Whether you’re running traffic from ads, focused on organic social media, OR using list build methods like summits… there’s a cost to every campaign you run.
And when you’re looking at your bottom line numbers, tracking and understanding that cost is essential.
In this quick episode we’ll talk about what those metrics are, how you can track them, and how to understand what they’re telling you.
The Financial Series: (Coming soon)
Check out the entire library of business 101 episodes here.
Alyson Lex 0:02
Okay, so you've just sold something, you've had a campaign, whether that's a book a call campaign to your email subscribers, or big ol launch of a brand new product, you have had a campaign. Cool. Do you know how to check your metrics to see how well you did? And I'm not just talking about revenue in the bank, although that's a really important metric, obviously. But do you know how to dig into the financials of your ROI on us on a specific level, so that you are not stuck, wondering what worked and what didn't? From a financial perspective? Because, frankly, you could have the best performing ads in the world. And if they don't make financial sense to you. Why are we doing it? And so today, I'm doing a super fast solo episode, to talk to you about some numbers that are really important to know, that you should know and that are going to help you when it comes time to calculating what you're going to do next time. Because one campaign, a business does not make, right. Okay, so first, I want to talk about AD metrics, your ads, any paid advertising that you're doing. All right now, this could be your traditional Facebook or Instagram ads, or Tik Tok or any other social media, this could be Google ads. This could also be any paid advertising that you have done. Alright, so if you're sending direct mail postcards, that is advertising, if you are buying sponsorships on podcasts, like this one are sponsored email placements, that is advertising, all right. If you are using an online method, where you would have somebody who clicks you want to be able to track those clicks, using whatever special techy software you want to use. A lot of times you'll use an affiliate program, assign each ad platform its own affiliate link. So you can track the number of clicks, the number of leads and the number of sales. Because those are the three things you want to find the costs of the cost per click, the cost per lead, and the cost per sale, you want to know how much it costs you to get a click to your landing or sales page. And the way you're going to do that is how much you spent divided by the number of clicks you had. Very simple. If you spent $100. And you had 100 clicks, it's $1 per click, okay. Then you want to calculate how much it costs you to get each lead. The person that got added to your email list, how much did it cost per email address that you collected, you're again going to take the total that you spent divided by the number of email addresses you collected, you spent $100, you got 100 email addresses, it's $1 per lead. Then you're going to look at cost per sale, how much it costs you to get each sale. Total amount you've spent divided by number of sales you had. There's your cost per sale $100 100 sales $1 per sale, you see how that's working. The reason this is important is because it allows you to determine the efficiency of that particular advertising method from a financial standpoint, because frankly, I could have had a 96% opt in rate on my landing page. But if it cost me $45 To get an email address, then I have to decide if that isn't is a viable amount for me to spend. Okay, because we're not talking about how much the advertising costs, we're looking at the metrics based on what you are willing to spend in your business. That is something really important, because we can talk about benchmarks all day long. We can talk about what industry standard is all day long, but what are you willing to spend? What are you willing to invest to get that result. And if what you have to invest in a certain advertising platform is more than you are willing to invest to get the result. It's just not the right platform for you. There are ways to fix it. You can look for another platform, you can try to optimize the ads, what have you but at the end of the day, you have to be able to say this costs more than I'm willing to spend or I'm willing to spend what this costs you have to be able to make that distinction.
