What is a customer worth to you? How important is it to make that first sale and turn a looker into a buyer?
We recently ran an ad for a company who were offering $5 off to new customers on any sale of $10 or more. In addition, they were willing to pay an additional $15 acquisition cost per new customer. That's right - a $20 cost for a $10 sale! How many of us are brave enough (or well enough funded) to do that?
Well, does it make sense? Is it worth paying twice the value of the sale you make to turn a looker into a buyer?
Well, let's look at what's changed. Someone looking at your web site sees you as one more possible supplier, out of the hundreds that they can find with just a few clicks of their mouse. You are just a web site, nothing more. Then they buy from you. The relationship has changed. Now you mean something more to them. They are a customer.
Of course, it is then up to you what happens next. Respond quickly. Confirm everything. Provide excellent service, and turn your customer into a *loyal* customer - and your initial investment will get paid back many times over the years (of course - if you don't provide that level of service you probably will not last for that long).
Think about it. How much did it cost to get your first customer? How much business have you subsequently gained from that customer? How much should you therefore be willing to pay to get that customer? In many cases it will make sense to pay what seems like 'over the odds' to turn that 'looker' into a 'buyer'. Maybe YOU should be offering a crazy, loss making, 'introductory' price!
Dave Broadway
September 2000
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