Today I want to wax eloquent about one of the most important marketing metrics you should be tracking: Your cost of client acquisition.
Before I get into that, however, I just want to give you a quick reminder about the offer on the Tax Resolution Systems manual going on until tomorrow. Get your copy here.
Your cost of client acquisition is one of many metrics that you should be actively tracking in your business. It is one way to make apples to apples comparisons between marketing media and messages. Knowing the direct cost of acquiring a client from, say, direct mail versus your yellow pages ad, is a simple way to help you make smart marketing decisions.
Let’s take an in depth look at the cost of client acquisition across several marketing channels for tax resolution in particular. We’ll also examine improving closing ratios with a dedicated prospect follow up system, thus dropping the cost of client acquisition.
Straight Outbound Telemarketing
Let’s start with the straight cold calling approach utilized by the big, national tax resolution firms. For the sake of conversation, we’ll set aside the legal issues relevant to this approach. Let’s start with some ratios. A great sales telemarketer will call 30 liens, and get 1 prospect. An average telemarketer will call 70 or 80 liens and get 1 prospect. A typical unlicensed closer will close 1 in 11 prospects, good ones close 1:9. When running numbers I usually cut the difference, and call it 60 liens to 1 prospect for the telemarketer, and 10 prospects to 1 client for the closer.
A licensed tax professional will generally have a much higher closing ratio (usually about one in six), but will have longer consultations (30 to 45 minutes, versus 10 or 15 minute straight sales pitches).
Based on these assumptions, we have 60 liens, 1 prospect. 10 prospects, 1 new client. That’s 600 tax liens to get 1 client, at an average fee of $2750. Typically, a 10% commission is paid to the telemarketer, and 20% to closer, for a total of $825 in commission. Plus add about $200 in lien costs, and $3/hr for an autodialer for about 5 hours. All told, that’s $1040 (heh, that’s funny…) for one client.
For the best case scenario, it looks like this: 30 liens, 1 prospect; 6 prospects per client… 180 liens to get a client. Same fee and commission, a reduced lien cost ($60), … Continue reading