Well, we are off to 2016. Have you set your annual goals? What is there to do in 2016?
What is going to drive your business with limited time and resources?
I got all fired up for this year talking with Nygel Scourfield at C3 Partners U.K. who is a former Director of Albemarle & Bond. He has launched a new customer generation platform specifically for Pawnbrokers. Nygel knows his stuff, spent time really understanding the pawn customer and shared common sense findings about the value of a customer and what you can expect to extract from a new customer over time.
The Customer
So, the chicken and the egg. What comes first in the Pawn business? Customer or Merchandise. Yes - Customer. Whats more important to the Pawn business? Customer or Merchandise. Yes - Customer.
Its the customer. Always the customer and nothing more. Customer rule. More customers the better. Never heard of a bad customer. Customers are always right. Get it. Customer are everything to business.
Without customers you have zero value. If the number of customers your store support is growing you are in good shape. If the total number of customers is going down, your business is on the decline.
One way to measure the success of your pawn business is total customers, total loans, average loan amount, and average number of items in loan.
Customer Acquisition Cost - CAC
If you have only one take away from this blog, this is the most important business metric that you need to know about your pawn business. What does a new customer cost you to successfully transact a new loan or sale?
There are a number of ways to figure this out, and most importantly it does not have to be a perfect calculation, but go to this link if you would like a more in depth understanding and methods how to calculate. click here.
The acquisition cost can vary from a minimum of $50 to $500 per customer. The average is approximately $75.
Customer Lifetime Value
How much does a customer contribute to your business over time? Have you ever thought about it? Isn't that the reason why you have a store?
Pawn brokers most commonly only see what is in front of them, "The Merchandise".
The result of a transaction that maybe a loan or buy that results into a interest revenue or profit after the re-sale of the item you may purchase.
If you can put yourself into the mindset that you look at the customer as a $1200 dollar bill of future revenue over a 3 year period, how would look at the opportunity.
The average Pawn Customer Lifetime Value contribution is approximately $1200.00.
533% Per Year (ROI) return on your CAC - 3 year
My spending 30 years behind the loan counter and on the sales floor, I want to puke to think how many customers I let walk? How many customers did I not attend to as appropriately as I should have? How may telephone calls did I not get to in time? How many new customer acquisitions each day walked out of the store?
And yes, if I had only accomplished one transaction with a new customer it would have resulted in $1,200.00 in revenue over the next 3 years.
The pawnbrokers that effectively complete the customer acquisition that turns the customer opportunity status into a new customer wins.
Think about what you can do at the loan counter to make that loan.
Think about what you can do when a customer is interested in purchasing an item in your store to complete that sale.
Let 2016 be the year of the customer for your store
Steve Mack
Bravo Pawn Systems
