“Investors’ see Twitter as a $1B company” 9/25/09
What is a new customer worth?
Facebook, Amazon, Twitter and other online businesses reveal the value of customer acquisition. These dot com companies are experts at new customer acquisition. Why? Because these businesses live and die by spreadsheets, statistics and the big picture. Dot com companies have real time business statistics. Every day the IT department feeds the dot com CEO new visitor stats, sales and conversion reports. This CEO can manage all the numbers except one, the number of visitors (customers) to his/her company. The success of a dot com business is merely a mathematical equation WHEN you have enough customers. This is the same for brick and mortar businesses. Unfortunately a brick and mortar business owner measures customer visit statistics with a door chime instead of an Excel spreadsheet and a statistics engine.
Why do traditional brick-and-mortar businesses ignore the importance of customer acquisition? Distractions, emotions, tunnel vision and more lead to marketing inattention. Independent restaurants, hardware stores, and other traditional businesses operate day-to-day watching the same customers to come and go as they please. In time, these businesses will fail as they watch their customer base peak then decline below profitability. It happens all the time. The business owner ignores the big picture, the obvious, New Customer Acquisition Marketing.
Your total customer base will shrink 25 to 35% this year.
Many will move away, some will die and more than we like to think will be unemployed, divorced, disabled or suffer some serious financial setback. Statistically your total “customer inventory” could easily be shrinking by as much as 35% per year. If this figure seems ridiculous, stop and think how many customers you used to have that are no longer around. If you just knew the human stories behind these “missing customers,” you might be very surprised…
When her son graduated from college, Susan retired and moved to Florida. John got himself downsized and has been unemployed for nine months — and doesn’t have a time to spend with you. Steve’s company transferred him to Ohio. Now Steve and his wife no longer see you. They are now someone else’s customer. Old Doc Johnson passed away with a sudden coronary and you never even saw the funeral notice. Don’t get me started on the the effects of this current recession, 
Who are the best new customers for your business? The best new customers for your business are usually new homeowners or new movers to your community. Why? Because, these consumers need new services. They need your services. They have not been to your competitor…YET.
New movers need everything from housewares, haircuts, restaurants, advice, auto repair, exercise, housekeeping, and more. New homeowners are ready to unleash thousands of dollars for products and services including home improvement, entertainment, self-improvement, new automobiles, and more. Why? Because most new homeowners held back on most purchases to protect their credit worthiness (among other reasons) until settling into their new home.
Research suggests “client lifetime” is approximately 5-7 years for most small 
businesses. A restaurant customer can spend between $1500-$6000 or more during this time. That does not count other family members or referrals. Maximize their revenue potential to you by winning their business early. You will gain loyalty and repeat business. These are the customers who provide enhanced value to the business you built…the business you expect to sell or retire from one day.
We’ve designed a customer acquisition calculator specifically designed for a restaurant owner. This calculator was created to help restaurant owners interact and visualize their profit potential. Your business needs more customers to increase sales and profits. Begin to think like Facebook, Twitter and the successful business owners who manage their “big picture.” They understand success and profits start with new customer acquisition. These business leaders are aggressive in their promotional strategy. Outsiders regularly question the sense or profitability of free and heavily discounted giveaways for the purpose of new customer acquisition. Their competitors become unhinged:
“How can they give it away for free?” ”That offer is crazy!” “They can’t afford to do that!” “Business must be really hurting.” “It will never work.” and on and on….
Their new customers and advertising respondent quip to their friends in person, on email and on social networks:
“Bob’s Restaurant gave me the greatest offer!” “You wouldn’t believe how much Bob’s wants my business.” “This must be a mistake; I better get in there fast.” “I would have never gone there if it weren’t for that offer.” “Those guys are smart, they knew how to earn my business.” “They must have many locations or soon will.” and on and on…
Make no mistake. Big profits are made by companies who use a system to generate a continuous flow of pre-motivated, pre-interested, pre-qualified customers. A system generating clients predisposed to do business with you…profitable, loyal customers. This system works year-round, in any type of economy, in any type of market…marketing system that requires none of their management time and energy.
