Wedding Industry Cost Per Acquisition
DO YOU KNOW YOUR COST PER ACQUISITION – how much you spend in marketing/advertising dollars to get one paying customer. WOULD YOU BE WILLING TO SHARE YOUR NUMBERS? After you read this blog please post in the comments section. Lets work together to get access to real numbers and insight on what wedding industry businesses are really spending & gaining. Stop flushing your valuable marketing dollars down the toilet guessing what works for wedding industry pros! Lets work together to share real information and gain access to real cost per acquisition for wedding business owners.
I have NEVER met a business owner who told me they have expendable marketing dollars. Many tell me they have NO marketing budget at all! Many small business owners believe marketing never works and they refuse to try anything. This is one of the biggest mistakes a small business owner can make. The moment you go into business you are sacrificing something: income from a 9 to 5 job, vacation funds, grocery money, retirement savings, family time, lifestyle, time with friends, your looks, your sanity, etc… In the first 2 years of starting my business I had to give up movies, entertainment, dining out, shopping, drinking (booze is expensive), salons, dating my husband, vacations – you name it, if it didn’t give us life it got cut from the budget. You risk and sacrifice so much as a business owner, you owe it to yourself, your family and your future to make sure you have a plan to succeed. Winging it, doing what you think other successful business owners do or investing in advertising or marketing on a whim is not a successful strategy. I recently asked one struggling business owner what they spend on marketing and advertising. She angrily said, “nothing”! She used her 401K to start her business, investing over $30,000 just to get opened. Her entire focus was on getting her business opened, not what she would do to get customers to her business. She is struggling to keep afloat and will not or can not spend anything on attracting potential clients to spend money on her services.This is not where you want to find yourself as a business owner. You must have a plan to attract the right customers and make sure once you attract them, they book/hire you. Knowing your numbers can make the difference between success and failure.
A wedding venue owner I work with told me he thought his marketing expenses were about $8000 per year. He booked 27 weddings in 2016. When I asked him what his cost per acquisition is he said about $100 per couple who books his venue at $3000 per wedding. Spending $100 to gain $3000 sounds amazing! Then we got into the numbers and here is what we found:
1. Annual wedding print adv investment $3500 – can’t verify any bookings from this, likes the exposure
2. Wedding website listings total $600 month – gets hundreds of leads each month, about 10 inquiries a month, 0 to 2 couples tour his venue each month, books about 3 in total per year.
3. Spends $200 a month on social media marketing that generates website contact forms for venue tour requests. He averages 10 contact forms per month and averages 4 venue tours monthly, booking about 2 weddings from the contact forms monthly. He spent $13,100 and booked $81,000 in wedding revenue, which comes to a cost of $488 per booked wedding (remember 27 weddings in total)3, not the $100 he had estimated.
Print adv – no verifiable return
Website adv – 3 booked weddings each year generating $9000 yr (spent $7200 yr, generated $9000, estimated cost per acquisition is $2400)
Social Media – 24 bookings per year generating $72,000 yr (spent $2400 yr, generated $72,000, estimated cost per acquisition is $100).
If this was your business, what changes would you make in your advertising and marketing strategy? This venue owner spent $13,100 per year to reach new customers. After reviewing his numbers he decided not to change anything. He felt that his investments worked well for his business, his revenue more than covers the cost of his annual advertising and his overhead is very low.
How much does it really cost for you to attract and book 1 client? EVERY business should know their numbers. Every business will have a unique set of numbers that lead to their CPA. For this blog I kept the math very simple. Some experts will add in many more financial factors when calculating CPA. If your goal is to grow in 2017 you will need to have a solid understanding of what it cost you to gain each new client. What are you spending to connect with engaged couples? I asked 2 DJ’s to share some numbers with me.
Average Revenue Per Client= $1200
Number of Customers Per year= 40 x $1200 = $48,000
Annual Amount spent on advertising = $8000
$8000 divided by 40 = $200 CPA
Average Revenue Per Client= $900
Number of Customers Per year= 6 x $900 = $5400
Annual Amount spent on advertising = $500 (one bridal show and networking)
$500 divided by 6 = $83.33 CPA
When you do a simple CPA like the examples above, do you need to reduce or increase your CPA? Do these numbers make sense to your bottom line? HOW CAN YOU REDUCE YOUR CPA and INCREASE YOUR REVENUE? IS THAT POSSIBLE? Here are some questions you should think about and review.
