Performance based pricing

Tell us how many customers you want We'll suggest a budget

Before deciding how much (if any) to invest in advertising, ask yourself these 2 questions:

                            What will it cost me for each new customer?

                                                                            How many new customers should I acquire?

Why these 2 questions?

First, you need to be confident you'll make more money from your "average" new customer than you're spending on advertising.

Second, you don't want to acquire new customers if you don't have the resources to properly serve them. (A disgruntled, ex-customer will tell lots of people and you don't need this negative word-of-mouth advertising).

Two Key factors that affect your cost per customer:

Cost per lead: Each market is unique. Automotive is entirely different from dentistry. Not only do the marketing messages differ but so do the amount companies are willing to "bid" for new customer/patient leads in these markets. (NOTE: Some markets costs nearly 20X more than others.)

Your "Closing Rate": What percentage of your leads do you convert to customers? Is your offer sufficiently compelling to motivate prospects to call or visit? When they call/visit, how well do you and your staff present your business?

Let's review an example of what you might expect to invest in an LBN marketing campaign:

1. Cost per customer

We'll assume you're a plumber in metro-Detroit

Let's call our business    "Sue Age Plumbing"

Step 1
Determine how much Sue should invest in advertising, As discussed above, she needs to estimate what it costs her to acquire a new customer. To make this estimate she must answer the following 2 questions:

What will it cost Sue per lead?          What is her "Closing Rate"?

What will it cost Sue per lead?

The cost per lead varies from industry and locale. (PLEASE remember, your costs will be different from what we discuss below).

For our example, we'll use actual 2008 client data. Our plumber, Sue, invested $1,200 in her LocalBizNow online ad campaign which generated more than 2,500 searchers viewing her advertisement.

These views produced the following results:

How many of these leads will turn-into customers depends upon Sue's ability to close!

If Sue can convert 5% of her "Online Actions" (These are the prospects who clicked on her "More Info" page, visited her website or download her coupon) and 20% of her e-mail inquiries and 40% of her calls, her cost for acquiring a new customer is under $19.

Comparing costs per lead

It is extremely difficult to calculate the cost per lead for billboard, radio or print ads. It can be done, but you need to carefully track the source of every call, email and customer visit. This means you and your staff must ask every prospect, "Where did you hear about us?" However, asking is not enough, you must verify the source. Let me explain why, with this simple, true story.

One of our clients surveyed their customers to learn how they discovered their business. The number-one response was the "Yellow Pages". The problem was this business didn't advertise in the Yellow Pages (or any phone directory).

Moral of the story? Prospects often don't remember where they heard about you so carefully analyze their responses and ask them to be specific. Specific answers (such as naming a specific phone directory) tend to be more accurate.

At LBN we provide you with measurable results, easy-to-read reports that show the number of phone calls, emails, ad-views and website visits generated by your advertisement.

We make it easy to calculate the return on your advertising investment.

What is Sue's "Closing Rate"?

The answer to this question is affected by the following 2 factors:

1. Do prospects like her offer? message? the look of her advertisements and website?
2. When they call or visit, is it a positive and welcoming experience?

In our example, we assumed Sue is good at answering the phone and attentive to prospective customers; hence, she has a respectable closing rate of 40%. (NOTE: Some businesses score as low 2%, they let the calls go to voicemail or appear rushed while answering calls or servicing prospects. If Sue did this her cost per customer would increase to $400!)

Now that we have a reasonable estimate of how much it costs Sue to acquire a new customer, we need to address how many new customers can Sue Age Plumbing support.

2. How many new customers should I acquire?

Most people's initial reaction is    "As many as I can get" That's the wrong answer!

Before you advertise you need to ask two important questions:

1. How much profit will I make from my long-term relationship with this new customer?
2. How many new customers can my business reasonably support?

Let's spend a moment looking at each of these questions.

How much profit will I make from my long-term relationship with this new customer?

If it costs you more in advertising than you'll earn from this customer, you shouldn't advertise. For example, let's assume that Sue's cost to acquire a new customer is $400. (i.e. She's rude to her customers and has a 2% closing rate.) If her "typical" customer generates a lifetime profit of $300, she shouldn't advertise. (e.g. It costs her more to acquire this customer than she'll make over the lifetime of this relationship.)

REMEMBER: Calculate your profit over the average life of your new customer. Your first sale might be small but you shouldn't expect to recoup all of your advertising investment from the first sale. For example, if your average customer makes multiple purchases that generate a total profit of $2,000, use this number in your analysis.

How many new customers can my business reasonably support?

3. Get an Ad Budget – Get Measurable Results At LBN we give you detailed reports so you can evaluate the performance of your advertising investment. With a click of a mouse you can review how many times your ad was viewed and acted upon. Furthermore, we utilize a unique tracking telephone number on each of your LBN ad campaigns. Using this "tracking number" technology, allows us to record each call so you can later review and analyze your effectiveness on the phone. NOTE: You can always ask us to professionally review your calls. We are happy to share our expertise to assist you in improving your businesses telephone sales and service skills.

Putting you on Page 1 is just the 1st step!

Click here to get started or Call us

Tell us your needs, the services you provide, the communities you serve and our market specialist will recommend a budget that will help you to reach your sales goals.