Lately, clients have been doing deep dives into their event expenses and ticket pricing. And that's a great thing! I encourage them to go one step further on exploring their event costs.
Today's suggestion goes along with an email, from last month, on the Average Transaction Value (ATV) of your ticket buyers.
Let's look at another critical marketing math number you and your team need to know.
"How much does it cost your event to acquire a customer?" Or, what my finance friends call Customer Acquisition Cost (CAC).
It's imperative that you know your CAC. If not, how else do you know how much you can afford to spend on advertising?
Here's the excerpt from an email last month to drive home the point:
"... In 2013, a client was considering a local media buy for their event. The media buy included both traditional and online placements. At the time, I knew that the client's Average Transaction Value was around $50 USD.
With some additional marketing math numbers and based on the proposed marketing package, I calculated that it would cost my client over $400 USD to generate a $50 USD customer transaction.
My question for the ad sales executive, "why should my client pay $400 in advertising to generate a $50 sale?" That math doesn't work! ..."
In the example above, the Customer Acquisition Cost is $400 USD for $50 USD of ticket revenue. That isn't sustainable, because you'll go broke!
Most event organizers have no idea their CAC. If you don't know it already, make sure you know your CAC! Per the example above, it can greatly assist you when negotiating your advertising and media buys. As that old cliché goes, "knowledge is power!"
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