How much do you spend to acquire a new client?
If you don’t know, go through your paid bills for the last 12-18 months and tag everything marketing-related: advertising, direct mail, websites, networking groups, newsletters, software, outside services, signage, marketing assistants, and everything else.
Add it up. These are your hard costs.
Next, look at your calendar and figure out how much time you spent on marketing activities: networking, writing articles, blog posts, and emails, conducting interviews, creating and delivering presentations, meeting with referral sources, posting on social media, and so on.
Assign a dollar value to that time and add the result to your hard costs.
Take your total marketing expenses and divide by the number of new clients you brought in. The result is your average cost to acquire a new client. If a new client is worth $10,000 to you, you can make an intelligent decision about how much you’re willing to spend to acquire them.
Next, go back and look at the breakdown of your expenses. Assuming you track where new clients come from, (please say you do), you’ll be able to increase your profits by managing your marketing expenses.
If your ads are working, you might increase ad spending. If you’re wasting time with networking, you might cut down on the number of groups you belong to.
By far, the easiest way to increase your income is to focus less on acquiring new clients and more on retaining the clients you already have.
Repeat clients (and the referrals they provide) come to you at very little cost. You’ve already paid to acquire the client. From this point forward, what they pay you is nearly all profit.
Referrals are the quintessence of profitability. Here’s how to get more