In today’s episode we dive into one of those “bland yet unbelievably important” topics – metrics. Metrics are the LIFEBLOOD of your business yet probably 10% or less of companies really track them properly and use them to grow their business effectively. In this episode I’ll show you exactly what metrics to track, how, and how to use the data to skyrocket your business growth.
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Hey, what is going on guys, Jeremy Reeves here with another episode of the sales funnel mastery podcast.
And today, we are going to talk about something really exciting and that is Metrics. We all love numbers right.
So Metrics are the lifeblood of your business you know. There are so many businesses out there that do not understand their metrics and honestly one of the big you know, the big factors — I mean talked to a lot of people everywhere you know, from people that are kind of just you know in the low 6 figure range all the way up to $300M companies, right.
I am actually working doing a project for Agora right now. I am trying to be one of their controls that is bringing — actually, I am not allowed to say confidentiality wise the numbers, but basically, it is many, many, many, many, many hundreds of thousands per month you know, kind of call that.
So one of the big determining factors or one of the big differences that I see when I am talking to various levels of business owners is and I can see kind of how savvy they are as business owners. It is how well they understand their metrics, right.
So I have talked to some clients and you know, usually, when I talk to people the first questions that I start asking are you know, how much are you getting per lead you know, what is your cost per click. What is your cost per lead. What is your conversion rate. What is your like on your opt in page. what is your conversion rate on your sales page. What is your you know, average order value. What is your average customer lifetime value you know, all of these metrics are really, really important because if you look at business, all business is money in versus money out, right. That is really what it comes down. Money in versus money out.
If you are bringing in more money than you are spending, it is a good business. If you are — you know, obviously that is relative. If you are spending more money than you are making, it is you know, you are not in a good situation and even with that, and I am sure everybody listening to this can agree of how important that is to know that because mean, you know, it is literally you know, it is kind of like you know, your health and you have no idea what is going on with your health. I mean, obviously, that is a bad situation you know, and that is when you get into trouble.
And you know, even with that, I am sure everyone listening can agree on that, that metrics are like one of the single most important things that you need to know in your business, and yet, very few people actually know them you know.
Think about your business, do you have a spreadsheet you know, calculating all of your various metrics in your business or at least something like analytics showing you, you know, the visitors you are getting, your conversion rates, you know, analytics can track all that on your website you know, things like that. If you are doing Facebook or AdWords, are you really tracking everything that you are doing so you know exactly what is working, exactly what keywords are working, what are not working, that kind of thing.
So I give you a couple of examples here. So I had a lady, she had a dog training business and she came to me and she is like you know, it is not working, I do not know what is going on, blah, blah, blah, you know, I bought this business and you know, it is not really you know, I do not know if this is the case, but I felt like she felt like the person who sold it to her kind of gave her like a crappy business.
It actually turns out, I actually sat with her and I you know, we put the numbers together and it actually turned out that the business was freaking phenomenal, right.
She was getting — and this is with like pretty much no marketing experience just handed to her. She was getting 9 times ROI on her ad spent, but she did not know that because she was not tracking things properly you know and it is a huge mistake but it is so, so common that it is unbelievable.
You know, most business owners unless — anybody under 7 figures it is almost rare for people to really, really, really, really have a really solid grasp of their metrics and the funny thing is, it is almost impossible to go above 7 figures if you do not know your metrics.
So it is kind of a weird you know, irony there.
So that is one thing. Another thing is that I am working with another client and I just had a meeting with him yesterday and you know, the topic was okay, you know, how do we keep you know, how do we continue to improve things. How do we continue to improve our metrics.
And one of the things that I said was, I said, okay, and their businesses is a little bit complex because they are bringing leads in for 1 business and they get a certain dollar amount for those leads, but then they are also using those leads in another one of their businesses.
So it is kind of — it is more complex than you know, than the average kind of business and then there are also selling leads you know, that kind of thing. So there is a lot of different factors in play here, but I am going to try and keep it simple.
What I said was okay, you know, for the average customer that comes to your doors, how much are they worth to you, you know, long term and they said, well, kind of depends. And also another kind of wrinkle in here is they have an online and an offline funnel. So the funnels had different metrics, so the offline I think was worth $130 a lead or a customer and the online worth $180 or might be — it does not really matter.
So I said, alright, let us at least you know, I do not think we are going to get this perfect, but let us at least get kind of the baseline, right. Let us at least get an estimate and say, okay, you know, let us just say that you know, they are worth $150 on average, at least, it is better than nothing you know, it is not a perfect kind of thing, but let us just say $150. Let us also put in a little bit of buffer in there, so let us just say, you know, they have to be worth you know, $130 or so to kind of be worth it to continue you know, getting those leads.
