Customer service – the most effective marketing tactic.
Have you ever considered how much it costs you to acquire a new customer? As a marketing company, we work with clients on a regular basis to explore the importance of excellent customer service. Recently a client of mine calculated his cost of acquisition through the following formula.
Marketing cost ÷ total new customers = new customer acquisition cost.
$1,100,000 spent in marketing ÷ 12,000 new customers acquired= $147 total cost per new customer acquisition
Through this formula we discovered that my client is investing $147 to acquire each new customer. If we factor that a client’s average transaction value is $120, it takes at least two purchases to make the transaction profitable.
In contrast, convincing an existing customer to purchase again is at about ten times less expensive, in my client’s case, $15 per customer, thus the profit margin is significantly larger for each existing customer than for a new customer. The more they shop the cheaper per transaction it gets. The chart below shows that the cost of acquisition drops exponentially with each additional transaction and, in our example, levels at $15 per transaction.
This is one of the reasons you need to employ your friendliest, most knowledgeable, and most enthusiastic people to work in customer service. They need to be empowered to solve any problem and delight the customer every step of the way. When your employees are engaged they can do their best work to satisfy your customers and keep them coming back again, and again, and again. In addition, having the right people in leadership and management roles, and discovering how those roles can function together, is critical to growth and success.
If you want to see your company grow, customer service will be your most effective marketing tactic and it costs ten times less than traditional advertising methods.
It is your time to succeed.
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