Do you ever wish there was just one thing you could focus on in your business and everything else would just fall into place? One thing that would take care of everything else? There is, keep reading.
There are so many things to track in business that sometimes it can get overwhelming. You have to keep track of employee hours, insurance costs, vehicle registrations, vehicle insurance, accounts receivable, accounts payable, advertising, social media, taxes, government regulation, profitability and the list goes on and on. Whether you are a solopreneur or CEO of a major corporation measuring performance, AKA business metrics, can be a daunting but necessary task.
If you get overwhelmed like I do don’t move on just yet. Because what I’m going to cover is a subject that when you understand it’s importance and get it right, it will revolutionize your business.
But, if you are not focusing on this metric your business will always struggle. It’s that important. This is also the metric that most advertising agencies do not want you to know about because when you do you will fire them on the spot.
So what is the magical metric you ask?
The cost to acquire the customer. The response I often get when I say that is I have no idea what it costs to acquire a customer. If that’s you, that is why you are struggling. You should know down to the penny what it costs to acquire each customer and more importantly how to make this cost as low as possible. Let me explain.
Dan Kennedy, arguable one of the best copywriters of the last 30 years explains that the company that can pay the most to acquire the customer always wins. Hands down always wins. What this means is if you want high placement on Google Ads it might cost as much as two hundred dollars a click for highly competitive markets. Which most businesses would never be able to afford which is why the “big boys” are ready, willing and able to pay that high cost.
But the real reason they are willing to pay that cost is because they know with 100% certainty that for every one thousand clicks, meaning someone coming to their landing page, blog, website etc., a certain percentage will make a purchase. This is their cost to acquire the customer. More importantly the really good marketers understand that if they can acquire customers at a very low cost or a break even they can scale their business extremely rapidly.
Believe it or not there are companies with actual hard product lines, meaning real products, not digital products, who make a profit when they acquire a customer. They spend a hundred and net two hundred for every hundred they spend. They net a hundred in profit when the acquire the customers. How scalable is that? This is what Dan was referring to.
When you make money when you acquire the customer it makes it nearly impossible for your competitors to compete with you because you can spend any amount you want on getting customers because you make money on every dime you spend.
This doesn’t happen by accident either. It takes focus, practice and tweaking but once you get a working campaign, your business can scale very rapidly. When I say very rapidly I’m talking about companies that start with a one thousand dollar advertising budget who scale to fifty thousand in just a few months without ever worrying about losing any money.
Most ad agencies don’t want you to know about this metric because they will tell you that branding is important, that you need to get your name out there, people have to know who you are to trust you enough to do business with you. I do agree that trust is important but throwing money down the drain does not create trust any more than stealing a fire truck makes you a fireman.
Trust is created when a prospect realizes you are an expert in your field and if they have a problem that they want solved they will hire you regardless of cost. Why do so many people take their vehicles to the dealer after their vehicle is no longer under warranty? Because they trust that the dealer hires qualified mechanics. When my vehicles go out of warranty I no longer take them to the dealer. I take them to JJ’s Auto Care in Jacksonville because they know what they are doing, they do good work and are fair priced. I trust them and they continue to earn that trust every time I go in. I like the people that work there so I keep going back. In fact, I can’t remember ever asking them the price when I take my vehicle in. They do call with an estimate when they know the problem but I always ok the work.
You might be saying, yeah Dave but that’s you, I’m on a budget and can’t just spend like you do. That may or may not be true, but I can tell you that when there is a problem with one of your cars if you don’t get it fixed it just gets worse and more costly to wait so I want it fixed when it occurs, not later.
What about the plumber? On Thanksgiving you are peeling potatoes and sending them down the drain and just a couple hours later your toilets won’t flush and you have crap in all of your tubs and showers? What is the one thing you want to know about the plumber? Can they get the crap out of my tub and if you believe they can you will hire them. But how might you know that? If their website described this very problem in detail, what caused it and how they fix it you might believe they know what the heck they are talking about. Sometimes it might come across like they have ESP. Marketing can work like that and when it does it works very well.
I help business owners understand how to build trust through their marketing. When your prospects know that you are the expert in your field they will hire you. It is your job to make sure they know you are an expert. You don’t have to be the only expert just the only one they know about. When they know that and trust it, they will hire you and when you have marketing that conveys that to your ideal prospect you are on your way to rapidly scaling of your business.
You are an expert in your field but if your ideal prospect doesn’t know it, what good is it to be the expert?
To your lifelong prosperity,
David Mulvaney