Follow me if you believe new customer acquisition is important to your business. New resident customer acquisition is a niche market in your community that can provide you with all the new clients you need…a group of people that don’t patronize you, yet. They don’t patronize any of your competitors, yet. People who move in will be shortly looking for what you sell. These are high-quality customers who will be rewarding you or one of your competitors with their patronage and loyalty.
New Mover Families
The easiest, surest and smartest way to attract a steady flow of new customers is to go after just moved new residents.
You can do this too. My company, Engage Marketing, Inc. has done this for many others. We can help you now, on your schedule, online, night or day and absolutely within a manageable budget. I mean a low budget. My online system targets new movers and new homeowners to provide all of the customers you need to grow your business until the day you decide to retire or sell.
The financial mathematics of new resident marketing will startle you…
The new resident market in your community is worth millions of dollars to your business. Let me prove it. According to your industry statistics the average lifetime revenue contribution of a customer household is worth several thousand dollars.
“Lifetime Revenue” Refers to the toll on amount of money the customer will spend with you. “Customer Household” refers to the fact that sometimes you will have more than one customer per household.
Let’s do the math for your business. Consider the average amount of money spent per project by a customer. Now take that number and multiply it by the average number of projects per year. Now take that number and multiply it by 5 to 7 years. (Note: 5-7 years is the median length of patronage between a customer and a business in your industry.) Now add in other family members.
Your customer lifetime revenue total is likely between $1500 – $6000
There are hundreds of new families moving into a typical suburb or metropolitan area every month. Our online system can show you how to get a precise count for your local market.
Do the math!!! Hundreds of new families per month times $1500-$6000 times 12 months per year equals millions of dollars of future revenue for your business.
Are you thinking like a statistician yet? A dot com CEO? It is all about dollars and ’sense.’ Now that you’ve visualized the new resident gold mine you can grow your business and profits to any level you choose. How do you transform this sensible market theory into a chalice that can generate explosive growth in profits for your business? You need a stealth direct response marketing system that targets new residents. Forget ‘image marketing.’ Forget about ‘keeping your name out there’ advertising. You need a system that consistently delivers…
$22-$26 spent with your business for every dollar you invest…
Receive a whopping 2600% to 8800% return on investment! These kinds of numbers can be achieved consistently when you know what you are doing.
Let your competition experience the worry, struggle and frustrations that accompany the unrelenting pressure to find new customers. You’ve broken away from the pack. Your business is attracting scores of new customers month after month, year after year. Your worry free your marketing system is in place you control the new customer faucet.
The three magic ingredients…
1. The List
2. The Offer
3. The Package
Master these three elements and you will master the engine that can drive the growth and profits of your business to any level you choose. Build your dream business, make more money and spend more time with your family.
The List
You need to find out who is moving into your area on an ongoing basis. If you try this on your own you will likely get lost dealing with several mailing list companies. Most companies do not have the time to help you. You are looking for a small list of names, a
few hundred names tops. Mailing list companies typically charge $125 or more for each minimum file transfer. You will soon be out of budget. Luckily we have done all the heavy lifting for you. We have provided restaurants a powerful online new mover and new homeowner search engine. The capabilities are extensive. Your trade area geography is easy to define. You can acquire about 200 names for as little as $30. Our list engine is available online linking directly from any new resident product page.
The Offer
After the list, your offer is the single most influential variable in the response rate and profitability of your new resident marketing system.
The secret lies in testing. Test, test and test again the wonderful thing about direct response marketing is the market place will tell you what works best. Don’t make the mistake of using a weak offer and trying to preserve the profitability of the first transaction. Here is a true story that will startle you.
Several years ago there were two very similar clients Dana and Tom. Both owned beauty salons. Both salons were located in upper middle-class communities. Both enjoyed solid reputations. Both cultivated talented staff and each one built a loyal following of customers.
Both Dana and Tom signed up for the New Resident Mailing program at about the same time. Six months later Tom is getting more than ten times as many new customers as Dana.
Here’s what happened…
Dana’s mailing piece included an incentive offer. It entitled the recipient to receive a FREE SAMPLE of a normally high priced shampoo. This brand of shampoo can only be purchased in salons and enjoys a good reputation. The sample of shampoo they 
were offering however was not an actual bottle of shampoo that might have a high perceived value. The sample was actually a foil packet which was only good for one application. Dana confided in me that he was able to obtain these packets free of charge from the shampoo manufacturer and thereby keep his costs down.
