Page 321 - Duct Tape Marketing

305Chapter 19: Fortifying Customer Relationships

On the contrary, large businesses are usually organized in departments: The
marketing group is in charge of getting customers. Then, once the customers
are on board, their contacts switch to people in the purchasing, distribution,
delivery, and other departments. The marketing mindset changes to an opera-
tional mindset, and too often the customer gets lost in the shuffle.

As small businesses begin to get larger, some begin to adopt structures that
resemble those of their big-business role models — and suddenly their cus-
tomer focus begins to change. Don’t let this happen to you. Manage your
business so that every person in your organization realizes the value of every
customer — not only to your sales today, but also to your sales tomorrow
and well into the future, when the customer’s positive comments will lead
others to your business. (See Chapter 18 for ideas on how to identify, serve,
and win more business from your best customers.)

Valuing your customers

Imagine that each of your customers arrived wearing a price tag reading
Replacement Cost: $1,000. Imagine that even your inquiries and responses to
ads came equipped with signs saying I cost $75. Don’t you think that every-
one in your company would handle each contact with greater care if they
realized what it cost to bring that person into your business — and what it
will cost if you have to recruit a replacement?

Estimating the cost of a new customer

To roughly estimate the cost of bringing a new customer into your business,
apply the following formula:

Begin with the cost of last year’s marketing program. Even a wild guess
at what your company spent in advertising, sales, public relations, pro-
motions, signage, brochures, and other communication vehicles will
provide a good starting point.

Subtract marketing costs that were directed toward repeat or loyal cus-
tomer marketing communications — for example, customer newsletters,
customer promotions, and customer entertainment.

Divide by the number of new customers you attracted last year.

The result is a rough approximation of what it costs to develop a new
customer for your business.

Share your findings with others in your company so that they are aware of
the valuable commodity with which they are dealing each time they have cus-
tomer contact.

Once you know the cost of getting a customer, you’ll have an indicator of how
much expense you can justify to keep that customer on board.