I Only Had 34 Coupons Returned

What is a customer worth?

A few months ago, we had the opportunity to purchase an advertising shopper magazine to accompany our group of radio stations. It was a good deal, we bought it. We knew nothing of running a print publication. How hard can it be?

Needless to say, the customers that advertise in this publication are very transactional customers and expect instant gratification. This is a little different sale for an organization that has tried to specialize in the world of the "tell them why and wait for when" relational customer.

The following is a rough account of the follow up with an advertiser after the first run of a $70 ad that consisted of two coupons for a local burger joint that also serve breakfast.

"I am not happy with the results from your magazine, I only got 17 coupons back last week." (It was actually 34 total we find out later, 17 of each coupon. Sometimes advertisers aren't 100% accurate with the information they share.)
"I really expected a couple of hundred.: (Establishing and controlling expectations could be addressed here, but I will save that for later.) "I think I will try something else."

My rep returns very dejected and angry at the customer for not being happy with a return of 34 coupons. I counsel the rep to look at it from the advertisers perspective, he expected 200 or so coupons and got a lousy 34. Sounds crappy, huh? The good news is that all is not really lost if we help the advertiser look a little deeper. Just because we are selling print ads does not mean that we forget what we know about marketing.

This "Burger Magnate" works his own drive thru and knows his regular customers very well. "Ask him how many of those 34 customers are new." It turns out on the follow up call that an estimated 20 of those customers were new. "Assuming he delivers a wonderful customer experience, how often will each return over the next 12 months?" We found out that once a month would be a number he was comfortable with. "How much will they spend on each visit?" The average single person ticket hovers around $6.

We now assume that these 20 customers tell no one else to visit and that they dine alone each time they come in. Over the next year, these 20 customers will account for 240 separate visits and will spend an average of $6 per visit. The customers that came in from a $70 ad will spend $1,440 in incremental revenue during the upcoming year. How many advertisers would do back flips with this type of return on investment? Oh, and by the way, the burger place we refer to is still an advertiser!