Friday, June 18, 2010

How much would you pay for a customer?

Consumers are more informed about product options and have higher expectations today, so it is harder to attract and keep a them. Marketing, particularly internet-base marketing is about trying new and different ways of doing just that, and as such it is important to track the cost of acquiring a customer. So knowing that we need to work harder to attract these customers, how much should you pay to attract a customer?

There is a radio station in Edmonton that can answer that question definitively. The answer is $1.

102.3 NOW! Radio launched a campaign a few days ago where they would pay a dollar for every fan that indicated that they "like" NOW! Radio by becoming a fan of their facebook page. Now $1 is not going to persuade anybody to become a fan of a radio station - it wouldn't even buy that fan a coffee. But the radio station wasn't paying the customer the dollar directly, they were donating it a charity chosen by those selfsame fans.

Talk about a win-win-win scenario. The radio station wins because they have gained a customer and they know it only cost a dollar. They have just built a very targeted, clean, focussed, permission-based marketing list. The customer wins because they feel good about being part of a charitable donation. And the charity wins because they receive a substantial donation.

What can we learn from this as internet marketers?

- when used creatively, social media can still be an extremely effective tool for building your customer list rapidly (NOW! Radio went from around 3000 to over 8000 fans in just 3 days - in a local market)
- the lessons we learned in school about tracking and understanding cost of acquisition of customers is still pertinent in this environment of interactive web-based marketing - and by taking this lesson and applying it to the tools we now have it can be even more useful
- people will become customers if they feel they are doing it to be part of a larger community, so as marketers we need to provide our customers with that feeling

I don't know how many of NOW! radio's fans thought about the fact that they were essentially giving their permission to be marketed to - or even if they cared, but when I heard about the campaign, I just wished I had thought of it. It has inspired me to become more creative about how to build customer lists, both for ourselves and our clients. Not all the good ideas are taken.