December 16, 2019 alexbranning

Episode 3-65: Check Your Math

Hey, what’s up? Podcast family. Alex Branning here, super excited to chat with you today. It’s all about knowing your numbers and how the math in your business impacts everything. We’re going to be talking about all kinds of numbers today. Buckle up and get ready to take notes.

All right. So, oftentimes, when people want to talk to me about numbers or want to talk about marketing numbers, we’ll dive into that briefly, but I want to go over the numbers in all of your business. A couple of notes, these are the headlines. If you’re taking notes right now, if you have no paper out, I know some of you do, and I love getting those notes from you, write at the top of the page, “What I track is what improves.” Because if you don’t track it, if you have no idea what is actually working or not working, then your your basically going on a hope and a prayer that things will improve. If you can’t look and say, “All right. I see the numbers either going up or down,” then you’re going based on how it feels, and often the perception of our business is different than the reality.

So, first let’s go over some marketing numbers. People love talking about cost per lead. I think cost per lead’s a great number to track, and I use it as well, but I want to throw some other numbers out there for you to add to your spreadsheets as you’re doing your calculations. One, is cost per appointment, for those of you that are in the appointment setting business, what does it cost you per appointment? Let me break down some numbers for you. So, if you get 10 leads, and out of those 10 leads let’s say they cost you $10 a piece, let’s just make it nice and round. The 10 leads cost you $10 each, and you’re able to set two appointments. Well, we could look and be like, “Oh my gosh, I’m getting leads for $10 a piece. This is an incredible ROI.”

What about your appointments? If you’re getting your appointment two out of 10, that’s 50 bucks each. Well, still exciting depending on what it is that you’re selling, but the numbers are starting to creep up a little bit. But what if, instead of your cost per lead being at 10 and your cost per appointment being a 50, what is your lead cost actually double? But instead of one in five of every other lead turns into an appointment, you’d be like, “Oh my God, that’s great. Yeah, let’s do that. I want my appointment at $40 instead of 50. If I’m closing half of my appointments, that means that my cost per sale went from $100 in this first case hypothetical of $10 a lead, 10 leads, one sale, to now my sale is $80, so my cost per sale, which is another number to track CPS.

Because now I’m getting leads at 20, but I’m setting appointments with half, so my appointments are 40. And I’m closing half, so my sale is 80. And so, now, my prospects from the campaign, even though my lead cost doubled, my profit is actually my revenue, is 20% greater. So, cost per lead is awesome, but it can often be this really squishy number that’s hard to… Sometimes it doesn’t mean anything. I guess that’s what I’m getting to. Customer leads is great to track. It’s fun to improve upon. I love it. I love it for myself, for my clients, but that’s not the end goal. Cost per appointment is a much more realistic number. It’s a number that you can generally take to the bank. In other words, if you know you’re going to close half your appointments and your appointment cost in the campaign is $40 for some people, I mean financial planners would love to get appointments where they’re only spending $100 to generate an appointment with a client and they’ll thousands and thousands of dollars over the life of the client relationship. So, they pay $100 for an appointment all day long.

But for other people, like a personal trainer or MLM business, the cost per client is far lower, so cost per appointment is a great way to track those numbers, cost per sales even better. But especially for those in the eComm game, I guess, talking to someone who’s like, “I’m getting clicks to my eCommerce site for 3 cents each.” Great. What does it cost for you per sale? Who cares what the cost per click is. That’s a wack number to track. That doesn’t make any sense. So, when marketing, I want to encourage you, write down CPL, write down your cost per appointment, write down your cost per sales. What you want to do is really hone in on what is it costing me to generate this business? Not, what is it costing me to fill a spreadsheet with names and numbers? Because at the end of the day, names and numbers are great. You can remarket them, you can retarget them, they’re on your list, that’s powerful, but if it doesn’t turn into dollars in your bank account, then you’re just patting yourself on the back. Nothing’s really changing for your business. It’s all about tracking the numbers.

So, speaking of marketing, let’s talk about it, another number to track, and that is time per lead. Time per lead. I had a really enlightening conversation, which is a very positive spin that I’m putting on the conversation. It’s very enlightening. I was talking to somebody in the insurance space, and I was sharing the marketing campaign. He was asking me about the Giveaway Funnel to find out more about it. Giveawayfunnel.com. I’m not going to explain it here, Giveawayfunnel.com. And I was mentioning how in our campaigns that we set up, it costs 500 bucks for us to set it up, $10 a day, you’re going to generate, let’s just say, 10 appointments a month. You’re spending about 80 bucks per appointment.

