Knowing how much a new customer or client is worth to you, over the entire time they do business with you – gives you the best idea of how much to invest in marketing. This number is referred to as your Customer Lifetime Value (CLV).
Think of it like being able to walk into a store, and purchase new customers.
How much would you be willing to pay for each one?
1) First, think of how much your average sale generally would be.
2) Then, think of how often that customer is likely to return to your business and repurchase. Don’t worry – these numbers don’t need to be perfect – just an approximate idea.
If you have some real data in your CRM or accounting software – we highly recommend getting your information from there. If not – no worries! Most business owners have a fair idea of what these numbers will be. An approximate will be fine. Need help figuring it out? Contact us.
Flow Marketing has developed a style of marketing that works extremely well for businesses with a CLV of $1000+.
We have a few tutoring companies as clients, with an average fee of $500/term ($50 per week, 10 weeks per term). With four terms in a year, that’s $800/year.
Their students generally stick around for approx two years (some stay much longer, some much less. All things considered, the average is around two years).
In this case, the LTV (lifetime value) per new acquisition is $1600.
For a client like this, we’d aim to get them 10+ new signups a month.
After running some calculations, we’d suggest an initial budget level of $2000/month (incl. both ad spend and management) in order to achieve this.
Although the immediate sales they see in that month are $2000, the LTV is much higher ($16,000). As the months roll by, the company consistently grows.
For higher ticket, once-off purchases where your customer is likely to not return and repurchase – we take a different approach.
Let’s say you’re selling something for $30k like private tutoring, or some kind of B2B machinery. Maybe you’re in real estate looking to make a 30k commission.
In these cases, we'd focus moreso on lead generation and lead nurturing. Let's face it - not many people will buy something that expensive without talking to a human (it is possible however) .
We can afford to massage the leads a little more thoroughly, in order to gain those conversions. We’d want to be across multiple advertising channels for this, generating 20+ booked meetings every month. A budget for 4-5k/month may be needed, however 1 sale would pay for 6 months of advertising and allow the business to scale ad spend rapidly.
The reason why barely any other agency’s website show you the price, is because every business is so wildly different, and there really isn’t any ‘one-size fits all’ approach.
Our client’s ROI usually varies between 2x – 7x. For some businesses with a strong and compelling offering, we can achieve 10x+.
Most clients will invest between 20%-30% of of their growth target into advertising.
We have experience managing clients that have up to $100k+ per month of ad spend, so we have experience at all ends of the scale.
If Flow is managing a single service for you, our management fees will likely sit at around $1000 per month, plus ad spend.
If we’re doing more than one service, it will likely be somewhere between $1500-$3000/month, plus ad spend.
If you’re wanting to grow rapidly, of have more ambitious growth goals, you may expect to spend $3000-$6000 on management fees, plus ad spend.
For a decent ‘about us’ style video, you’re looking at between $1000-$4000.
We also have a one-off marketing strategy offering, which is 50% funded by the government. The full cost is $5000, so you only have to pay $2500.
We also have a smaller version of this which is $3000 (also 50% paid for by the government).
We understand these budgets may be out of reach for some businesses, currently. If you do not have $1k+ to spend on ads, we have created an awesome guide for you to find a decent low-cost freelancer to help you build your business to a point where you can afford it. Flick us an email here to request this.
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