So essentially, what I said was, okay, let us pick a number, let us just say it is $150, I forget the numbers off on top of my head. I deal with a lot of different businesses, so I have all kinds of different metrics going on in my head right now.
So let us just say it was $150 just for you know, just for argument sake here.
So I said, alright, your average personâ€™s worth $150, right. Now, what is your allowable cost per new customer, right. So how much do you want to profit because you do not want to spend $150 you know, to then make $150 over time. You are essentially just you know, getting a zero return and you are not even getting it back for like the next you know, a couple of months or year or whatever it is.
So let us just say we brought it down to you know $120, right. So the allowable cost is $120 to then make $150 in whatever the next 6 months or so, right. So they are making $30 you know, essentially, you know, 20% ROI over a 6-month period. Not great stats, but they are doing a lot of volume, so it is a little bit different when they are doing a volume (inaudible 7:32.1).
So I said, alright, so you are able to spend $120 per you know, customer that you bring in the door. So let us now look at your advertising and figure out what is working and what is not.
So we have your allowable cost per new customer, is $120, right. So I said, alright, their main advertising was AdWords, right, which makes it easy.
So I said, alright, let us now look at all of your keywords because your average — I think her average was, I think it was $130 something like that, let us just say it was $130. So I said, alright, so if your average cost per new customers $130 that means that you have some keywords that you are probably getting new customers for you know $30 or $50 and you have other keywords that are probably going upwards of $200 to acquire new customer and what we are going to do is take that $120 right, and have a little bit of a buffer, but essentially anybody — any keyword that it is costing more than $120 to acquire new customer we ditched them. We removed them and then all of the ones that were under $120 especially the lower ones, we are going to ramp them up as high as we can that way you can keep a similar volume right, you spend for the customers that are really profitable, we are going to go up a little bit but you are also getting rid of all of the customers that were not profitable, right.
So it is going to even out. So now you are actually going to end up spending much less money probably around 25% less, but you are still getting a similar amount of volume, right.
So your actual profit is 25% higher, obviously, you know, those are — we literally just started this yesterday. So those are not real numbers. Those are just you know, kind of estimated numbers, but you know, that is what happens when you really understand your metrics, you can do things like that, like when you know, okay, I need to get leads in for $2 because I know that you know, one in ten leads is going to convert and — just say one in twenty leads is going to convert 5% conversion rate and that means that, what is that, I forget the numbers.
I just finished up sending an appeal letter to the IRS, my brain is a little bit funky. They are trying to screw me up (inaudible 10:05.6) for something that was their fault, but anyway, so you know, we are getting leads for $2 each, one in twenty convert that means that is a 5% conversion rate that means that you are getting a new customer for $40 right.
So if you know that, then all you have to do is find advertising where you can find customers for less than $40 right. That is it, and maybe you know, whatever your numbers are maybe that customer is worth $80 over the next 3 months or 6 months or whatever it is, but all you really need there is your — you have to know first of all what your lifetime customer value is and you have to define that.
So you can do — I like to do a short term and a long term. So I like to do typically what is the customer worth in the first 30 days right because that is short term. I mean, you can — most people can afford to you know, kind of have that cash flow going in 30 day periods right, without you know, drying up your bank.
And then I also like to look long term. So long term is very, very, very different for some people you know or for everybody you know. For smaller companies let us just say under 7 figures, that might — long term might be 3 months right or maybe 6 months, depends on how much cash flow you have, depends on how profitable you are already.
For bigger companies so for you know, a couple of 100 million dollar companies for 8 figure companies even, you might stretch that out to 6 months or 12 months or 2 years or you know, some companies, they gauge their lifetime customer value over like a 5-year period right, but that is when you get into the really high number.
So let us just say that your short term is 30 days and your long term is just say 3 months right. So what is — let us do 6 months actually because that is a little bit more realistic.
So alright, so what is your customer worth in the first 30 days, okay. So figure that number out then what are they worth in the first 6 months and what you will find is that if your new customer is worth and again, these are just hypothetical numbers, they are going to vary drastically in all different industries, all different businesses, I am just kind of throwing this out there.
So let us just say that your new customer is worth I do not know, $50 in the first 30 days, okay, but after 6 months, they are worth $100 right. So what you have to look at is okay, well, to be able to scale my business I can then spend $50 to acquire new customer because I know that I am getting that back in the first 30 days then you essentially break even on that customer the first 30 days.
Now the goal, I mean typically, when I do this, I try to break even on the first like 48 hours, but I am just using 30 days just you know, just a simple exam.
