One of the biggest mistakes I see with my marketing clients is a failure to estimate the lifetime value of a client.
It’s the lifetime value that determines what a new client generated by a marketing campaign is worth.
Without that number, you’ll make the mistake of making a one-to-one comparison to the cost of generating a long term client to the revenue from one visit.
This causes you to under-fund your marketing, decreasing the exposure you should be gaining in your marketplace.
Use this equation to estimate the lifetime value of a client:
Average cost of a treatment session x Average number of treatment sessions over a year x Average retention time of client
Average treatment = $100
Average number of treatments 12 per year, (12 x 100) = $1200
Average retention 3 years (3 x 1200) = $3600
With this estimate, the value of a new client brought in by a marketing campaign is $3600. If you spent say $260 on average to get the new client, you’d see strong ROI.
If you think in terms of a single visit, it looks like you’re paying $260 to get $100 in revenue – a loss you’d never invest in.
This is an estimate, but if you’ve been around a few years, you should be able to get some fairly accurate numbers.
Remember that a new lead is not just about the first couple of visits. The value is what you can get over the lifetime of the relationship. The higher you can make that number (meaning the longer you can retain clients) the better your marketing ROI will be.
Case Study Campaign
PHASE ONE – Targeted Ad to attract new clients for 1st appointment
(weeks 1 &2)
TARGETED AD (Time Sensitive Special Offer) –>> Landing Page –>> Auto Responder (name, email, phone number) –>> Booking Page
7,516 see ad, 701 click ad, 180 sign up (name, email, phone number), 72 book appointment, 39 show up, 4 become long term clients
$14,400 revenue from from Phase ONE of the campaign NB: Revenue figures based on the value of a long term (3 year) client to the business PLUS revenue generated from the 39 people X ‘special offer’ $$$
PHASE TWO (weeks 3 & 4) – Retargeting the 521 people who clicked original ad but didn’t sign up
Also, a reminder email sent (through Auto Responder) at same time as retargeting campaign to people who signed up but didn’t book
TARGETED AD (Reminder, Special Offer Ending) –>>Landing Page –>> Auto Responder –>> Booking Page (Extra Special Offer)
455 see ad, 252 click ad, 114 sign up, 80 book appointment, 45 show up, 6 become long term clients
$21,600 revenue from Phase TWO of campaign. NB: Revenue figures based on the value of a long term (3 year) client to the business PLUS revenue generated from the 45 people X ‘special offer’ $$$
Revenue Results from one month advertising
Long term clients acquired – 10. Cost to acquire each new client – $260. Average lifetime value of each new client – $3,600. Total lifetime value of all new clients (minus cost to acquire clients) – $33,400
PLUS revenue generated from the 84 people X ‘special offer’ $$$
PLUS – Referrals from these clients AND the 68 hot leads which are the names, emails & phone numbers of people who booked but didn’t show up.
Rinse And Repeat!
So as you can see, by investing your marketing budget in a highly targeted advertising system, rather than throwing your money away on ‘hope marketing’ tactics, you will very quickly be able to reduce the number of work intensive one off appointments and build a solid customer base of loyal clients who return for repeat appointments over the long term.
To find out how you can get similar results for your own business by implementing my targeted online advertising system – click the button below