to work each and every time, when this happens you can start to get control over your business and not be so reactive to the market.

You can also see how expensive a media is, for example I am looking at the pink leaflet again but I dont think my prices can support it. the £40 1K from royal mail is the sticking point. even if I can what will be the cost of each new customer and will it produce the same results each time?

So knowing this cost has knock on effects on the business, and the choices you make.

For me I dont want to move sideways and add new services its about reaching those people in need of what I provide and i can convince by an offer (selling). so each new marketing and sales method must stand up on it own and the cost fit with my price point.

Selling does cost more than marketing. but its advantage if you can find a way there is no limit. For me I could scratch around finding new ways to get work from the market but I dont think that will add more to my bottom line.

Finding a way where the cost of a customer from selling fits is the best option.

So guys do you have any numbers where you sell and the cost of each customer works and what price point.

[Craigp]

I can tell you, you will be looking at paying about £50 per customer from the pink flyer, at best. (using Royal Mail)

But you wont even get that on the first drop, it will be successive drops when you see that.

IMO your average job (from the flyer) will need to be around the 200 mark for it to be worth while.

[garry22]

Surely the salient point here is the VALUE of the customer (lifetime value and the value of referral business).

Once you have that, what appears to be a high aquisition cost may well be a bargain over the next five years.

[Mike Halliday]

I don't think you can rely on a customers long term 'value' when working out a marketing budget.

 its no good thinking "I made nothing on a job today but in the future I will make a profit" what if you run out of money in the next 2 years and aren't around when they eventually call again

when they come back its the gravy train but you need to be making money on your marketing immediately.

for reference: I've spent £840 on marketing since the first of Jan this has brought in 82 jobs, so I'm paying just over a tenner for a customer which i'm happy with,  considering  this is traditionally the slow time of year (although the weather here has been fantastic and has really helped the start of the year)

[maxcampbell]

for me its the most important number apart from my return on the investment.

Please explain what the numbers are. Is it, as I asked, the total marketing spend per month divided by the number of new customers that month? or is it the spend per marketing channel divided by the number of customers recruited by that channel?

If neither of them, then what?

[ian harper]

max, I will put up a google docs embed on on blog page today

Mike, do you feel in control of the flow? are you buying work at the rate you would like it?

Craigp, thats my experience in the past, Pink leaflet does work, i have a local guy using them regularly. Its interesting his minimum price is £120, he got two TMs so his overheads must be high. its that balance thing price point, volume of work, overheads, profit. It would be interesting to know if our profit margins are the same given the different price points?

garry22 your right but how many people run their database right, i was talking to getbooked up guys about selecting clients by year, so to send a different message to each group. and they said whats the point we have hundreds that might have moved on. that cant be right, surly a managed database you would have cut this waste out?

backend has got great lifetime value but I find the comments interesting as they have a very big franchise. would be nice to hear how they manage their customer databases!

I am a great believer in investment in my business (Sale & Marketing) and I know all these sales methods work but knowing the the return on that investment and cost for each customer so you can repeat it so your make judgements about your price point and market positioning so much easier. unfortunately you get so much BS in this area and no detail.

For example, carpet cleaners testimonials about courses and alike "this course/service/product double my business" type of statement.  really? how exactly did it?

Numbers shine a light

[ian harper]

Guys

i have put a google spreadsheet that you can edit and enter your own or made up numbers, so you can work out your own cost of a customer and ROI

http://cleanonomics.cleaning-carpet.co.uk/cost-of-a-customer/

[Mike Halliday]

Ian, I would prefer to pay nothing for work but since the start of the year Its been working out at a tenner  which considering if all these 82 jobs had been minimum price jobs (£65) then I would be spending 18% of my income on marketing, which according to industry experts is around what you should spend to growing your company.

This £10 figure can be misleading though,

 I did:.....

an email campaign which cost £120 but only brought in £320

Google adwords which cost £64 and brought in £120

Telephone marketing that cost £87 and brought in nothing.

But my main source of new customers ( leaflets) is so refined & effective that it allows me to try different marketing ideas no matter the cost

[Ian Gourlay]

I personally Agree with Mike Marketing has to pay.
Where Mike scores is he is not afraid to spend and constantly Markets to same the people, so probably does have repeat customers.

Plus his Creative Thinking  Award Winning Carpet Cleaner

And now his Animal Van etc etc


I do know that all The Gurus talk lIfetime value but I know if Mr Sugars Apprentices do not deliver on their First time Marketing they Fired

Or in our case leave the industry

[ian harper]

Mike

Thats the issue with averages its there range low and high points.

But did you feel in control of the flow in each marketing area? this turning it up and down as you need it and not reacting is exciting. once you reach it and I did once in my maid services you feel in control of your life. say your email cant you scale this? BTW you should try text no spam filters -)

I dont have any problem spending money on sales and marketing only if i am getting a good roi. gone are my days of spending £10K on yellow pages in a year and not getting it back, thats a lesson learnt.

you say about your leaflets which is like what i was saying about this local guy that uses pink leaflet. he is hitting the same areas time and time again, he has the numbers working for him. but getting to that stage can be expensive as you learn what works, and making the number work and your happy with your margins. this guy has two Tm vans so he is scaling and show he got it right I am sure if he wanted he can add more. its this that any one van carpet cleaner should be aiming for, it shows your in control. and also shows that you dont have to build sideways adding new services. being the best cleaner of carpets is not the key to money its being the marketer of carpet cleaning that will.

For me its these margins in each marketing method that set my price point. like I said I cant work out how to make the pink leaflet work for me at my price point. if i change it will upset the balance in other areas. and i am not sure that i want to take that risk, as i do have bills to pay. but i wil keep looking at it to try and find a way.

