Here is a (very interesting) question I just received from one of our readers via the yellow note on the right menu:

"Hi Fabio, can you comment about the results from the advertising campaings that your customers get from advertising on your screen at Rosta (Torino). What is the renewal rate of contracts? Thanks."

Dear Fernando, thanks for the question. It is actually very interesting. I will answer it in a second, but first let me clarify the key point that your question highlighted.

The renewal rate of your Customers is actually a key factor for the success of your advertising business. This is because renewing a contract with an existing Customer will cost you much less time, energies and resources than closing a new one.

It will cost less because you dont have to approach them for the first time, you dont have to explain the benefits that your service will bring to their business, you dont have to answer to their objections again etc...

If you already convince them once that your services are worth your fee (and more) - unless you dont disappoint them or dont deliver what you promised - then a consistent part Customers would renew the contract without almost any effort from your side.

Now, to answer your question, the renewal rate of the LED screen we manage in Rosta (Turin) is about 50% the second year and about 30% the third year. This ratio is also confirmed from the others of our Customers.

Therefore, assuming that I start with 20 Customers the first year, 10 of them would renew the contract the second year and 7 of them would do it for the third year too.

The abandonement ratio is natural for any kind of advertisement business and should be taken into consideration while creating your business plan - and conpensated with the costant research and acquisition of new advertisers.

So, these are the data from my side. If your experience confirms them or contrasts them, please let us know!