I hated math in school. However, this is fun math. At first you might rub your eyes, but once you see what it can do for you and your business, you’ll be happy. Why? Because this math shows you how rich you’re going to get.
Here’s a typical example: How much does it cost you to bring in one new customer? If you don’t have the answer, it’s time to figure that out right now.
Let’s say you get a graphic designer to design you a flyer, you then pay a printer for printing, and the post office for postage.
Maybe that costs you $2000 for 1000 flyers.
The average purchase at your business is $40.
That means you’d need 50 orders to break even (2000 / 40 = 50).
That’s a 5% response (50 / 1000 = .05 or 5%).
If you have a well written flyer and it is targeted to an ideal prospect you could hit that number. There is no magic number when it comes to the average percent, but mailings to current customers can easily reach double digits. Keep in mind that’s a big difference from what many consider to be the average direct mail success rate for acquiring customers – 2%.
Anyways, let’s say you send the flyer out and you only get 20 people to come in and they spend $40. For a total of $800.
So on the front-end of things you’ve lost $1200 (you spent $2,000).
But, you know that your customers stay with you for an average of 2 years and spend $240 with you.
So those 20 new customers will actually generate $4,800 in business ($240 x 20 = $4,800).
Giving you a $2,800 profit on mailing those flyers (4,800 – 2,000 = $2,800).
Knowing that, you would decide to mail the flyer out more often as each time you mail it, you will get $2.40 back for each $1 you spend (4,800 / 2,000 = 2.4).
This is a rough example, and doesn’t take the present/future value of money into consideration, but can you see how quickly you’d start making big money? That’s my kind of math.
I’ll get more into the front-end and back-end marketing stuff later.