Comparing costs of client acquisition

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

The quarterly direct mail primer reminder

Every few months, I start seeing a sudden increase in the number of questions I get pertaining to direct mail. The fundamentals of direct mail tend to get lost in the overall tax practice marketing conversation these days, since that conversation is dominated by social media and mobile.

The fact of the matter is that direct mail remains one of the most successful methods for marketing a professional practice in any industry these days. Direct mail should be one of your top three or four “go to” methods for new lead generation, prospect follow up, and client retention. It ranks right up there with the telephone, Internet, and word of mouth as a primary marketing communication medium.

While there are many lengthier articles on this blog regarding this subject, I figured that some readers could use a quick primer on the subject. I actually posted the following seven points back in January, but they continue to remain relevant, and even I need the occasional bop on the head on this subject to remind me to use it more.

Direct Mail Primer
I consider the following seven elements to be the most salient points to always remember about direct mail:

  1. The purpose of a lead generation direct mail piece is to generate a response for additional follow up marketing — not to sell your services in the letter.
  2. Following up with phone calls the day of or the day after your prospect should have received your direct mail piece is pivotal to seeing drastically higher response rates.
  3. Letters with handwritten addresses are opened about 3x more often than printed labels. Real stamps drastically increase letter open rates, also.
  4. A compelling headline in your letter is the single greatest key to response AFTER getting them to open it. It is worth researching the internet for “direct marketing headline banks” to get examples of successful headlines from other people, and modify them to your needs.
  5. If you hit a 2% response rate from a direct mail campaign, you’ve hit a grand slam. Anything over one half of one percent is still good, especially in any business with a large transaction size (such as tax resolution).
  6. Sending a one-time mailer is usually a waste of money. Direct mail works best with “multi-hit” campaigns. E.g., send a first letter, then a couple weeks later send another one to people that didn’t respond. Response rates are additive, and in most cases,
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How I get inbound tax resolution leads with no marketing

In a typical week, I get at least one, and sometimes as many as three or four, people contacting me completely out of the blue that are telling me that they think I’m the best person to help them with their tax problem and wanting to hire me.

These are folks that I’ve never talked to before, never marketed to before, never had any one on one contact with at all. But they’re reaching out to me, with their checkbook open.

How is this possible?

It’s actually quite simple: I took the time to establish myself as an expert.

Never forget that people do business with other people that they know, like, and trust. This is the single most important thing you can ever learn about running a service business. Period.

Establishing yourself as an expert, as the go-to person in your area or specialization, you automatically build credibility. Providing ways for people to get to know you, even if you never actually speak to them, builds on this. Over time, people that know you will get to like you and trust you (assuming you’re likable and trustworthy, of course).

People get to know you via the content that you produce. On my tax firm web sites, I provide a ton of free or extremely low-cost information for people, including how to negotiate their own Installment Agreements and how to draft their penalty abatement applications. I also provide pointers to appropriate IRS resources and other information that can help them.

This material costs me nothing but time in order to create. After the initial creation of a few backlinks to those sites via press releases, articles, or videos I post elsewhere ,I do no further active promotion of those sites, I just let Google and Bing find them on their own and determine whether they are worth including in search results or not. I don’t try to “game” the search engines, and I update the sites far less frequently than the so-called SEO “experts” say that I should.

It also helps that a little over a year ago, I took the time to write a short book and self-publish it on Amazon. That book is now one of the best selling books on Amazon on the subject of settling tax debts. The end of every chapter includes a call to action referring back to my primary practice web site, which offers additional resources. … Continue reading