The Value of a Lead – Baby Formula and More Baby Formula…
I am a new mom and while I was pregnant I got a bunch of free samples, not sure how or what list I got on, but it was fun getting so much stuff!
The one thing that really stood out is how many samples and coupons of baby formula I received.
Now when I say that I received a lot of baby formula, I’m not exaggerating. I would receive boxes of them! Every time I went to anything like a birthing class, baby care class they were always given out as samples. When I would go to my doctors office based on what month you are, they give you goodie bags, and in that goodie bag is formula.
In addition, I would also get boxes of formula in the mail. When I left the hospital I got samples of more formula. Formula was just coming out of the woodworks non-stop. You get little travel formula, you get specialty formula, you get powdered formula, liquid formula, and all the types of different formula for all types of different needs.
In addition to just the formula you also get carrying cases and more neat little backpacks, storage bags, all kinds of fun stuff based around the different formula.
There were two companies that were fighting for my attention; one was called Enfamil and one was called Similac. Both of them were sending me free samples on a regular basis.
Did you know the amount of money parents spends on formula during the lifespan of when the baby needs formula is $2000-$3000… that’s a lot of money.
After I learned how valuable I was (as a pregnant mother deciding on what formula to use) I fully understood the reason why they kept on giving me free samples. These different formula companies were willing to send me formula that I’m sure cost them some money. First of all they’re heavy to mail, that costs some significant amount of money for postage. And they’re full supply, not your typical sample packet but a supply that would last an extended amount of time… full sized containers.
It is obvious that they understand the value of a lead. If they have to spend $50 or something to get me to buy their formula then it’s worth it because they know that $50 or whatever they’re spending on me, can potentially lead up to $3000 over the year.
So now of course if I choose to purchase formula, who do you think I’m going to purchase?
I’m going to purchase one of the companies that gave me free samples because I know how to use them, I’m familiar with them. These are the only names I actually know. I don’t even know names of any other formula that are out there.
They did a very good job courting me and getting me familiar with the different types of formula that are out there and I understand why they did it. It's because I’m valuable, I would account for about $2000 -3000 of revenue for their business. So it’s totally worth it for them to spend that money up front on the lead.
The reason I’m sharing this with you is because I want you to look at your business and understanding the value of your leads. What do you have into your funnel? How much can you spend on the front end knowing that your lead is worth X amount of dollars on the back end?
Understand the value of your lead especially the lifetime value of your lead. Is it worth it for you to spend some money upfront?
This also ties into what we do with local businesses getting them on daily deal sites. Now many businesses don’t understand the concept of getting on a daily deals site like Living Social or Groupon, it’s all about the lead and the exposure for your business.
I was talking to a dentist that we were able to get on a deals site and he said he could care less what he gets in his pocket from the deal, it doesn’t matter for him because he knows the lifetime value of that particular customer. The same with a vet that we got on Living Social. He said the same thing, he doesn’t care what it costs upfront because he knows that once that animal gets there he now has the animal for life. The lifetime value of having that animal come into his veterinarian office is way more valuable than just a one time shot for buying a voucher. So they have a solid understanding of what it means for customer acquisition as well as understanding the lifetime value of that particular customer.
So that’s just a lesson today on lifetime value of your customer and understanding the importance of lead acquisition and understanding how much your lead is worth to you in the long run. Understand your funnel and grow your business!
Lorette Lyttle is the “little” sister of “The Lyttle Sisters”. Lorette can’t stop thinking like a marketer everywhere she goes and loves to write about what she observes from other businesses , personal experiences and other successful entrepreneurs and how certain strategies can be (or shouldn’t be) integrated in your business. She is also the “geeky” one of the sister clan and pulls out some techy stuff once in awhile and likes to write and share with others who will listen (since Alicia usually just nods her head at the tech talk) ! Learn from Lorette with various posts on Marketing Mondays as well as Tuesdays Tips and Tools.