1. Do you ask every client how they found you? Do you get a clear answer? If the answer is, “I found you on the internet” then NO that is not clear, especially if you have a website, 5 different social media platforms, links on your colleagues sites and online advertising campaigns. ASK THE CLIENT AGAIN, where on the internet?
3. Do you know how much of your business is word of mouth? Many of you claim all your business is word of mouth but is it really? Are you tracking who is referring you? For example if you are a dj that charges $1200 for an average package and 10 of your 30 booked weddings came from one wedding venue. The referrals from that single business relationship generated $22,000 in revenue for your business! If that is the case and your CPA is $0 for this revenue generator, then I sincerely hope you are investing in that referral resource by providing excellent service, providing excellent content via social media for that venue and making sure you provide some referral or exposure value in return. Contact me for info on how to secure your valuable business relationships. You don’t want that referral resource to dry up.
4. Do you invest in trade shows or wedding specific events? Do you know your true ROI from each show? (cost for show $800, ave rev. per cust $500, 5 clients booked you from show, $2500 generated from $800, simple CPA $160) – don’t forget to include the cost of your booth, time, staff, promo items, discounts, etc.. Your investment could be 2 x the actual booth fee of the show.
5. Are there any holes in your sales process? Where are you losing potential sales? Can you only book one wedding per weekend? Are you telling 20 potential clients each year, “sorry I am booked that day”. YIKES that is a big, painful painful hole in your sales strategy. Do you have a pitch to try to turn all those “sorry I am booked that day” into, “We are booked that day but have you considered a Sunday? You would save about 25% by booking a Sunday”. Just consider an enticing plan B, every time you have to turn down a booking that you spent marketing dollars to generate, it’s a loss.
6. Do you track your sales cycle & know when to increase, decrease spending? Do you have plans based on this data for boosting sales in typical down cycles?Standing out from your competitors in highly competitive cycles?
7. Are you making the most of your B2B sales potential – referrals? How much do you invest in networking and B2B relationships, which can generate some of the most qualified leads and referrals. Are you networking effectively and investing in industry relationships?
Finding your true cost per acquisition is not as simple as the math shown above. There are many factors business owners forget to include sometimes. If you are responsible for making sure your business succeeds YOU MUST know your numbers and find a way to reduce wasteful spending and increase or at least nurture the resources that are paying off and keeping you in business. I am a numbers nerd, you can’t streamline and strategies by guessing. If you are a small business owner struggling to figure out your business numbers please connect with me on my Didi Russell page or email me. I would love to go over your numbers and talk through some of your challenges and goals. Let’s look at things objectively and discuss some ways you could be saving money or investing more productively.
One of the worst all time conversations I have with business owners (far too many business owners).
Business owner “Didi, I am desperate to get more bookings.”
Me,”How much are you spending on advertising or marketing your business”
Business Owner, “Nothing, I can’t afford to spend money if I am not booking any business. If you could just send me some contacts who are booking lots of brides and they could send me referrals I could book those and then have some money to advertise.”
Me, “That is not the way it works, if you are serious about succeeding in business you should have a better plan than waiting around for successful businesses to bail you out. You will find a way to invest in your business and promote your services. Your colleagues are investing in advertising. They want to work with other business owners who invest in smart marketing and advertising. They don’t want to waste time in one sided business relationships. If your entire marketing plan is to invest nothing in your business and simply hope successful business owners will spend their money to get their brides to book your business, that is a failing model.”
Business owner, “Well, I have to book some weddings before I can advertise my business.”
Me, “Good bye”
Thank you for reading, please join the conversation and share your thoughts, issues, gripes or successes in the comments. If you are really brave share your CPA. I would love to compile real numbers on what the average CPA is for each of our wedding industry business services. If you are not so brave inbox me and we can find your true CPA and look for room to make improvements.