We Are Sunshine

Why All Effective Marketing is Math

Monday, April 10th, 2023

By Grant Miller

I never thought in my wildest dreams that I would ever be teaching anyone about math of any kind. It was one of my worst subjects in school. If the world depended on me to calculate the rocket trajectory for a nuclear warhead to blast away a meteor hurling towards earth, we would all be goners.

But the math that I am good at, and the math that matters to us in the real world of business, is your marketing math. These are basic equations that tell you a whole lot about making good marketing decisions for your salon(s).

When I consult with salon owners, I can usually stump them within the first couple of questions since they have no idea of the most basic information that is crucial to their business.

Not knowing your business and marketing math would be like trying to sail across the ocean without a GPS, map, sextant or any form of navigation equipment. If you did survive the journey, which is unlikely, you would definitely end up very far from where you wanted to go. I see salons crash and burn all the time for failure to know and understand their meaningful metrics.

Three of the most important marketing math number you need to know are:

  • Average annual revenue per member
  • Average lifetime revenue per member
  • Cost of acquiring a new member

Here is why these numbers are so important.  Let’s say you just spent $1,000 to mail 15,000 ValPak coupons that had a highly targeted offer aimed at new members and only 100 people redeemed them. Would that be an effective campaign?  Most salon owners would think that would be a gigantic failure. After all, 100 redemptions out of 15,000 is less than a 1 percent response rate.

Well, we don’t deposit response rates in the bank – they only take money.  Response rates are somewhat of a meaningless statistic. Here’s where the real marketing math begins.

If each of those 100 new members who responded to your ad spent only $10, you broke even on the front end, which really isn’t too darn bad. 100 x $10 = $1,000 so you got all your money back. Basically it just cost you $10 to acquire a new member. But remember, you just picked up 100 new members.

For many salons across the country, it is not unusual for the average member to be worth $75, $100, $150 or more per year.  Let’s take the low number: $75 average revenue per member. Those 100 members are worth on average $7,500 over the course of the next 12 months. So, that ad you spent $1,000 on will generate $7,500 over the next year…that is more than a seven-to-one return on your investment.   Not too shabby.

If you could “buy” a member for $10 who is worth $75 – $150 a year, how many would you want to buy? I would buy all I can everyday. Actually, the smartest salon operators are willing to spend much more to get a member because they understand their marketing math and realize that it’s a good investment.

The effective marketing of your salon is the highest paid job you can ever have.

Nothing makes you more money than the ability to create new members and revenue on demand. Once you understand your marketing math, you will have cracked the code to being a successful salon owner.