Cost to Aquire a Lead and Client
There has been a lot of heated debate lately about the costs of acquiring a lead and eventually a prospect for your business. I truly believe that it all comes down to looking at the data and figuring out how much you are able to spend. I hear from a lot of people who are new to running ads and being in the online world that $5.00 per lead is too much money to spend on a lead. If you don’t know with great specificity how much it costs to acquire a lead, compared to how much you are making in sales from those leads, then you have no right to make judgments about what is too much money.
I love the book “Never Lose a Customer” by Joey Coleman. (You can get it for yourself here => https://amzn.to/2IcODB1) In the book, he talks about how in the bank industry, it takes $300 dollars to obtain a new customer and open an account for them. Of the people opening new accounts, 32% of them leave within the first year of having opened it. It takes the bank roughly 25 months to recover the cost of a new client, assuming that it is $12.00 per month for a maintenance fee. Of the 32% that leave in the first year, 25% of those people never even make a transaction through their account. I share this with you guys because when I ask most people about how much it costs them to acquire a new lead in their business, I get a blank stare.
A few years ago, I did a bunch of work for a home design company. We knew to the penny how much each lead costs, and how much each prospect costs. We knew which trade shows, which conventions, which advertising modalities were the most profitable. They had been in business for 20 years and had plenty of data for us to use. If you’re new to business, it’s understandable if you don’t have all this information. However, if you’ve been in business for a while, it’s important that you understand this data to grow your business.
If you want to learn more about how you can figure out your cost to acquire a new lead or prospect, listen to this episode!