Astute Financial Consulting

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Fort Collins, CO 80525

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Keeping your existing clients is invaluable. But just how much does it cost to find new customers searching for a security alarm company?

 

Every business owner needs to understand his or her customer acquisition cost, but it varies by industry and business size. Some estimate new business acquisition costs five to 25 times more than customer retention.

 

You should incorporate marketing strategies into your business plan to help generate immediate responses and sign up reliable long-term customers. To grow, you’ll likely need to use several marketing tools like email, social media, physical advertising, word of mouth, and conference or event attendance. These come at a price, and you need to factor them into your customer acquisition cost.

 

Of course, there's more to it: The revenue from customers should do more than just offset your marketing expenditures associated with finding customers. In the security business, you also incur costs to install systems, and like every business, you incur general overhead expenses. We'll dig deeper into these costs in a future blog article.

 

You need to re-evaluate these customer-cost metrics periodically to keep your efforts on track. For example, some marketers recommend testing, tracking, and adjusting paid online campaigns monthly. Additionally, new marketing methods continue to appear. Today, alarm company leaders get customers through the internet, social media, and other channels that didn’t exist or weren’t as effective before.

 

Do the math ➗ 

The simplest way to calculate the marketing costs per new customer acquisition is through the following formula: marketing cost divided by customers won equals per-customer cost. If an advertising campaign costing $50,000 generates 200 new customers, your acquisition cost is $250 per customer.

 

If you layer your marketing efforts, you should compare them. A social media campaign may generate residential business while exterior advertising may be more effective at attracting commercial customers in particular neighborhoods. Calculate acquisition expenditures and revenue for each medium to develop a more refined marketing budget.

 

Create a spreadsheet with separate headings for each marketing effort you’ve employed in the past year and begin factoring your expenses and revenue. As your alarm business grows, consider the lifetime worth of your customers. You’ll appreciate their value. The simple lifetime value equation is sale value — or RMR in our industry — multiplied by average retention time in months for a typical customers.

 

Improve results 📈

In the end, you can hone and focus your marketing efforts using this information, getting you the most bang for your buck. Knowing your customers’ lifetime value helps you better determine what you’re willing to spend to generate initial sales.