How Much Does A New Customer Cost?

For someone who is about to start up their own business, whether online or not, this is an essential question to ask.

When you sell a product or service you need someone to make a purchase so you can make money. The most important principle in business is that there are two different types of people involved in your business; customers and clients.

While both of these may appear at first to be the same they are critically different and concentrating on one over the other can be the difference between success and failure.

This concept, what I call the $1 Customer, I teach to clients in order for them to focus on building relationships that last.

The difference between a customer and a client is repeat business.

For every link you exchange, promotion you run and ad you place to attract customers to your business or website there is a cost involved. It can be something as simple as your time, but the cost reduces your profit immediately.

For every $1.00 someone spends an initial customer will cost you something; regardless of whether that cost is $0.15, $0.25 or $0.50. With a customer you never get your full $1.

A client, in comparison, is a returning customer to your business and can cost you nothing. They may purchase something because of a promotion, but clients are the most likely to return to your business because of their positive first experience or because you have a value proposition (like Daily Blog Tips) very few others do. In the online world clients are what attract advertisers and build your email list. Clients are highly targeted high value customers.

Very few businesses can survive on customers alone; a successful business needs to concentrate on turning any and all customers into a client.

High value clients are also the most likely to refer your business to a friend or acquaintance providing you with another $1 customer and prospective client.

Email lists are the best way to stay engaged with your clients as you can inform them of promotions, new products or services and announcements related to your business. A customer is a one-time transaction or visit with no loyalty; a client is someone whose repeat business can be forecasted, expected and maintained over a long period of time.

Are you paying enough attention to your customers and turning them into clients?

Brad Ferris is a marketing consultant and writer of Triage Investing Blog where he authors content on business fundamentals and successful investment practices.