BTW I have spent around £1500 from start of the year on marketing and its been really bad start made my first loss ever thats was down to my machine having to have some expensive repairs.

good luck

[Ian Gourlay]

With The Pink Flyer the Guy is probably going for a High Price

I think the trick with off the Page  or Leaflet is to be able to Market at a Price The Majority of The Market is prepared to pay

Ian H over the years I have noticed you have used Low Price Strategies and High Price Stratergies plus covered a large Area.

I do not know if you Still Live in Southend but at one time you were or probably still Advertising in Colchester

Using a Low Price Strategy I used to Do Colchester to Basildon on a Daily basis and its a fair trip , I was just puzzled on how you managed this. Unless you were subcontracting out

Please do not take this as Criticism  as i love talking Marketing and the various Strategies but feel it is hard to talk openly . And even at Meet Up Events you have to get through peoples Egos

[garry22]

I don't think you can rely on a customers long term 'value' when working out a marketing budget.

 its no good thinking "I made nothing on a job today but in the future I will make a profit" what if you run out of money in the next 2 years and aren't around when they eventually call again

when they come back its the gravy train but you need to be making money on your marketing immediately.

I don't think anyone on this thread advocates losing money on the off chance that people will come back. That's more for people with marketing degrees who don't have to foot the bill themselves.

Some types of business can afford to break even or make a loss (I'm thinking digital delivery / information products) because they are building their lists. Carpet cleaners deliver a physical service with wages, wear and tear etc so cannot do that.

Having said that, trying to sell one off hits off the page is an incredibly inefficient way of doing things. It's much easier if you have a relationship with people first.

[ian harper]

Ian, I still make profit from the colchester jobs and thats far better than sitting on my butt. Ian you have to understand its not what you charge its what you make. That guy with two tms and pink leaflet, his overheads are much higher. the important part is profit. i'll bet it is not far from what i make, he just spends more. and btw he does not offer the same service as me. we are set up for fast turn around, not spending all day moving furniture. we provide that service but at a price, customers make that choice.

dont think you know what the customer wants just provide the choice. just because you cant see that with me does not mean it does not happen with my customers, just like any upsells, or backend marketing i might be doing. or choosing what jobs i take and which i dont. knowing my numbers makes it easier to make these choices.

In fact I just done a job 36 miles away this morning and am spending time looking at Hertfordshire today. as I have a customer base there as well, from woodmans business, and have made profit from herts before.

The reason for this post is I need to sell more as marketing has maxed out, and am looking for ways to produce a way that the cost of a customer is worth it.

WTF i just looked over at my other PC with adwords running and google has auto set my default max CPC at £88, thats interesting. worlds gone mad.

On the subject of google they just cant provide me with what i need. i prepay and have over £1k in my account. i can only think thats it in essex, has anyone else experienced this?. This is why I am looking at selling.

Mike, I am sure that you comment about " I would prefer to pay nothing for work" was a joke. just in case you confused others.  ROI is what that is all about? and is why you make that calc before overheads? the customer pays for that part. then you have to cover your overheads, then what you want to make on top.

now selling is different. your still looking for a good ROI but the numbers change as the people your trying to get to use you have to be convinced by an offer.

I see my investment as a lump sum that i keep getting back to reinvest. The bigger i can make this lump sum the more i can get back. percentages work well at explaining what i mean. that return percentage goes up with the size of the lump sum does. the great thing is that you dont have any risk as long as you keep an eye on the cost of the customer, and your overheads dont get out of hand. only issue is market size.

So I can have £10k in google but would that change things? I dont think so. unless they are playing us with levels. that would make sense. why give work to someone that cant cover it. if you sit down at a poker table everyone can see your money. google has this advantage. if your a high roller then you get special treatment. its good business looking after the people you know with the money not the ones that say they have it. just a idea, thinking out load -)

Guys, We have no idea how big the market is. no information is available to us to make judgements. is a more sophisticated pricing model called for? just look at coffee shops you will see the ingredients are all the same but the choice is large and so are the prices if you thought about what it costs. no issue with that.

We offer two levels of price, but should it be more? like gas and elec companies, they confuse us so the choice is much harder and you cant work out the value? I think you could add one more to make a total of three different prices with matching specs.

Next why is our market so different to USA? is it culture or us not offering the right service at the right price? ONe of my personal views is that TMs make you far more productive but in the UK you normally pay extra is this key with the difference? I really would like to try this idea out as I have said before but its a gamble.

Its not what we think its about customer choice. why are they not like customers in USA? What I am asking is the size of the market down to us or British people?

[Jamie Pearson]

Ian, I would prefer to pay nothing for work but since the start of the year Its been working out at a tenner  which considering if all these 82 jobs had been minimum price jobs (£65) then I would be spending 18% of my income on marketing, which according to industry experts is around what you should spend to growing your company.

This £10 figure can be misleading though,

 I did:.....

an email campaign which cost £120 but only brought in £320

Google adwords which cost £64 and brought in £120

Telephone marketing that cost £87 and brought in nothing.

But my main source of new customers ( leaflets) is so refined & effective that it allows me to try different marketing ideas no matter the cost

This is your cost per job not per customer.

Do you know the lifetime value of your customer and the break down of one-offs to lifelong customers?

[Doug Holloway]

Hi Guys

Ian the big difference between you and Kevin is that he will charge 3 times what you do.

I recently did one of the jobs you couldn't due to machine problems and she was happy to pay double.

I am not criticising you and have always liked you but some of your pricing is just too low, it doesn't allow a buffer for machine problems or bad weather.

The YP guy who is trying to flog me adwords says Chelmsford is up to £6 a click at times , which is ridiculous.

Cheers

Doug