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Posted: 16 Nov 2012 02:41 AM PST

How much does it cost to get new customers? You probably make regular decisions about buying advertising and attending networking events. Today I share a tool to help make those decisions easier.

New Customers: How Much Are They Worth?

One of the first pieces of information to identify about your customers is their lifetime value to your business. The basic formula is simple - how much will customers spend with you and for how long? It's best to calculate this based on margin rather than total spend to better understand the real value of the customer to your customer.

What is more complex is to calculate the soft factors to customer value. Will they make referrals? How profitable are they? They may be quiet steady customers that require little management or challenging customers that cost a lot to service. The detail of the formula is not too important - what is important is to start.

Action: Estimate the lifetime value of your average customer.

New Customers: How Much Does it Cost to Get Them?

The second piece of information you need is the acquisition cost of a new customer. To find this, you need to know the length of the sales cycle. Some businesses sell customers at the first call. Others take longer. In one business I own, a month is enough time to be sure that multiple prospects will go through a sales cycle. In another business of mine, we use 60 days.

Action: Once you know the sales cycle length, figure out how many customers you got in the last sales cycle.

You also need to know the advertising expense over the same period of time.

Action: Find the amount you spent on advertising during the last sales cycle.

Variation: Put a value on the time you spent networking or managing the sales cycle - this is a real expense but often not tracked by owners.

Now for the cool part - divide the advertising expense by the number of customers you gained. This is your cost per customer. Just knowing this number is fun to compare with other business owners. You can ask, "How much does it cost you to get another customer?" My experience is most don't know. You now do. Very smart.

What can you do with this information?

It helps you to decide what is good advertising and what is risky. Before you buy any more advertising, you should estimate what you expect for new prospects and a close rate. This helps to decide if you should buy new advertising or do more of what is working. It helps me with vendor negotiations because I come from a position of information power. I share my acquisition cost with them and ask them to help me understand how their product/service is better. If possible, I try to get a commitment on the contract to that performance or at least a termination clause if their advertising doesn't meet expectations.

New Customers: ROI for Acquisition

This is the bonus section. You already figured out the lifetime value of an average customer. You now know how much it costs to get a new customer. Have you ever wondered how long it takes to make a new customer profitable? The relationship needs to first pay back for the sales cycle investment, including advertising.

Action: Divide the acquisition cost by the lifetime value to get the payback period. Here's an example: If a new customer costs $500 to acquire and is provides $3,000 in margin per year on average, the paypack period is $500/($3000/yr) or 1/6 years or 2 months. You are not profitable with this customer until month 3.

Take some time to find these numbers. It doesn't have to be complex. You'll want to have them in hand before the next salesperson hits you up to buy more advertising!

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Images: "Computer screen and dollar sign with word Customer / Shutterstock.com"

The post What Would You Pay For New Customers? appeared first on Tweak Your Biz.

5 Top SEO Tips

Posted: 15 Nov 2012 10:45 AM PST

Search Engine Optimisation (SEO) is an organic science. It grows and reacts to the atmosphere around it. That atmosphere can be the search engines themselves or it can be the changing habits of internet users. Today, we're taking a look at five issues and how you can work on ways to improve your search engine ranking. It's DIY SEO you could say. Here are my SEO tips.

Research your Target Phrase

Research target phrase and target long string search terms - these typically have three or more words. They might have less searches but the people that do search using these terms are higher quality visitors. And there'll be lower competition for those terms. Let's take the example of 'tennis shoes', if you search for tennis shoes in Google.ie you have 59million listings coming up. BUT if you search for 'ladies tennis shoes size 6' there are only 2.6million listings coming up. So yes, the more specific you are, the better the results will be. You can do some initial keyword research by using the Google keyword tool.

Where to put the Target Phrases

Once you've found these target phrases, where do you put them? First of all, ensure they are in the page name itself. They should also be in the product name. Where possible, weave the target phrases throughout your on-page copy. The url is another vital part where they should appear. Within the pages themselves, inbound links and anchor texts always attract attention from search engines. And the target phrase or keyword should be an ever present in your meta titles and meta descriptions for SERPS too. There is a disclaimer though!! Only include all these if they make sense to the reader.

Don't ruin your Brand Message

SEO is important but it is not everything. You should never ruin your brand message or marketing communications online just to facilitate your SEO methodologies. One of our main beliefs is that no matter how well you attract people to your website or blog, they must engage with it when they get there. The old saying goes… 'you can bring a horse to water but you can't make him drink.'

Social Media

Social media plays a role too so put sharing buttons on all key content like special offers, product pages, news and blog posts. Google takes social signals into account so you need to allow your visitors and readers to share and endorse your content across their social media accounts.

Current Content

And finally, you need to be relevant and active. Keep content current. There is a myth that the more active you are the bigger your online footprint therefore the more visitors you will attract. Being active and relevant is important but more importantly you must write about topics that your customers are interested in. Ask your customers what they want from you; listen to what they are already asking about. This leads to building your reader numbers and these readers will comment, share, endorse and link to your content. All this equals more visibility and ultimately improves your ranking.

SEO DIY is not hard. You just need to keep account of what you're doing and deciding if it's working and to what extent. Most of all ensure your branding and marketing communications remain consistent and accept that SEO plays a major role but still only one role in your overall modern marketing mix. What are your SEO tips?

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Images: "Process of Search Engine Optimization illustrated by gears / Shutterstock.com"

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vineri, 16 noiembrie 2012