Customer Acquisition vs. Retention: The Direct Mail Advantage

Mailer’s Tip Tuesday! Case Study for Customer Acquisition Cost (CAC) and the Case for Using Direct Mail for Customer Retention

Yes, sending ongoing direct mail to existing customers is expensive, but the acquisition cost for new customers is way more expensive.

First, you need to have a realistic discussion about Customer Acquisition Cost (CAC). CAC is calculated by dividing the total cost of sales and marketing efforts by the number of new customers acquired during a specific period. Specifically, the actual formula =

In simple terms, the formula = CAC / # New Customers. Expanded, the formula = Total Cost of Sales and Marketing divided by the Number of Customers Acquired.

Example: Let’s say you are opening a new day spa in the Hudson Valley, and you need to publicize the new business (or, at least, you should). And let’s say you have budgeted $15,000 towards initial launch marketing for the month you opened. Here are some realistic costs towards the budgetary allocation of your marketing:

(a) Digital Advertising (Facebook): $2,500 [1]

(b) Three (3) billboards on moderately trafficked local roads ($4,000 – $5,000, or here, $4,500)

(c) SEO & Web Presence Support: $3,500 [3]

(d) Direct Mail Campaign to Women Only reaching 5,000 area households: $4,500

In total, the initial and ongoing campaign cost is $15,000. And, let’s say that your $15K investment generates a modest 200 new customers over the next three (3) months. Here, the CAC is a $75 per new customer… It’s not an insignificant cost. However, if the average spa/salon customer spends an approximate and very reasonable $100.00 per visit [1] on hair care, treatments, services and products, then your total return is $20K and you’ve made back your investment (Return-on-Investment or “ROI”) by $5,000 in three months. Now what?

The answer to the “Now what?” question is ongoing communication. Your best customer is a returning or repeat customer, and people are creatures of habit. Your job now is to continue to reach out the the people who came to see you and build a fan club, and this is done through both email and direct mail, with direct mail being the most valuable. How is this done? Here’s how:

Use either a voluntary email opt-in when checking in or utilize a web-based booking/sign-up for appointments. Either way, request a confirmation of mailing address (this is easier than it sounds, but you must be vigilant).

If Cornerstone were to send out on your behalf only 200ct 5″ x 7″ postcards a month to returning customers, the average cost would only be approximately $1.25 per card[6]. Even though there is still a recurring advertising cost, it is nowhere near the CAC of $75.00 initially spent. Additionally, maintaining customer satisfaction is exceptionally important for growing the business and generates additional customers via online reviews and, most importantly, word of mouth. Zenoti’s The Checkin, a Seattle-based “resource hub for beauty, wellness, and fitness professionals” for salons and spas, states that “42% of loyal clients are driving a whopping 80% of sales in 2024”.

In conclusion, the worst thing you can do is do nothing. Yes, $15K hurts upfront, and it’s no fun to spend $250 each month on ongoing mailings or even more for professional SEO efforts, but the alternative is to have the lights on with no foot traffic.

If you own a personal services firm or direct retail business in the Hudson Valley or beyond, please reach out to ask us how we can help. Our email is info@crst.net, or just call (845) 255-5722. We’re here to help.

[1] ref: https://thesalonbusiness.com/facebook-ads-for-salons/#. Facebook advertising technically may only cost $400/month to $500/month, but we are suggesting that you extend your campaign for 6 months with strongly targeted foci to reach women-only in local markets.
[2] ref: https://www.alluvitmedia.com/billboard-advertising/ny/poughkeepsie.php#. Costs for billboard advertising have a wide range and are calculated via “Average Cost per 1,000 Impressions” (a.k.a. “CPM”). For our example, we have estimated our $1,500/month per billboard assuming a monthly $10 CPM at 150,000 monthly views or impressions.
[3] ref: https://crstweb.com/search-engine-optimization/. These are our (Cornerstone Services, Inc.) rates for a minimum 6-month commitment towards SEO; these charges include the initial claiming of social media profiles and optimizing them to support SEO efforts; then, our costs assume ongoing SEO support for six months at 5/hours a month. Please note that the CRST Web Development team can assist with web presence services; we only engage in SEO support for websites that we create.
[4] ref: https://crst.net/direct-mail-portfolio/. This approximated “all in” charge is for 5,000ct 6″x11″ cards designed, printed & mailed plus postage (as of June 2025)
[5] ref: https://heygoldie.com/blog/how-to-calculate-your-hair-salon-service-price#
[6] Approximately $250/month for a 12-month commitment; assumes an initial commitment of 2,500ct cards, amortized monthly; recommended card topics are “$5 off any non-discounted hair care product for your next visit”, “Like us on Google”, “$10 any spa treatment over $150”, “Free hair brush”, etc.
[7] ref: https://www.zenoti.com/thecheckin/a-guide-to-salon-client-retention-8-essential-strategies

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