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246 - The Magic Of Internet Marketing Math

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246 - The Magic Of Internet Marketing Math

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Episode Recap:

Let me walk you behind the scenes of the Biohacking Secrets sales funnel’s numbers.

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Best Quote:

So that’s the thing about Facebook Live. Some videos hit and some don’t. So the key is doing one a day and put $10 behind each one, and the ones that get some traction and dump as much money as you can behind them. So that’s number one. So that’s lowering the cost to acquire a customer. Our number two metric was conversion rates on the landing page. Our conversion rates weren’t bad, I was pretty happy with them so I wasn’t stressing about that. 

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Transcripts:

What’s up everybody? Good morning, I hope I woke you up. Welcome to Marketing in Your Car. Alright everybody, I hope things are going amazing for you all today. I just wanted to jump on today, headed into the office, I’m just about to…I’m so bad at preparing.

I have a webinar in 40 minutes for the network marketing group we’re taking through Clickfunnels. So I gotta get in and get that all prepped, and then I’m doing a webinar for Clickfunnels today. And we got some Jiu Jitsu practice tonight. And talking to Robert Kiyosaki’s people today. So a lot of stuff, I’m excited. But what I wanted to talk to you guys about today, is something even more important. It’s one of those things that’s my favorite part in the funnel building process.

It’s the part that stresses most people out. So typically we create a funnel, we do our best foot forward, and then we launch it to the world and wait to see what happens. And this is where most my Inner Circle people freak out. Like, “Oh Russell my funnel didn’t work. This is a scam.” No just kidding. They don’t say that. A lot of people probably think of the Clickfunnels community or whatever, they launch something that doesn’t make money over night. And they’re like, “Oh this funnel thing doesn’t work.”

So it’s always kind of funny. So I want to walk you through what’s been happening with the Biohacking Secrets funnel. Because we’re going through that phase right now. We officially started launching it actually about a week ago. I think John’s spending about a hundred dollars a day just driving ads and seeing where things take out. So this is the thing normal people, they drive ads for like….they do one of two things. One they drive ads for a day and they’re like, “Oh, it didn’t work.” And they freak out and they want to shut it down.

Or number two, they drive ads for like 2 months and it doesn’t work and then they come back, “I spent 20 grand and I didn’t make any money.” I’m like, “Dude, why did you not stop?” So this is how we do it. We drive some ads, 100 bucks a day or so for about a week, just to see. So we’re spending $500-$1000 to kind of get some initial data and see what’s happening. So from that, yesterday we had a call with Anthony, he had looked over the numbers.

The numbers were basically this; we were spending on average about $20 on Facebook ads, giveaway a free book. Some sources were cheaper, some were more expensive, but as a whole about $20 per book. That was the average. And then our average cart value, so that’s the first metric, which is the key. It’s the cost to acquire a customer. So if you’ve ever watched Shark Tank they always say, “So what’s your cost to acquire a customer?” And none of the entrepreneurs ever know, because the entrepreneurs are typically idiots.

They don’t pay attention. “The first number you have to know in your business is ‘what is your cost to acquire a customer.” So I get a baseline cost to acquire a customer from that initial first week test. So boom, that’s my trick number one that I need to know. Then metric number two that I need to know, what is my average cart value? So from every person that buys a front end product, what’s the average, how much money do they spend? So all you do is take all the money you’ve collected from this campaign, divide it by the number of front end sales you have and that gives you your average cart value. Are you guys impressed?

I’m like a mathematician over here. Says Russell, who barely passed math in high school and college. That give’s your average cart value. So our average cart value is $17. Alright so, wherein lies the issue my friends, if you’re paying attention. We’re spending $20 to acquire a customer that’s worth at point of sale $17.

Now obviously, long term customer value, lifetime customer, all that type of crap is good to know. Yeah, we may have lost $3 on every book we sold, but you know, people are always leaning on long term customer value, the lifetime value of a customer. The LTV, and those things are good to know, but for me when I’m building a funnel I don’t care about LTV because I want to funnel it so that it at least breaks even up front, otherwise it’s not worth running for me.

