The number everything depends on.
WHY YOU NEED IT
Without it, you cannot tell whether advertising is profitable.
WHAT TO CALCULATE
What an average customer spends How much of that is profit How many times they buy
THAT LAST ONE
A customer who returns is worth far more than a single sale.
THE FIGURE THAT MATTERS
Profit from an average customer, over their whole relationship with you.
WHAT THAT TELLS YOU
The maximum you can afford to spend acquiring one.
THE CONVERSION STEP
Not every enquiry becomes a customer.
If one in four does, you can afford a quarter of the customer value per enquiry.
THE CALCULATION
Customer profit, times conversion rate, gives the maximum cost per enquiry.
WHAT MOST BUSINESSES DO
Advertise without knowing any of this, then wonder whether it worked.
WHAT TO DO
Work it out before spending anything.
Even roughly.