Okay, Now, when you look at your cost per sale, I want to dive into that just a little bit more when you, when you look at your cost per sale, consider the upfront cost, or the upfront sale amount, as well as the lifetime value. So now this is getting kind of advanced, but it's really important. If, for instance, I have a $10 product that I'm promoting, but I know that 50% of the people who buy that $10 product go on to buy my $1,000 product. Okay, then the average lifetime value of a customer is $510. Okay, and the way I've gotten to that is $10 plus $1,000. Plus $10, which is $1,020. divided by or times actually 50% divided by two is $510. That is, on average how much I would make per person given my statistics. All right now, I'm not going to do a deep dive into this, if you want help figuring this stuff out, head to system to thrive.com book a call with Jenny and I, and we'll figure all of that out with you. Well, we'll talk about how we can make that happen. But you have to also look at the lifetime value in order to determine if you're willing to spend the money per click per lead and per sale. Because if I'm getting, if I'm getting sales for $7 on a $10 product, I might be thinking man, I'm only making three bucks, although, frankly, that's awesome. But in reality, I'm making $503, if I look at the lifetime value. And so grocery stores use this a lot, though, you know, they have this stupid cheap soda special, right, it's called a loss leader. The idea is to get you in the door with that. And that's why you see the tiny offers the small products, the pocket products, whatever they're called, are so popular because they get people in the door. And then the monetization is on the back end, the real money is on the back end. Okay, so that's all the ad metrics, the pay the advertising, the stuff that you want to look at how much it costs to get people to your world, how much it costs to get them to become a lead, and then how much it costs to get them to buy. Once you know those numbers, you can begin to really make some some good financial decisions for the next campaign. Alright, but then we also have organic metrics. Because it's not just ads that are gonna cost money. There is organic promotion, there's content creation, there's lives, there's webinars, there's all these things that you're doing. And you need to calculate the time investment there. And so what I really recommend doing is looking at how much time it took you to promote this thing organically to your existing list to your social using affiliates or strategic partners, whatever. And multiply it by an hourly rate that makes you feel comfortable, because that's an investment. And you need to determine if that's an investment that you are willing to make. Because organic promotion doesn't cost dollars in our pocket. But it does cost time from our day. Just as Jennie says you either pay for it or you work for it. And frankly, it works well when you do both. Okay. So make sure that you are calculating for your organic advertising as well. You also want to make sure that you are calculating any software tools or team that have only been used for this campaign or time on your team that was spent on this campaign, creating assets. You know, doing admin, any of that stuff that your team might have done? Well, that's an investment in this campaign as well. Even if it only took them half an hour, calculate half an hour of their hourly rate into your total investment into this campaign. You must understand what it really costs you to get the results that you're getting. And now, yes, building your email list so that you have someone to market to. That's an ongoing cost of business. So we're not going to talk about all the stuff you did to get to this point. We're talking about what you have done to prepare for this specific campaign, this specific launch this specific event. All right, ongoing visibility, lead generation list building, business development, that is cost of doing business and that's we don't calculate that that's just good stuff to do.
But having graphics created for summit That costs, you know, $1,000, well, that's $1,000, that wouldn't have been spent if it wasn't for this event, right. If you had to purchase a specific a special software, in order to facilitate this event, then that needs to be included. And then again, we can get advanced and go into the weeds with really kind of amortizing it across multiple events or what have you, you may decide, hey, I the software I can use for a bunch of different things. So I'm not going to include it, that's your prerogative. But if I have something that I had to purchase, and I'm never going to use it again, it's included. Okay. And basically, what all this means is that you're going to have a really good number, a really full number. A lot of times, we focus just on how much we spent on ads. And we forget about everything else that went into it. And once you do that, you may say to yourself, hey, this cost more than I thought it did. And I really wasn't as successful as I thought I was. Or, oh, wow, this cost more than I thought it did, but I still totally killed it. Awesome. Now I know what to do better going into next time. And you may also find, hey, this, these graphics cost a lot. I'm gonna see how I can repurpose and reuse those. So that I can reduce the overall cost, increase the value of these right assets don't always have to be a one time thing. But that's that's a whole nother episode, I am getting ahead of myself. The key is to have a real true and full financial understanding of what it costs you to do what you're doing. And that is the purpose of what we've talked about today. So if you have any questions, please again, head over to system to thrive.com. schedule a call with myself and with Jenny and let's let's talk about what you've got going on and see how we can help you till next time