Measuring advertising success:
The reason to spend money on advertising is to get new clients or to make new sales from the old clients.
Why, then, do we allow ourselves to be sold “impressions?”
If 1,000 or 100,000 people see our offer yet no one buys, it makes no difference how many people saw it.
The only measure of success of advertising ought to be “sales,” “new clients,” or “income” - something that directly demonstrates effectiveness of ads.
Cost per client:
To correctly measure the success of advertising, we must calculate the cost of advertising per client/customer/patient. Simply divide the advertising expense for the month by the number of new clients (or sales or income.)
Do this for the past year to get a clear picture of your baseline cost per client.
Using the wrong measure of advertising success can lead to sticker shock. When it's not about the impressions or pieces distributed, but about new clients, suddenly even the very “cheap” promotion becomes very expensive - when it doesn't result in the product.
The thing to do is make the promotion more effective – not spend less on promotion.
Cost per client down, new clients up:
The point then, is to bring the cost per new client down, while bringing in more new clients than ever.
One of the fastest ways to do this is to spend a little bit of money on your referral program.
Referrals – low cost, high reward:
How much do you spend on a referral program? Probably not much.
Yet referrals are often a key source of new clients. Can referrals be encouraged?
The problem with referral programs:
Your clients refer clients to you because they have confidence in you. They feel that by lending their expertise to a friend – letting them in on what chiropractor, which car repair shop, which store, that they can be opinion leaders for their friends.
Some are just so happy with their service that you've provided that they want to pay you back.
Neither of these impulses include “Get something.” They are both “Give something” impulses.
When we do referral programs that have published rewards for referrals, it confuses the “give something” and “get something” impulses. Those people who would refer because they are happy with your service may be put off by a published referral program – thinking that their friends may see it and wonder if that is why they were referred.
A better program is to send each person who refers a client a personal thank-you note, signed by the owner of the business. This may be accompanied by a bouquet of flowers.
At first glance, this may seem expensive, but it is virtually guaranteed to be a much lower cost-per-client method than anything else you are doing to attract business.
If you acknowledge people for the behavior you want, you are likely to see more of that behavior.
Do the above and let me know how it goes. Once you've discovered your “cost per client,” send me an email at email@example.com. We'll look over what you're spending and what results you are getting and offer suggestions for improvement.