As business owners, we’re always looking for new and proven ways to bring in new customers. Yet, we don’t always take time to understand just how valuable each individual customer is to the long-term health of our business. Understanding the Value of One Customer, will show you how important it is to invest in getting and keeping more customers.
Need to determine your advertising budget and ROI? You’ll first need to know the worth of an annual customer. To get this amount, answer the following questions:
1. What is your average sale (transaction amount)?
2. What is frequency of visits/purchases of an average customer? Expressed in transactions or visits per week, month or year.
To determine the value of a new regular customer:
First, multiply the average frequency of visit by your average sale or transaction amount. For example, if a restaurant diner visits you once a week, with an average transaction of $10, the annual revenue value of that customer is $520. Subtract food costs of say 30%, that customer is worth $364 of gross profit, annually.
So, while driving traffic is important in the short-run for most businesses, keeping long term customers is where your advertising investments really pay off. Understanding the “Value of One Customer” concept will show you how just few customers are needed to achieve a high return on your marketing investment!
May Promotion Ideas!
Mother’s Day is a great time to promote products & services for gifts, gatherings and celebrations. Flowers, Jewelry, Catering and personal retail gifts are a few examples. If you have a gift-oriented product or service, develop a limited-time-offer and play up the emotional need to give back to Mom!
Cinco de Mayo is a great opportunity for restaurants and food catering businesses to feature food and drink specials. Nobody is happier at Happy Hour than they are when celebrating Cinco de Mayo! Use the number “5” (Cinco) as part of an offer or even make it your price. Some examples are: $5 Import Beer, or $5 Pizza all day long! or Buy 4, Get Cinco for Free!
Rumor Has It—”Everyone’s Falling in Love with Print Again!”
We’re hearing more and more that people are actively choosing to unplug from the intrusions of digital media.
In his recent LinkedIn article, “Why is Everyone Falling in Love with Print Again,” Andy Rogers uses research from Forbes and AllBusiness Networks to remind us of “The Sensory Experience” that print can create and how it can build trusted relationships.
With the love for print on the rise, use Direct Mail to tell your story and work towards building a trusted relationship of your own.