I like to typically and again, this depends on the client. It depends on your business. It depends on the goal of the you know, campaign that you are doing you know, because there is all different types of campaigns. There is lead generation campaigns. There is audience awareness campaigns. There is profit campaigns which is usually going back to customers. So there is all these different things to consider.
So then you say, okay, you know, so you know, and I have this advertising. I know that I am making $50 per customer in the first 30 days, but I am also making $100 in the first 6 months so is it worth it you know, then you have to look at — so you have your lifetime customer value for 30 days and 6 months or 12 months whatever you want to do then you say, okay, so what I am willing to spend to get that customer. I know that they are worth $50 in the first 30 days and $100 in the first 6 months, okay and it is only going to increase in there, so they might be worth $200 in the first 2 years or whatever.
So then you have to say, okay, well, what ROI do I want. What is my allowable cost. So, maybe, if you are in a good cash flow situation, maybe you can do spend $50 to acquire the new customer and just break even in the first 30 days knowing that you are going to double your ROI you know, over the next 6 months right.
If you are kind of bootstrapping a little bit more you might say, okay, we are going to only focus on — we are going to get super, super, super laser targeted and I can spend $30 to make in the first 30 days right, knowing that they worth $50, so you are going to essentially profit $20 per customer in the first 30 days and then $100 over the next 6 months, but you have to figure out your allowable cost and that is a little bit different for everybody, it depends on your risk level, it depends on your available cash flow, it depends on what advertising you are actually using. So all these different factors, right.
The whole point of this is that you have to know these numbers, right. So if you do not know these numbers that is the first thing that you should do.
Now if you are just starting you do not have to worry about it too much because you kind of have to find you know, your bigger play — if you are in you know, the lower 6 figures like you know, just say 0 to I do not know $2 or $300,000, I would focus on a little bit more on really narrowing down your message, right. Your USP, your exact audience, your exact offer that you are giving them and why you are unique and special you know, different and all that kind of thing.
But if you are above you know, just say quarter million or so, you really, really, really, really, really, really need to start focusing on your metrics and really get a good grasp on them because when you know your metrics it opens up everything because then you know exactly what your promotions have to convert. You know exactly how much money you can spend. You know exactly how much money is going to be in your bank you know, if you are paid traffic at least because when you are doing paid you know, and that is kind of the holy grail when you can make traffic work to paid traffic then you know that, hey, if I spend $10,000 this month that means I am going to make just like $12,000 in the first 30 days, I am going to make $20,000 in the next 6 months and you can actually predict how fast you are going to grow with your business, right. So I hope that all make sense.
So that is my (inaudible 16:27.3) for today, as always, if you enjoyed this episode or this podcast in general, make sure you are telling your friends about it. If you are on any Facebook forms or you know, whatever you are on you know, make sure you tell people about it so we can kind of grow the community a little bit more. Like I said, it has been growing really, really fast lately, basically it doubled in the last 2 months or so which is awesome, I am really excited about that and it makes me want to continue to do it.
Also, if you leave a review that is going to help us grow the fastest, it only takes like 30 seconds and you know, it would just be you know, if you really enjoyed this, it would be a huge favor to me if you just leave a review on itunes. Again, it takes like 30 seconds and it would be a giant favor to me. I spent a lot of time putting these together and thinking about it and for going out and finding guests and all that kind of fun stuff, so it would be a huge favor to me plus it is only in your best interest because I am going to send you my 101 Conversion Tips free if you leave a review.
All you have to do is just leave a review and then shoot me an email [email protected] letting me know that you left a review and will send you that over.
I actually got a — I got an email from someone the other day that did that and he looked through the 101 Conversion Tips you know, PDF, and he said — he was like, oh my God, I cannot believe you are giving away this for free. He said, I actually feel bad for going through this because you need to be charging money for this you know, so and I used to. I used to charge $77.
The reason by the way that I am giving away for free right now, it is not going to be forever. The reason that I am right now is because some of the things in their not all, but you know, there is a 101 Conversion Tips and probably, I do not know, 15 maybe are a little bit outdated, things that you know, used to work or old formats, things like that and I just have not updated it yet.
I used to do my site on HTML with Dreamweaver and all that and since I switched over to well, thrive that I am using now it you know, basically, I just have not move that product over. So it is something I used to sell for $77 and basically just have — I just need to update it and then started selling it again, but again, I am giving it away for free simply because out of laziness, I do not really have anything else that I could think to give you. So I am just giving it away that because I thought it would be cool, but yeah.
So anyway, leave a review. Tell your friends and I will talk to you next time. I hope you enjoyed it. Bye.