Every school owner loves at least one thing…and marketing isn’t usually one of them. How many times have you thought to yourself, “I just want to run my school” (instead of trying to understand how to get people into it).
While marketing can be outsourced, it’s still imperative that you, as a school owner, know what’s going on with your marketing and that doesn’t mean ripping your hair out. In fact, at its core, marketing comes down to just 5 numbers.
So, let’s dig in!
[monthly fee] * [average student retention in months] = SLV (Student Lifetime Value)
Okay, so what’s going on here? This calculation is designed to find out how much a single student is likely to be worth (financially) to your business, based on how much you charge and how long you have historically retained students.
So, if you charge $100 and typically retain students for an average of 18 months, your SLV is $1,800.
100 * 18 = $1,800
I get that this seems daunting. You may not have the exact numbers of how long students have trained and what your averages are. If you don’t have this, make the best estimate that you can with what you know of your business. Then I would recommend tracking actual numbers, so you can get a firmer grasp on you business.
Next, we need to look at what it costs to obtain a single student. I suggest looking at spending up to 20 percent of your SLV, especially in the beginning as you are saturating the market and getting people used to who you are, building a list, etc. (most likely, not everyone knows….this is a problem).
So, the fourth number is the percentage you are willing to spend or your Target Acquisition Percentage (TAP). For the sake of my explanations, I will be using 20%.
Finally, the fifth number is your Single Customer Acquisition Budget, or the cost to obtain a single student (not a trial). To get this, multiply your SLV by your TAP. So, something like this:
$1,800 * 0.2 = $360
So, $360 would be your SCAB (…yep, that’s a horrible acronym…but think of it like something that leads to a permanent covering and not bandaid on your business! 😀 )
If you hire someone, then those costs get averaged per student acquisition and counted toward the cost per student, which your SCAB should cover.
This is the basics of your marketing numbers. Any COMPREHENSIVE marketing strategy should look at this.
Failure to look a this calculation is why so many schools fail to market and ultimately fail entirely. Having a realistic expectation of marketing costs allows you to make some very serious decisions about your business, such as whether it may be worth it to get funding…after all, the faster you close that deficit, the sooner you are in the black.
For more on you SLV, search Google for “customer lifetime value (CLV)” or “customer life time value (customer LTV or CLTV)”. These are common marketing industry terms for the same principles.
Next time, I want to get into a couple of other numbers that play into this (such as how many trials do you need to get that single customer and so on).
To get the full “Guide to Getting Students”: CLICK HERE