And that should be kind of the case for you as well. Yeah, lifetime value is cool, but don’t make that a metric you drive your business on right now. Because it’s just stupid, otherwise you’re just gambling, hoping that next year you’ll make more money. Which you will, but I want to be break even at point of sale, otherwise it’s not worth it. Alright so right now, we’re not at break even. We’re losing $3, plus we also had the book printing, plus shipping, so another probably $10 on printing and shipping.

So we’re actually negative $13 on every book we sell right now. So we’re not at break even. This is when we’re all like, “Ahh, this sucks. I spent all this time and effort. I quit.” But instead you look at it and say, “Okay, let’s look at all the pieces.” There’s only 3 core drivers in this thing, maybe 4. So the first one is the ad cost, right now most of our sources, we were spending, like I said on average $20 to acquire a book customer. Usually from static Facebook ads. One thing I’ve been doing in my business that’s been working really good right now is Facebook Live.

So I said, “Hey Anthony, do a Facebook Live that we can then drive traffic to the book through Facebook Live.” So he did that and low and behold, first test was amazing. He dropped from $20 to acquire a customer down to the ads coming through Facebook Live, were $6. Huge, huge, huge difference. So we told Anthony, “Every single day now you are going to do a Facebook Live.” And all of them are pushing to the book offer, and when they’re done we’re going to put $5-$10 in advertising behind it and the ones that take off, we’ll then ramp up advertising and the ones that don’t we won’t. So that’s the thing about Facebook Live.

Some videos hit and some don’t. So the key is doing one a day and put $10 behind each one, and the ones that get some traction and dump as much money as you can behind them. So that’s number one. So that’s lowering the cost to acquire a customer. Our number two metric was conversion rates on the landing page. Our conversion rates weren’t bad, I was pretty happy with them so I wasn’t stressing about that. But the order form bump conversion rates were lower than I wanted. Right now we’re at 11%, we’re taking the order form bump.

So I looked at it and I think the copy and stuff I had was confusing, so what we did was simplify the copy, simplify the message and made that easier. So I don’t know what the conversion on that yet, will be. We’re going to run this for another week. But my goal is to get that from 11% to about 20%. If we get that to 20% that alone will get us to a break even funnel. Especially considering the cost to acquire is dropping due to Facebook Live. So that’s a big thing. Then the second metric was our upsell rate. Our upsell rate sucked. It was real bad.

So I looked at that and said, Okay, right now the upsell was selling for $197 and it’s a weight loss, biohacking weight loss course. Okay, the conversions are horrible. What do we need to do? Well, I think the pitch was wrong. So I just re-recording a pitch myself and threw it in there on behalf of Anthony, we plug in some b-roll of Anthony and me, and we had took an outro from him.

So we had to tweak the pitch which is much better. So that’s number one, and then changed the pricing strategy from $197 up front, to basically made it where it’s a free trial. You just say yes, and they’ll just get it all right now, and then 7 days later you get billed $97. Or you can save $20 and get it for $77. So we changed the upsell pricing strategy to that as opposed to the straight $197. And it’s funny because I think Anthony was worried. “Man, if we drop the price, are we going to make so much money.”

And I was basically like, “Think about it this way. At $197, if we’re getting 1% conversion rate, 1 out of 100 are buying it, it’s only adding $2 to your average cart value if you get a 1% conversion rate. When it’s $97 we get a 10% conversion rate, meaning 1 out 10 people are buying it, it means…”Let’s see what’s the math on that. That means we’re making….At $100 we’re making $10, so that increases our average cart value by $10 per person. “If we drop the price in half we get a conversion of 10% that changes the whole metric. That adds $10 average cart value on every single person.”

I think the math’s right. I might be wrong. Good chance I’m wrong. But conceptually I hope that makes sense. So we made those little tweaks and now we’re doing the next tests. So we’ll test this next week and we’ll look at the numbers again at the end of that and see where we’re at. And hopefully between lowering cost to acquire, increasing the order form bump take rates and increasing the upsell take rates, we will be at break even or profitable.

And the second we’re at break even or profitable, now we’ve got something that we can grow and we can scale and we can have a lot of fun with. So there you go. That is the magic of internet marketing math. I hope you guys enjoyed that. Have some fun with that with your next funnels and we’ll talk to you guys all again soon.

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