A customer is priceless! Without any customers your business would not exist. So how much is a customer worth? The answer depends on the type of business you operate and how much it costs to acquire each customer.
Let’s say you operate a sports bar like Hooters or Beef ‘O’ Brady’s. Your cost for acquiring a customer will largely be associated with your marketing costs. It may be hard to determine the actual cost unless you can get your customers to fill out a survey card or some other form of input. In addition, some people may only visit the sports bar one time making it nearly impossible to gather any information.
On the other hand, if you operate a service business such as a barbershop, you are more likely to get repeat customers. As your customers continue to come back every few weeks you will get to know them on a more personal level. Don’t get me wrong, sports bars have many repeat customers but you are not as likely to get to know each customer as well as the barber. The reason for this is because the barber works one on one with each customer and conversation is almost guaranteed. This gives the barber ample time to find out why you chose his specific shop and possibly what it will take to keep you coming back.
This may be an unfair comparison as these are two very different kinds of businesses. The point is, it is easier for the barber to determine how he got his customer.
How much is a customer of a barber shop worth? This will depend on what type of hair cutting services are offered and how much they cost. For example, a guy that I know operates a barbershop in Lake Wales Florida called El Ponceno. I think he charges around $14 for a normal hair cut but he also does custom hair design which can cost nearly $40 per visit. So, a customer that wants custom hair design that visits once a month could yield $480 in annual sales! At nearly $500 a year for one customer getting custom hair design, this type of customer is very valuable!
The El Ponceno Barbershop gets many of its customers by word of mouth referrals but has recently started getting some from their website. A friend of mine operates Terra Business Solutions and he built the website. Just this past week four people called the barbershop after visiting the website. They found the website by searching for “Lake Wales Barbers”. With people searching Google and other search engines for local merchants the cost of acquiring a customer may get cheaper if you can optimize your website for organic search traffic.
How do you determine how much a customer is worth? What methods are you using to acquire and keep new customers. In a future post, I will explore some of the challenges and methods some local businesses are using to attract new customers. Thank you for your input!
David Landen
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Angela McCall February 15, 2013 at 12:13 am
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Wow…I never really thought about this til you asked the question how much my customer is worth. You know, customer & client are two different things. Customers are the ones who buy stuff from you once. And a client is someone who keeps coming back, using your service over and over. To me, every single client of mine is worth it. I treat everyone the same. You don’t know that the client who bought business cards from you may be the client who would use you to build his magazine! So treat them all with respect, they’re all worth it.
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davidl February 15, 2013 at 11:50 pm
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Well said Angela! You do need to treat everyone fairly and a small client can turn into a big one! I guess the golden rule applies here. Treat everyone they way you would like to be treated. Thanks for your input.
Brain Harry February 21, 2013 at 8:08 am
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David,
I learned one important thing from you. Knowing your client on a personal level is important to get sustainability and ethical service to client.
I thank you for sharing such a common thing in an easy illustrative exapmle.
Bless you
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davidl February 24, 2013 at 10:48 pm
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Brain,
Knowing your customer is of the upmost importance! When you get to know them on a personal level you will find more ways to help them and possibly more sales opportunities. Thanks for commenting.
David