Offering a bonus can be a great way to get new customers and to convince your current customers to buy from you. Bonuses can come in many forms, but you need to be able to select the right type of offers in order to prevent spending more than necessary.
Lifetime Value of a Customer
Before you go spending any amount to acquire a new customer, you have to understand and appreciate the lifetime value of your customers because that will tell you how much you can afford to spend on them.
For example, it makes little sense to spend $1,000 on a customer that will only give you $500 in return. Conversely, it makes a lot of business sense to spend $500 on a customer if you know that they’ll return $1,000.
Once you get a good understanding of your customer’s lifetime value, you can pick your bonus offers accordingly.
According to Business2Community online, it can be up to six times more expensive to get a new customer than it is to generate more revenue from an existing customer. With that in mind, you may find it less expensive to offer bonuses to your existing customers since you probably don’t have to “lure” them as much as you would have to new ones.
Select Your Bonuses Carefully
Some companies like to offer fancy equipment as a bonus offer if their leads sign up to their service. They may offer something like a laptop in exchange for a customer’s loyalty, and feel that such an offer is worthwhile.
The problem with such a bonus offer is that it could be pretty costly in the long run. Such offers should only be made as a last resort, if all else fails. Yes, you may get your first lead to convert, but you’ll also incur high costs. Can you really afford to keep giving expensive laptops away to everyone who converts? The answer is probably no.
Instead you should offer coaching programs or a similar service that you can emphasize will be better for your customer. If you know that your customers are after a specific skill or service, they’ll feel much more rewarded by a service that will improve their own business.
Additionally, a webinar or coaching program (where you could record yourself without the need to hire a crew) are much more cost effective than giving away flashy equipment, especially if you get a lot of interested leads.
Make the Sale First
It’s crucial to remember that you should always make the sale first before you deliver your bonus offer. If you are giving away a laptop, the last thing you want to do is deliver the product, only to then find out that your customer has vanished.
You must ensure that you have the sale signed and agreed before you send out your bonus offers.
When you offer to give away coaching programs or webinars where you teach customers new skills or provide industry knowledge, you become accountable to complete that specific product.
Let’s say that your customer has agreed to purchase a new 1-on-1 coaching product. You now have to work hard to deliver that product to teach your customers. And the very fact that you’ve offered to provide such a bonus makes you accountable to get the job done.
Whatever your bonus offer may be, make sure that you’re spending the relevant amount of money on it. And remember, you must always take your customers lifetime value into consideration before making any offers.