As Dana explained it – “I do not want to pay for both the mailing and the incentive offer.” Dana was absolutely convinced his “clever” approach was the way to go. Dana had a 1% response rate. And out of those who responded, 80% became long time customers. I will show you the financial mathematics later in this letter. And you will see that Dana’s New Resident mailing program is making him money. But Dana missed the boat. Big time. Read on…
Tom recognized that targeting new people moving into the community could be a goldmine. In his business, like most, once you acquire a customer and make them happy with the product or service you are providing – they will come back again and again until they move out of the area.
So Tom decided to offer a FREE HAIRCUT – no strings attached. He realized that this was a powerful offer. One that would attract people whom he could convert to regular customers but also people who would just come in for the free haircut and never comeback. Each FREE HAIRCUT that Tom provided actually cost him $10.00 in labor to perform.
Tom had a 17% response rate. Remember some new residents just came in for the FREE HAIRCUT. Tom converted just 50% compared to Dana’s 80% conversion. But Tom made a killing. Here’s the math…
Dana and Tom’s Financial Mathematics
Lifetime Value of a Dana or Tom customer ……….. $2880
(Both had similar lifetime values. The average customer spends $60 per visit and visits 8 times per year. The average customer patronizes the salon for 6 years. Lifetime revenue calculation is $60 X 8 X 6 = $2880)
Dana’s Summary:
Cost of Dana’s mailing 200 Welcome Gift Offers per month …. $221
Cost of Dana’s Incentive offer ………… $0
Total Monthly Cost ……… $221
Total Number of Responses per month (500 X 1%) …. 2
Total # of Responses who become regular customers (80% of 2) … 1
Future Lifetime Revenue of New Customers (1 X $2,850) …. $2,850
Summary: Dana is spending $221 on new resident mailings per month that will bring in $2,850 in future business. This means Dana is only getting back $12.90 in revenue for every $1.00 he spends on marketing to new residents.
Tom’s Summary:
Cost of Tom’s mailing 200 Welcome Gift Offers per month …. $221
Cost of Tom’s Incentive offer …………$340
(17% responses rate X 200 = 34 FREE HAIRCUTS X $10 each)
Total Monthly Cost ……… $561
Total Number of Responses per month (200 X 17%) ….. 34
Total # of Responses who become regular customers (80% of 34) … 17
Future Lifetime Revenue of New Customers (17 X $2880) …. $48,960
Summary: Tom is spending $561 on new resident mailings per month that will bring in $48,960 in future business. This means Tom is getting back $87.27 for every $1.00 he spends on marketing to new residents.
Tom is getting more than 6 times the results of Dana using the same program. The lesson here is to learn how to measure and quantify all your costs and results. Test new offers (it won’t cost you any more) and re-evaluate until you’ve optimized the results.
The Package
Direct mail comes in all sorts of shapes and sizes. Look inside your own mailbox. You’ll find postcards, self-mailers, and various envelope packages. The outside envelope sometimes has teaser copy, a picture of the product, perhaps a window that shows a “simulated check”.
Intricate mailings have higher costs and are often less likely to get opened. The name of the game is to do no harm and spend the least amount of money to get viewed.
The best strategy for a restaurant when mailing a new resident is to use a live stamp and mail a first class letter. Everyone is a potential restaurant diner. You don’t need an extensive letter to attract a response. Postcards and greeting cards get down to the point. They present your offer upfront. These are convenient to carry and redeem. Remember your letter is just a vehicle to generate traffic. A prospective customer’s decision to do business with you will be driven by their actual interaction with your business. So keep it simple – and use a powerful offer!
We believe our system at www.GetNewDiners.com is very powerful with several standard direct mail templates. We also have a design feature to load exclusive card designs into your account for future mailings beyond your first mailing.
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In conclusion, now is the time for you to act. The recession and technology is changing everything about the way we target and attract customers for our businesses. New resident marketing at www.GetNewDiners.com is a low budget stealth marketing program that will attract the most profitable business at half the effort. Need help? Check out our 5 minute tutorial video at Viddler (click here). I look forward to your questions or comments.
