When I Knew Nothing About Marketing Return On Investment - A True Story
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.
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:
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!
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 :
- 1What tactics were bringing clients in
- 2What tactics were helping clients make the first purchase
- 3What tactics were keeping the clients interested
- 4What 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.
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:
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
- 1Time Frame - While you can do this calculation for any time frame, you’ll definitely want to know your ACV over the past 365 days.
- 2Number 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.)
- 3Total Revenue - Next, get your total revenue for the same time period.
- 4Calculate - 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
If you want to increase existing customer value
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.
Choices About Pricing
By knowing your ACV, you’ll have data that will tell you what is adding income to your bottom line.
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
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.