I get really scared sometimes…
I mean really scared.
And what scares me is talking to people who are all fired up to spend money on advertising, but they have no idea how much they need to spend to get a new customer.
You’ll never have a profitable business you can scale (this is important) without knowing this number.
Sure you may have a profitable business with 3 or 4 clients and you doing all the client-getting and all the work, but can this scale?
No, it won’t.
I’ve been there.
Without a profitable client-getting system in place, I couldn’t scale my business because I couldn’t afford to go out and get clients while at the same time delivering the work profitably.
So knowing how much you can afford to spend to profitably get a new customer is key.
Part of knowing how much you can afford to spend is knowing how much value a new client brings to your business.
All of the value may not have to come in as revenue immediately, but knowing that clients are worth $5,000 or $10,000 to you is a big difference than clients who are worth $500 or $1,000.
In some markets, you may need to be prepared to spend $500 to get a new client so if all you have is something they can buy for $500, you have a big problem.
This is totally fixable though.
Knowing it costs X to acquire a client means you probably want to be able to provide them with something that’s worth 10X or 20X.
Then, you can be sure there’s plenty of room to cover the cost of acquiring the client in addition to any cost required to deliver the product or service.
What’s left over is your profit.
Now, you can map out your entire campaign with clear guidance on how much it costs for people to go through your sales process.
Let’s start backwards with an example.
It costs $400 to acquire a new customer.
It costs $100 to get a prospect on a “sales” call with you or someone who handles sales (this can be positioned as a strategy session or consultation).
It costs $10 to get a lead to watch your sales presentation.
It costs $1.75 to get cold traffic to your opt-in or capture page.
What’s missing in between each of these is the conversion rates for people to move through the various steps in the sales process.
You adjust those with your ad copy, landing page copy, and sales presentation copy and ensuring they’re congruent with your target market and the pain you’re saying you can help eliminate.
From a budgeting perspective, $400 gives you enough ammo to acquire a new customer through your sales process.
When you optimize your sales process, you can potentially reduce this number.
In some markets, there’s always going to be a floor because of competition, but that’s not a problem as long as you can control of the value of what you’re offering.
This is where you always have the greatest impact on your profit.
It’s not about trying to find the cheapest traffic source.
It’s about taking your target market though a profitable sales process that helps you grow your business whenever you spend money on advertising.
When you do this, you can always be in profit before spending a dime on ads.
Now, if you’re a coach or consultant and feel you’re ready to step up to the next level – stop trying to figure it all out on your own and make sure you don’t go around the calendar another year without seeing the success you deserve – click here now.
I might be able to help you by mentoring you and giving you a step-by-step system that I use to build my own consulting business. Click here now.
To your success,
P.S. It’s NOT right for everyone – but if you feel having me working with you almost “daily” and giving you a proven step by step system to follow will help you get to the next level, then click here now for more details.
[Photo Credit: ™ Pacheco]