May 9, 2017 ByDave Larson
Why would a marketer do that?
Ever see an ad and wonder, “What were they thinking?” I know I have. Well, not everything in marketing makes sense until you know the wisdom behind it.
Here are three marketing moves that don't appear to make sense... until they do.
Why would a marketer spend more on the advertising than they will make on the sale?
The reason you would do this is because it isn’t all about the first sale.
The number you should focus on instead is the lifetime value of a client - in other words, the average revenue a new client will bring in over their expected lifetime doing business with you. So instead of focusing on a transaction, expert marketers focus on how much is a client worth over the long haul.
While you do still need to pay attention to your cost of customer acquisition, you can also remember you have some room to work with as long as you will recover your acquisition costs in the near future.
Why would a marketer keep searching for a new offer after they found one that works?
There are several reasons you would keep searching after you find the answer...
1. You don’t know how high is high. Let’s say you find an offer that gives you an 8 to 1 return. That’s good. However, if you stop there you may be missing an offer that can give you a 19 to 1 return.
Expert marketers learn to keep testing. Keep tweaking headlines and copy. The best headline becomes the new control.
2. The world is rapidly changing. Something can be working one day and the next day that stops. You want to find as many winning approaches as possible. Try as many different appeals in your ads. Different things motivate different people.
Why would a marketer charge for something that would cost less if it was given away free?
Someone recently asked me, “What is the advantage of charging 99 cents for something instead of just giving it away free?"
While there are times and places for both free and paid offers, expert marketers know that the advantage in charging the 99 cents is that it makes the prospect a paying customer. It is magical because it changes the purchaser's relationship with you (the seller). Something changes in the prospect's mind when they finally decide to give you money. You are in a position of trust. Now that money has changed hands, that newly minted customer is about 30 times more likely to give you more money than before the initial transaction.
One great example of this technique in action was Columbia House Record and Tape Club. They used the subscription model to become one of the largest sellers of music in the world. They offered 12 CDs for a penny as long as you agreed to buy 3 albums at regular price. They found that the amount didn't matter as long as you paid something. Whatever you think about Columbia House, you can’t deny the technique worked amazingly well.
Could you use some help crafting a more compelling offer? Call us at (407) 682-2222 for a free consultation with one of our marketing experts!
(NOTE: Looking for other ways to give your business a boost? Check out my latest ebook - 12 Ways to Get your Business Growing Again)