Here are three strategies to help you make informed decisions about using your marketing budget more efficiently:
Assess Your Spending
Look carefully at what you spend to attract customers. Make a list of the different vehicles you use—advertising (online/traditional), direct mail, yellow pages, email marketing costs, and customer referrals. Figure out your monthly and annual expenditures for each.
Ask Your Customers
Find out from your customers how they heard about you. Include all options, such as the web, newspaper, direct mail, and word of mouth. Be sure to ask customers wherever and whenever they interact with you—at the register, on-line, by phone, in response emails. You can even post a poll on your website that asks: "How did you hear about us?"
Weigh Your Cost of Acquisition
Once you’ve looked at your spending and talked to your customers, determine which marketing methods are the most effective for generating new customers and have the best return on your investment.
Tip: Take full advantage of referrals
Referrals are your best source for new customers. When passionate existing customers recommend your business, they are providing you with free new business and putting their own reputations on the line for you. So it is important to continue taking care of and marketing to even your best customers. In our experience, not only do these leads convert the best of all sources, they typically have the lowest of all acquisition costs. The investment—taking good care of your existing customers—leads to a high return (new customers) at $0 cost of acquisition.