Ah I am so glad you asked, as asking this question or any marketing based question opens us up to a few important factors about our business that we have to consider.
Now this question is one that I am asked on a weekly if not daily basis by clients and potential clients.
When answering, I rarely answer yes or no…
Well there’s information about your business that I do not know, information that will help you make an informed decision on how to spend your hard earned dollars and more importantly after doing so, if you should keep it going.
So the big thing you should try and understand about your business is the Life-Time Value of your average client.
Life-time value, is where you are going to look at your average cient, how many times to do they come to your salon or spa each year, and on average how long do most clients stay with you.
So let’s look at an example:
A salon owner estimates that her average clients visit her 8 times a year.
An average visit is $75
And most clients will stay with her for at least 5 years.
So her Lifetime Value is calculated like this:
8 X $75 X 5 = $3,000
So the LTV of an average client is $3,000.
Now that we know that we can start to look into what can we afford to “Invest” to get a client. Yes I choose that word carefully as marketing should be an investment in your business, not an expense.
Okay so let’s look at an example for Google Adwords. In this case I am going to use some statistics from an actual campaign (just no names…)
Client A, runs a salon in Sydney in a relatively competitive area.
Over a 30 day period she has had the following:
Clicks to website Cost of click (average) Total Google Spend
130 $1.84 $239.55
(this does not include the adwords management which will vary with all agencies, but this client is on our Sassy Traffic Pack).
Now if we look at in another way it has cost $239.55 for the client to expose her business to 130 people who were searching for the services that our client provides. That is pretty cheap marketing.
Lets keep going though.
Now we can look at cost per lead. How much does it cost to get an enquiry. So if the client gets 20 phone calls we divide that by the total spent.
So cost per lead is $12. So for every $12 spent, the client is getting a chance to get a new client”.
Then we have cost per sale. This is how much it cost to get a sale. In this situation the client thinks (there is a little grey area here due to tracking of each client) they get 15 new clients a month from Google.
So the cost per sale is simply dividing the total spent by the total sales, which in this situation comes to $16.
Okay, we’re getting there…
Now if you knew that the average client LTV (life time value) is $3,000 would you invest $16 to get that? I am guessing you would.
I’d easily pay that and a whole lot more. Because not only will you get a new client on board, you then have the chance to get their friends to your salon or spa as well.
A BIG KEY here, is to reframe the way you look at your marketing. STOP looking at it as a cost and look at it as an investment. Like all portfolios some shares go up, some down and some you just have to get rid off. Marketing is like that as well. When you find a avenue that works well for your business you can increase the allocation of funds to that avenue and if one doesn’t work after you have tested and “measured” then reduce it or cull it.
The success of this will all come down to your discipline with measuring your marketing. Do this, then you gain control, understanding and power within your business.
So should you invest in adwords or SEO?
I hope now you can answer that confidently!
To your success.