Marketing Costs of Selling Direct
Tim Hammerich
News Reporter
When margins are squeezed in commodity markets, it might be appealing for farmers to move closer to customers to capture more value. But this change in approach requires a whole new set of skills. Andrew Miller of Tulip Valley Farms shares how investing in social media and understanding customer value helped drive record-breaking traffic to his tulip farm.
Miller… “The challenges of social media is that the social media barons have done a really good job of figuring out how to create revenue from their platforms. So you're gonna have to pay for eyeballs either in print media or earned media. Getting in front of people is doable, but last year I paid almost as much for marketing as I did for bulbs, right? And, as such, I had the best year that I've ever had, right? Because I was, I paid for customer. And so it was, really, you know, I have an MBA, so I sat down and I just said, what's my customer acquisition cost? What's the lifetime value of my customer? So if lifetime value of my customers is $75, well then I'm gonna keep feeding that machine $3 for a new customer until I don't have any more $3 bills, right? And so that's what I did. I said, hey, I want to get 30,000 or 50,000 people on my farm this year, and it's gonna cost, you know, on average between $2 and $3. Well, I don't have $150,000, but if I had a smart $50,000 to put to it, you know, to get these customers, what would I do? And I did those things.”
Once again, that’s Andrew Miller with Tulip Valley Farms.
