The Cost of Bringing in Customers

by WOHe

If you do little advertising, this column will mean nothing to
you. If you do a lot, here’s a little exercise to see how much
those prospects and customers cost you.

Start here: How much did you spend last month for advertising
that includes newspaper display, media advertising, direct mail and
local ads? Now, divide that by the number of people who came into
your showroom as a result not buyers, just walk-ins.

To do this correctly, you’ll have to ask every person who walks
into your showroom how they heard about you. You’ll also have to
track whether or not each prospect buys. It’s not hard. When
someone comes in, just say, “How did you happen to hear about

For example, let’s say you spent $3,000 on display ads, $700 on
radio, $900 mailing postcards or flyers, and $500 on peripheral
buys. That’s a total of $5,100 for the month. As a result you had
30 walk-ins and sold six of the customers a new kitchen or bath. By
doing the math, you’ll find that from the $5,100 you spent on total
advertising, you were able to generate 30 new walk-ins or leads by
spending about $170 per prospect.

Could you spend that money more effectively? Could you get
better results and not spend as much? What if you went door-to-door
and asked people if they might be interested in a new kitchen or
bath? If they were, what if you said you would pay them $170 to
come into your showroom to see what you have? How many people would
come down? I bet they would follow you back to your showroom. Of
course this idea is far-fetched, but the point here is that we need
to find the right people, develop some interest and excite them
enough to sell them a kitchen or bath that will enhance their

Luring Customers
Car dealers are notorious
for luring people into their dealerships with direct-mail pieces
offering free cameras, watches, diamond pendants and things of
perceived value. These dealers know that once they get prospects
through the door, they will have a better chance of selling them a

A little-known fact in the car business is that, many times, the
sales manager will get salespeople together at the end of the month
and offer them $100 to get a previous prospect back in one more
time for a test drive. It doesn’t matter if the customer buys or
not; the salesperson gets the money. They know that getting them in
one more time face-to-face has a high closing ratio.

It makes sense you’re putting someone who is interested in
buying together with a salesperson who is motivated to sell.
Believe it or not, more than 60 percent of the people buy once they
drive the car a second time.

So, think about this for your business. What could you offer
prospects who didn’t buy, or new potential prospects who are
teetering on the edge, that would entice them to come and look at a
new kitchen or bath? You’re not going to want to do this with a
display ad. The prospects have to be more qualified.

Direct Mail Route
You might want to consider
a carefully selected mailing list targeted to the right type of
people. As every area is different, this is something you will have
to check out for yourself.
If you’ve determined $170 is your cost to find a new prospect, you
could always offer TVs, DVD players, stereos, digital cameras and
any number of the latest technological gizmos. But don’t do it.
You’ll get a lot of people, but most will just be freeloaders and
freebie-seekers. Go with something for a lot less money, but
something that also will attract people with some interest. For
example, offer glass crystal-like pitchers and glasses, plates and
glass sets for the patio, a unique showerhead, framed pictures for
a den area, a book on decorating and other sorts of gifts that are
meant to beautify a home. These are targeted toward the type of
people who are coming into your showroom in search of a new kitchen
or bath.

Tie this promotion in with a direct mail piece that offers the
item that has the right image for your business. Let prospects
know, in the mail piece, that the item is your free gift to them
just for stopping in to see and get an estimate on a new kitchen or
bath. Make it clear, however, that without an estimate, they will
not receive a gift. This way you get all the information you need
to follow up the lead in case they are reluctant to make a
commitment on the spot.

Don’t discount the value of a good direct mail piece offering
something of perceived value to prospects for free. Furniture
stores do it. Car dealers do it. If it works for them, it could
work for you.

However, don’t run a promotion of this type in a display ad in
the paper. You’ll spend too much money and get minimal results
because you can’t pinpoint your target audience.
Direct mail is more like underground advertising. You can do it
over and over again with different mailing lists. You can do it
with just a few people at a time, or hundreds or thousands while
selecting the demographics of people you want it to go to.

The other perk pertaining to direct mail of this type is that
you can keep testing and re-testing your prospects to find out
which gift works the best for your market, and you don’t have to
spend a lot of money each time. When you find a give-away item that
attracts the most people, stick with it. Other people won’t know
about it until they get the mailer or their friends tell them about

So, figure out how much each customer is really costing you with
the current advertising you’re doing. Then, see how much less you
will have to pay by sharing a little bit of that cost with the
customer. You might be surprised.

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