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Clicks, Conversions, Clients Course > Module 3: KPIs, Metrics, and Data Points

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LESSON OVERVIEW


Video 06: Determining Budget to Convert "X" Customers

  • How much will you need to spend in order to convert X customers?
  • This is very different from the previous video where we talked about how much you are willing to spend to convert each customer.
  • This is when you are looking to convert a thousand customers, 10,000 customers, etc. - anything more than where you have been in the past. 
  • You're looking into the future. You're trying to forecast where you could take things further with your ad spend. Now, remember this does evolve into the question of if I'm spending $10,000 a month and I'm getting 200 customers from that. Am I willing to spend a little bit more to acquire the extra hundred or 200 customers? 
  • What am I forecasting to bring in next month, this quarter, this year? 
  • If you're spending, let's say $200 to acquire a $500 customer, are you willing to spend upwards of $300 to bring in more customers at that $500 level? And if so, how much more can you afford spending at 300 per customer acquisition to get those sales at 500 a piece in the following month?
  • So if you were spending $10,000 a month and you're getting, let's say two 50 per customer, that means that every thousand dollars you spend you're acquiring four customers. So you should be spending $10,000. You get 40 customers per month. Now, if you want to spend $15,000, but you're willing to then get customers for 300 a piece. Now, you know that for every 1500 you spend, you're going to get five customers. 
  • So it's one additional customer and you multiply that by 10. 
  • Essentially what will end up happening is that you will have 50 customers per month at 15,000 in spend, which once again makes your life look awesome because not only are you making more money, you're getting basically 500 per customer. 
  • You take out the ads when you're making $200 in profit, per acquisition, based upon those numbers. But then here's the great part - you're scaling. 
  • You're bringing in more leads. The list grows bigger. Maybe they don't buy your product at 500 a piece, but maybe they'll buy something else, that's $97. Maybe they'll buy something that's $1000 or better yet, maybe you run an affiliate promotion to the people who haven't bought from you after a month or two and they buy someone else's product. 
  • Because as you figure out these numbers, it's going to make a lot more sense for you to spend more, especially when you have multiple ways to get them, to buy something other just your product. 
  • So keep that in mind when you were doing the math, figure out what you're willing to spend at minimum, and then what's the maximum you're willing to spend to acquire that customer. And then you can reverse engineer those numbers and see how much it would cost to acquire that person and how much you can spend to get more customers into your business and possibly even other people's businesses and still make a pretty good paycheck. 
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LESSON TRANSCRIPT


David (00:00):

Hey, everyone. Welcome back today's video. We're going to be talking about how much you will need to spend in order to convert X amount of customers. This is very different from the previous video where we talked about how much are you willing to spend to convert each customer? Now, this is what I'm talking about in this case. This is when you're at scale. This is when you were looking to convert a thousand customers, 10,000 customers, maybe even 200 customers, right? It's more than where you have been in the past. You're looking into the future. You're trying to forecast where you could take things further with your ad spend. Now, remember this does Eve. This does evolve into the question of if I'm spending $10,000 a month and I'm getting 200 customers from that. Am I willing to spend a little bit more to acquire the extra hundred or 200 customers?

 

David (00:51):

I am forecasting to bring in next month, this quarter, this year. So remember is once again, it's all math. This is all math advertising in general is analytics and math. So think about this. If you're spending, let's say $200 to acquire a $500 customer, are you willing to spend upwards of $300 to bring in more customers at that $500 level? And if so, how much more can you afford spending at 300 per customer acquisition to get those sales at 500 a piece in the following month? So if you were spending $10,000 a month and you're getting, let's say two 50 per customer, that means that every thousand dollars you spend you're acquiring four customers. So you should be spending $10,000. You get 40 customers per month. Now, if you want to spend $15,000, but you're willing to then get customers for 300 a piece. Now, you know that for every 1500 you spend, you're going to get five customers.

 

David (01:58):

So it's one additional customer and you multiply that by 10. Essentially what will end up happening is that you will have 50 customers per month at 15,000 in spend, which once again makes your life look awesome because not only are you making more money, you're getting basically 500 per customer. You take out the ads when you're making $200 in profit, per acquisition, based upon those numbers. But then here's the great part you're scaling. You're bringing in more leads. The list grows bigger. Maybe they don't buy your product at 500 a piece, but maybe they'll buy something else. That's 97. Maybe they'll buy something that's a thousand bucks or better yet. Maybe you run an affiliate promotion to the people who haven't bought from you after a month or two. And they buy someone else's product. So once again, how much are you willing to spend to acquire these people and to convert them over time?

 

David (02:50):

Because as you figure out these numbers, it's going to make a lot more sense for you to spend more, especially when you have multiple ways to get them, to buy something other, just your product. So keep that in mind when you were doing the math, figure out what you're willing to spend at minimum, and then what's the maximum you're willing to spend to acquire that customer. And then you can reverse engineer those numbers and see how much it would cost to acquire that person and how much you can spend to get more customers into your business and possibly even other people's businesses and still make a pretty good paycheck. 

MY NOTES


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