Your Marketing Dollars - How To Use Them For The Best Marketing Results

By Sue Painter

Do you know what the marketing dollars formula 60-25-15 represent? It's one way to spend your marketing dollars. If you use this formula you allocate your marketing dollars as follows:

  • 60% of your marketing dollars go towards retaining current customers.
  • 25% goes towards finding new customers.
  • 15% is used toward winning back your inactive customers.

Here's the reasoning behind this marketing dollars formula. Spend the largest amount of money toward keeping existing customers happy and offering them additional products or services over time. Depending on what study you read, a new customer costs you 4 to 6 times more money to get than working with an existing customer. It's much easier and cost effective to sell to existing customers than it is to go find a new one.

  • Most people are creatures of habit, so it's easier for your existing customers to stay with you than it is to go find someone new, especially if they are very happy with the quality of your help.
  • You already have an established relationship with existing customers, too. If you focus on strengthening this, you'll have success with cross-selling more to existing customers.
  • Lack of marketing costs. You've already paid the initial investment in getting these customers. It costs you a lot less to keep marketing to your current customers than it does to start all over and market to strangers who don't know, like, and trust you.
  • The 60% includes getting referrals from current customers, too. It works well to focus much of your effort in getting word of mouth referrals. Ask your customers for referrals and reward them for coming through for you, too. More than likely, 80% of word of mouth referrals will come from 20% of your existing customers. Treat these rainmakers well!

Spend 25% of your marketing dollars toward getting new customers. This includes advertising, free calls and other demonstrations, giving talks, etc. Your tendency will probably be to spend most of your money attracting new customers, but this formula advises only 25%. Do this well, and that new 25% will take care of the customers who leave you.

Finally, put 15% toward reactivating inactive customers. Asking this group to fill out a very quick survey about your services might give you some great information about how to get them back. And keeping in touch to inform them of new products or services helps keep your business in the top of their minds. Make sure they are receiving any e-zine or other regular publication. Over time, some will come back to you.

Of course, if you are very new in business, the 60-25-15 formula won't work for you. You'll need to spend your marketing dollars getting new customers for a while, but after a year or two you can also move to this formula and see how it works. At the least, this formula helps you realize where, exactly, your marketing dollars are going.

Sue Painter
Article by Sue Painter
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