Business Attitude: sales measurement

Showing posts with label sales measurement. Show all posts

July 12, 2016

Selling Real Estate - Make More $$ by Reducing your Cost of Customer Aquisition.

"Cost of Customer Acquisition" (CoCA) is an important metric no matter what business you are in. In real estate, where selling could be considered 100% of the time spent, CoCA, and reducing it, is the metric.

There are two very important things to know here:

1st - Reducing the CoCA is NOT about reducing costs, its about increating the number of customers with the same dollar.
2nd - There is no "right" method of calculating CoCA; choose one of my suggestions from previos blogs (or from this blog) and run with it. The important thing to remember is not to change the way you calculate this metric - It's not the number itself that has meaning, it is the movement of that number over time.

There are many different methods and scenarios to consider and calculate CoCA.

In the case of real estate agents, take all of the out-of-pocket (OOP) costs you have in a year (or any other time frame) and add it to the amount you want to make - your desired income. Then divide it by your new customers (or projected new customers); the result being your Cost of Customer Acquisition - Keep it that simple - KISS it.

Simple Example: I want to make $95K/yr and I have $5K in miscellaneous OOP expenses totaling $100K in expenses (your salary is an expense to the business even if it is just you). Take that total and divide it by your new customers - let's say 100 new customers - cost of customer acquisition - $1000. Being a real estate agent, where I may make $5K-$6K per sale (or more) - that a pretty healthy return - I'll take 600% all day long.

Whether your an agent or a broker - know this metric, and measure it in any way you want - just do it the same way every time - be consistant.

One of the ways we are testing CoCA, in an attempt to reduce it, is to increase the number of leads, and thus customers, by doing some dense marketing around both "SOLD" properties and around "Open Houses". We are using multiple methods, some traditional and some unique to Dense Market, We will not only test our dense marketing for CoCA but will also test Diminishing Returns, another important metric not covered in this blog..

If you would like a copy of our findings and results, email me at rleonard@LightsOnGraphics.com - They should be available by October 1, 2016. Only the first 100 will be provided at no cost. Follow me on Twitter for progress reports @T4Leonard.

Quote: "Costs in Marketing should NEVER be about cost; it IS about diminishing returns on the next marketing dollar spent" ~rel

Bob Leonard
561-371-4113 (Call My Cell)
512-593-8830 (in Austin)

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February 22, 2016

What MakesTwitter Such a Great Tool - Making Us All BetterCommunicators - Marketing 101T

Twitter at 140

Tweet World - Twitter teaches us to be more concise in our statements as we only have 140 characters to make our pitch.
Real World - This is not a new thought - 35 years ago I used to practice elevator speeches - yes speeches. We had to know when we could repeat our favorite, when we had to use a new / different one, and how to keep it short enough that we could always include a link ( Hand shake, say your name (introduce yourself ) and hand them a card) - Ahhh, let's call that a oldern days tweet.

Repeating Tweet

Tweet World - When you find a good tweet, repeat it, maybe as much as every couple days. Every time you tweet, your audience is only about 3% of your followers (my estimate). That being the case, you can repeat your tweet 33 times without repeating it to the same audience.

Real World - Sometimes, people need to hear your pitch multiple times for it to sink in. This is no different than using the same sales pitch to different people at trade shows, sales calls and even over the phone - It's called following the script.

Understanding the Impact of Individual Tweets

Today, we can measure the impact of our tweets instantly allowing us to test more frequently, more broadly and more accurately with less subjective inclusion. This same need has always existed, but the online and social tools did not as they do today.

The key 'take-away' here is that the same data, information and techniques have always been needed, we just use different (and better) tools today. Old marketers / sellers need to adopt; new marketers / sellers need to learn why - "Knowing why we do something is what allows us to adapt" ~rel.

Bob Leonard
561-371-4113 (Call My Cell)
512-593-8830 (in Austin)

September 20, 2015

How to Calculate your "Cost of Customer Acquisition" - The Most Common Question

Since writing a few articles about "Cost of Customer Acquisition" I have been asked several questions about it; the most common being, "How do I calculate my own Cost of Customer Acquisition?" Lets try to answer this.

First, there are both many different scenarios and many ways to calculate Cost of Customer Acquisition.

The simplest of the scenarios is the Commissioned Salesperson. Take all the out-of-pocket (OOP) costs you have in a year (or any other time period) and add it to the amount you want to make - your desired income. Then divide it by your new customers (or projected new customers); the result being your cost of customer acquisition.

Example: I want to make $95K/yr and I have $5K in miscellaneous OOP expenses totaling $100K in expenses (your income is an expense to the business even if it is just you). Take that total and divide it by your new customers - let's say 100 new customers - cost of customer acquisition - $1000. Two factors I did not consider here are 'cost of customer maintenance' and 'diminishing returns' as both come more into play when you transition from sales person to small business.

A second example would be of a small business large enough to have a few sales people. In this scenario, the owner will want to consider more of the costs as their will actually be more costs. Consider everything, from the cost or marketing, advertising, signage on the office, promotional pieces and lets not forget the base salaries, commissions and the costs of having salespeople employed as well. All these things, and potentially more, can be included in the cost side of Cost of Customer Acquisition. In reality, it's all up to the 'measurer' and his or her metrics and/or analytic desires. I have never seen two companies measure it the same way, but I have also never seen a company inconsistent in the way it measured this metric - this is good.

So no matter what size company - know this metric, and measure it in any way you want.

The objective in using this metric is to, over time, reduce the Cost of Customer Acquisition. This is accomplished, by either reducing costs or increasing the number of customers - if you know what I write about, you know where I lean. Marketing efforts, sales pushes and product mix changes will also affect this metric.

A few final notes:

Diminishing returns are important to at least think about, especially if this number is going into a business plan.
High margin / big ticket items have different metrics as does service businesses that may get clients who come back forever,
Cost of Customer Acquisition is much different than Cost of Lead Acquisition / Generation.

I believe it is one of the best metrics for any growing business.

Cost of Customer Acquisition

Bob Leonard
561-371-4113 (Call My Cell)
512-593-8830 (in Austin)