He was like, “Yeah, I don’t really want to spend $80 per appointment because right now I’m getting appointments.” This is what he said, “I’m getting appointments for roughly $40 for the month.” I’m like, “Whoa, you’re getting appointments for 40 bucks. That’s amazing. What are you using? You must have a big brand. You must have a great direct mail campaign. What are you doing?” “I have none of that. I go to networking events, and I spent $10 a week on lunch.” I’m like, “So, you’re getting one appointment a month? Oh, you’re spending 10 bucks a week on a lunch to go to a networking meeting, and you’re calling that your marketing budget. You get on average one appointment. Dude,” I’m like, “Yeah, your cost is low, but your time is, you’re spending four and a half… Well, let’s say you’re spending an hour a week. That’s four hours to generate one appointment. Oh my gosh.” Besides the fact that I don’t think one appointment a month is enough to actually keep a business afloat. I think he’s doing it more as a hobby, but that’s beside the point.

But the time or lead, he was going out there, going out to all these networking events, setting appointments, yes. Is it profitable? Yes. Is it the best use of his time? No. Not at all. Oh my goodness. There’s cost per lead, and there’s time per lead. If you have to invest a whole bunch of time, and you’re going to have to invest time, I mean the cool thing about Facebook advertising is it brings people in and it can set up a time slot on your calendar, but it does take time to set things up or money to pay somebody else like me to do it. But it takes time to get everything in place. It takes time to go to networking meetings. I’m not saying it’s bad, I’m just saying track it.

When I sat down and wrote out what my cost per appointment was and the time I spent per appointment from all my different marketing methods that I was using, I realized that going to networking events was actually costing me a significant amount of money. Because that time was not giving you the best return on my investment, as opposed to doing live Facebook videos or creating content for my YouTube channel or recording podcasts. And when I spent time doing those things, now I am leveraging my content and my time in huge way compared to going to networking events and sitting around a table with 20 people, which again, not a bad use of time, especially when you’re getting starting out. You got to have more time than money, right? But as you grow and scale, you really need to hone in on that time per lead and figure out what is that doing for you.

All right. Let’s go over some other numbers because these are really… I hope that inspires, by the way, I hope you guys are going to write down your time per lead and your cost per appointment and sales because those are the numbers to track. Let’s talk about what it looks like in the operation side of your business and how, sometimes, either delegating stuff out, automating a task, buying software to help speed things up, that can actually have a dramatic increase on the growth of your business. I want to share a quick story with you, related to my growth and what helped me really build my business and give me a jumpstart.

About seven years ago, when I was purely focused on website development, I read a book that talks about what it looks like for an entrepreneur on an eight hour day and how much money they’re actually generating in their business. Basically the long and short of it is writing out, “What am I doing and what revenue is this generating for me?” And then, what the author had me do, and I forget the book, dang, but what the author had you do is write out, “Okay, if this is how much time you’re spending on this revenue generating activity,” and let’s say the revenue generating activity, like for me, the revenue generating activity was sales presentation. So, if I’m spending one hour a day on a sales presentation, whether it’s a sales call or creating some content, and that is the revenue generated for me, and the other seven hours of my day are spent on the operation-

The other seven hours of my day are spent on the operation side. If I was able to delegate one hour of my day and have and, for the operations stuff, and delegate that to somebody else and double the amount of time that I’m able to spend on revenue-generating activity like making sales calls, whether it’s cold calling, cold emailing, et cetera, what kind of an impact would that have on my business? It’s a monumental impact, and a lot of times we don’t think about it that way, right. We’re like, “Of course, I’m doing this. I have to do this activity,” whether it’s filling out paperwork or things, whatever it looks like in your business.

For me, it was doing the actual development. If I can bring a developer in, pay him 20 bucks an hour, have him sit at the desk and do the work for me. Let’s just say he only works an hour a day. For the sake of this example, he’s working an hour a day. I’m paying him $20 an hour. Am I generating more revenue by being on more sales calls? Yes. When I looked at that, it was like a light bulb went off in my head, and I knew I need to make some changes to my business because right now, I am… As Michael Gerber said, I am purely a technician. I am not an entrepreneur. I’m not a business operator. I am a technician and that’s all that I am right now, and I’m just kind of hoping I get enough business to keep the bills paid. So track what it is that you’re doing and what are those activities are revenue-generating for you.

The other math to check… I’ll end with this, this is the third thing. So you’re looking at your marketing cost, breaking it down, cost per lead, cost per appointment, and then time per lead, and then you’re looking at your day. What are the things that I’m doing are revenue-generating activities? I want you to look at your revenue per client, your revenue per client, because the easiest sale that we could make is the second, third and fourth sale to people who are already working with us.

What I mean by that is if you have somebody that comes in… Let’s say you’re an insurance person. If you have somebody that comes in and buys life insurance from you, it’s going to be a lot easier for you to turn around and sell that person another insurance product because they’re already on your list, they already know you, they already trust you, they’re already paying you, than it would be to go get a brand new buyer and bring them into your business because you have to start all over again. You have to do the marketing. You have to set them up. You have to fill out the paperwork, blah blah, blah. It’s a lot easier.

So look at, if I can, instead of saying I need 10 new clients, maybe you only need eight new clients and you can resell or upsell two of your existing clients, revenue per client. So, you guys, know your math, change your business, change your life. I hope this podcast was inspiring. Talk to you guys later.


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