What is your benchmark cost for acquiring a new client? Do you even know what it is?
Many of the financial and professional services marketers we connect with every day can't clearly articulate the benchmark acquisition cost they're working toward. Either their company doesn't have one, or it hasn't been communicated clearly.
For the financial and professional services companies that do have a benchmark, it's not uncommon for the "all-in" costs -- including staffing, creative development, media, technology and record keeping -- to top $100 per client acquired. This is an approximate dollar amount most banks, credit card companies, insurance firms, and accountants target. Financial planning and investment client acquisition costs are typically higher. And for B2B firms attempting to bring-in big corporate clients, the cost is generally ten times greater or more.
Did you know: These costs could be 25 to 50 percent higher than they ought to be?
That's because financial and professional services client acquisition costs have been calculated over a period of decades and firms have been using the same benchmarks for just as long. They've almost become urban legends.
However, advances in data-gathering, metrics-tracking and instant campaign optimization allow marketers to eliminate a lot of the waste and inefficiency that used to inflate the cost of acquiring clients.
Think about it. Up until recently, you had to run a television campaign for months before you'd have any indicators about whether it was attracting and converting clients. Even then, much of the evidence was anecdotal. You could have wasted millions of dollars on creative and media before you discovered your campaign was not working.
Also, focus groups, communities, surveys and other "artificial" testing methods were costly, and having a winning campaign in testing did not always translate into generating desired business results in the real world.
In fact, up until very recently, it was almost impossible for marketers to connect all the data necessary to prove whether a digital campaign was a success or failure. This lead to a lot of online testing and churn that made the so-called "efficient" digital medium inefficient.
But now, it's relatively easy to set client acquisition cost goals and quickly determine whether they're being met or not. Social media allows you to test different messages and creative executions in the real world for hundreds of dollars rather than thousands. It's easy to see if a message, image, video or media placement is working within hours, rather than months. If the analysis of your data stream is working effectively, you can plug a leak in your marketing and sales pipeline in real time.
Another big cost-saver in today's advanced world of smart-marketing? It's easy to stop spending marketing dollars on prospects that will never convert and use the money instead on nurturing those who are more likely to convert.
That gets us back to our initial premise. It's probably time to completely rethink your cost to acquire a client, if your firm has one. If it doesn't, then you should build a realistic benchmark now.
Based on recent client work and analysis, we believe it's realistic to cut your client acquisition cost by a quarter to a half if you use smart, responsive, data-driven marketing techniques. One client dropped acquisition costs for a single product line by almost two-thirds using careful, end-to-end data analysis.
Beyond just saving money on client acquisition costs, there is another way this approach will make your marketing more efficient and firm more profitable. If marketing programs are set-up and managed effectively, you will bring in more higher-quality, profitable clients.
What are you waiting for? Contact Carpenter Group today so we can discuss how we can help reduce your cost of acquiring a client while also improving the quality of clients you bring in.