min. rEAD

marketing return on investment

When I Knew Nothing About Marketing Return On Investment - A True Story

marketing return on investment

I want to tell you how not knowing my marketing return on investment almost got the best of me. I’m hoping that by putting my story out there, it will help other business owners save time and energy when it comes to marketing.

When I finally opened the doors to my Pilates studio, I was elated. I had put so much hard work into opening my own place, and it had finally come to fruition. I had a great network of colleagues and friends who spread the word about my studio which landed me a bunch of wonderful clients. 

marketing return on investment

After a successful year, I knew that I wanted to grow my studio even more. I decided to try all of the different strategies that I’d seen in similar businesses. The plethora of strategies included:

  • Social Media Posts
  • Blogging
  • Opening a retail store in the studio itself
  • Ebook for email list building
  • Email Marketing
  • Various Intro offers
  • Internet ads
  • Facebook ads
  • Studio events
  • Radio ads
  • Newspaper ads

As you might imagine, after about six months of this extensive yet disorganized marketing plan, the exhaustion set in.

I was working so hard and knew that if I continued at the rate I was going, burnout was coming. 

Creating the content, organizing inventory and planning events was taking so much time and energy. Not to mention the fulfillment side of the business; I still had to teach Pilates!

marketing return on investment

On top of all this, I had no idea what was working. Something had to give. But what? I didn’t want to take the chance of eliminating the wrong things.

But I had no idea what the right things were.

What You Don’t Know CAN Hurt You

The problem was that I had no idea what was working (and what wasn’t working) when it came to getting (and keeping) clients. I didn’t know :

marketing return on investment
  1. 1
    What tactics were bringing clients in
  2. 2
    What tactics were helping clients make the first purchase
  3. 3
    What tactics were keeping the clients interested
  4. 4
    What tactics were leading directly to increased income

I couldn’t tell if all of my efforts were worth it. I was working harder but not smarter.

And then a friend and fellow business owner told me how to figure out my average client value, or ACV. More importantly she showed me how to use it to make critical decisions.

marketing return on investment

I had heard about lifetime client value (LCV) but ACV was new to me. It turns out that in the fitness business industry, we can’t really go by LCV as an average. It’s too hard to figure out when you have so many different relationships with your clients. For instance:

  • A 10-year relationship with a client vs. a 6-month relationship
  • If a client has an injury that takes them out of commission for a while
  • Maybe a client wants a home program and will only be coming for a few sessions
  • If a client only comes in sporadically for check-ins

All of these inconsistencies in the boutique fitness industry make the LCV less helpful when making marketing decisions.

Checking the ACV for a consistent rolling time period paints a clearer picture of the habits of your clientele.

This customer data allows you to assess your marketing return on investment and client retention. 

The ACV can also help analyze strategies that maximize customer value and aid in pricing decisions. But how do you do that? It’s actually pretty simple and I’ve narrowed it down to 4 steps. Keep reading

How To Figure Out Your Average Client Value

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  1. 1
    Time Frame - While you can do this calculation for any time frame, you’ll definitely want to know your ACV over the past 365 days.
  2. 2
    Number of Active Clients - How many active clients and members do you currently have? Most scheduling softwares will have a report that tells you this. (If you use Mindbody, see the end of the article for specific steps to pull up this report.)
  3. 3
    Total Revenue - Next, get your total revenue for the same time period.
  4. 4
    Calculate - Total Revenue divided by Total Active Unique Clients will equal your average client value.

How ACV Can Measure Marketing Return on Investment and Help Maximize Customer Value

If you’re investing in internet advertising

  • Calculate your rolling 365 ACV.
  • Create your first ad budget. (Remember this is an investment and not an expense.)
  • Make sure that in your intake process new leads have a way to tell you how they found you.
  • After a period of time see how many people who clicked on the ads became clients.
  • Multiply that number by your ACV and then subtract your ad spend budget to find your projected return on investment.

If you want to increase existing customer value

  • Calculate your rolling ACV.
  • Create a special that you will promote through social media and email marketing to your current clients. Possibilities include a retail sale, class special, and anything else you might like to try. (Click this link for some of the promotions that have worked for clients of FBP.)
  • Run the special for a period of time.
  • Calculate your rolling ACV again for the special’s time period.
  • Compare that ACV to the previous period.
  • Is it higher?

What about Retention?

The ACV is a fantastic tool to calculate retention success. If you calculate your Rolling ACV on a monthly basis you can learn so much about your studio’s retention performance.

  • If your ACV is increasing, look further. If the number of clients increased and your income increased you can be confident that your retention strategies are working.
  • If your ACV decreases because your income is stagnant. This means you have more clients making initial purchases, but they are not purchasing as many services or services of the same price as previous months. In this situation, you can ask yourself what you can do to maximize the value of each and every client.
  • If your ACV decreases because the number of clients decreases and the income is stagnant or decreases. You can deduce that there are problems with retention and look at your systems for retention after the first visit. Do you need more email nurture sequences, or do you need to speak with staff about making sure that clients are scheduling their next appointment?

Choices About Pricing

  • Calculate your ACV.
  • Recalculate your ACV with a 5% increase.
  • Use this information to make decisions and create budgets around infrastructure and ad expenditure.

By knowing your ACV, you’ll have data that will tell you what is adding income to your bottom line.

marketing return on investment

Work Smarter, Not Harder

The bottom line is this. You don’t need to do all the things to try get a marketing return on your investment. Use the data. Use your ACV and let it tell you what specific marketing endeavors are profitable, and focus on those.

Our own Results

Data analysts tell us that at the end of Q4 2022

  • The Pilates market had recovered to 100% of pre-pandemic revenue levels.
  • That the Yoga market had recovered to 80% of pre-pandemic revenue levels.

By following the very advice in this article, our Pilates Studio, in a tiny market in Massachusetts, had recovered to 

  • 122% of pre-pandemic revenue levels
  • With 40% fewer instructors.   

You'll have the same results by following time proven business practices like these.   

About the author 

Katrina Hawley

When not teaching clients, other teachers or dance students you will find Katrina playing with her cats Uncle Louis and Sadie Grace, hiking, cooking or listening to political podcasts while playing games on her phone.

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