The lifetime value of customers is what really counts so spending on marketing will pay off in the long run
In this tough economic climate marketing has never been so important. Gone are the days when the phone just rang and clients formed an orderly queue for your services. Few, if any of us, can rely purely on referrals anymore.
We are not in the mortgage business we are in the marketing business.
To be precise, I think we are all in the business of buying customers. Although we ultimately need to make sales to survive, our focus should be on the process of buying customers rather than making the sale. you need to generate a constant flow of leads, some of which become hot prospects and some of those ultimately become customers.
It’s about testing different marketing techniques until you have a process that works and brings you a constant flow of leads each month that convert into customers.
Then once you have a winning sales process in place it should be scaled up to maximise sales.
This mindset makes the individual sale less important. It is the acquisition of leads and the introduction of a sales process that will really drive success.
This is so important because the real worth of customers is in their lifetime value.
In the mortgage market this can be huge if you factor-in remortgaging and cross-sell associated products and services such as insurance or even unrelated products.
Imagine how much a new customer is worth to Sainsbury’s. If the average family spends say £500 a month on groceries, that’s £6,000 a year, every year.
Although we need to make sales to survive our focus should be on the process of buying customers
So it is worth investing a lot of money in acquiring customers.
It is not just about making an immediate profit on the first sale. We need to calculate the average lifetime value of a client and then set a budget for acquiring that client.
The budget may well be higher than the profit on the initial sale.
Once we know what a customer is really worth we can make an informed decision on how much we are prepared to invest in marketing in order to get additional customers.
When we know the lifetime value of a customer and set a budget we need to test different marketing techniques and find the right process to attract them.
This could include acquiring mortgage leads and contacting them immediately by telephone, Google pay-per-click, direct mail, email campaigns, direct response press advertising and PR. We need to test all the marketing tools and measure which work best to create a marketing process.
If there was one foolproof process that worked for everyone that would be easy but we all have different businesses and target different customers.
The shift of focus from sales to marketing and buying customers makes the idea of investing substantial sums of money into tested marketing much more appealing and sensible.