I wasn’t great at maths at school, I really struggled. I hated it too because it made me feel stupid, and I’m not. Our teacher was called Mr LeCount and he had a beard but no moustache (what’s up with that?) You can imagine how popular/ teased he was (think about it for a minute!).
But business maths now, that’s a whole different matter – I love that!
The first exciting maths I came across was property investing maths, compounding and return on investment, that kind of maths. Comparing one deal with another, particularly deals that were VERY different, to find out which one was the “best” deal, the “easiest” deal, the one that suited your lifestyle best.
This particular day was a delightfully business maths filled day for me.
First of all, on a Q&A webinar, we dissected one of my clients business KPIs (key performance indicators) and helped her make some decisions about the future of her business.
She was trying to work out “what’s not working”?
This client was also trying to decide whether to change her business model from a descension model (where you try and sell your most expensive, top-end product first) to an ascension model.
The ascension model is where you aim for the maximum numbers of traffic, and then opt ins on the front end; then you aim for a micro sales commitment, then you up-sell those customers to your next level product, moving up to the most expensive, top-end product.
The latter has been my model of choice, although I’ve flirted with the former occasionally. I don’t have a problem with talking to people and encouraging them to invest in the best solution for them on the phone, but it strikes me as very inefficient. Using the ascension model, most of it is automated and eventually, if you do it right, your new top-end clients self select.
It is, however, a GREAT way to get to know your customers what their problems or challenges are, so if you are in the Lean Startup mode of your business, this could be a great way to go.
My client knew that, if she can get prospects to opt in for a consultation, then she can deliver such great value to those potential future clients that a good proportion of them would sign up for her mentoring.
Her challenge was that she thought it was all “not working” and wanted some guidance.
This client is not very fond of maths either, but I have drummed it into her (over the years, she’s come and gone as a client of mine) that she simply MUST MUST MUST keep some minimum KPIs.
So when we talked about it, she was able to say that around 100 new unique visitors a week, turned into about 10-15 subscribers to her free report – a conversion of 10-15%.
Every week there were 2-3 opt ins for the consultation with her (roughly a 20% conversion) via the form on the thank you page of the report opt in. Of those, about 1-2 a week (about 10% of her subscribers) actually went on to book an appointment via her online diary – and that number is rising because she’s now following up those who don’t book to see what the problem is.
She’s done about 10-15 of these consultations so far and sold one of her $97 programmes and, in the last year, about 2 of her top level VIP coaching / mentoring days.
You can see the problem here, can’t you?
It’s not that her website is not working at all. It is.
Sure it could be improved at every step, it always can.
No, her real problem is….
Just not enough data.
Not enough traffic, not enough opt ins, not enough appointments opted in for, not enough booked & hosted, not enough consultations.
If she could x5 her traffic to 500 new unique visitors a week, increase her subscribers to 100 report opt ins a week, get her consultations up to 5-10 a week, she’d be a bit worn out, but she’d have some strong customer and conversion data, and she’d probably have a regular stream of clients.
Clients who would have paid her several thousand pounds each month, not to mention the ancillary sales of her webinar training programme at $97 each (and she could probably get the price of that up to $247 or even $297 eventually.)
The answer seems simple, which is to invest in more traffic.
Did I mention that she’s getting traffic that converts from Facebook all day long, but her budget is set at $70 a day?
So to get five times the traffic, she’s going to need to invest $350 a day for a while, which is scary when you don’t know if it’s going to convert to customers. That’s $2450 a week, and she’ll need to do it for a couple of weeks. However, she’ll get the data, and if she converts just 3 of those prospects to clients, she’ll have covered her costs. More, and she’s in profit.
Isn’t it interesting that we are happy to set up online businesses all day long but something about the way we can do it on the cheap means that we are always MOST reluctant to pay for traffic.
Essentially, we are saying, here’s my business but now I don’t want to pay anything to market it.
You couldn’t imagine doing that with a “real world” business could you?
You would have to invest in branding, graphic design, business cards, flyers, brochures, those pull up things, some form of advertising, perhaps radio, newspapers, PR… oh yes! you would need a decent marketing budget to launch a real world business, wouldn’t you?
But we don’t factor it in online.
In an ascension model, the holy grail is to be able to break even on your traffic costs on the front end opt in > sale > one-time offer section.
Then you can make all your profits on the back end. I did ask my client if she wanted to move her model to that version, so that she could send traffic to the optin then jump the optins to the sales page for her webinar training programme.
She’s currently enjoying 100 new unique visitors a day for a daily budget of $70, so she’s getting new unique visitors for $0.70. If 10% are opting in, that means 10 people a day would then see her thank you page/ webinar programme offer, and perhaps 1 might buy.
One sale at $97 would more than cover her ad costs. Even if she made a sale every other day, she’s going a ways towards covering her ad costs.
While she’s building her mailing list of prospects who are interested, have given her permission to contact them and who will be seeing emails full of value packed content and calls to action every 3rd day or so.
Now, this is the kind of maths I absolutely LOVE.
Along with the kind of mindblowing facts like this one:
If you have a 10 step process, and you improve each step by 10%, you don’t improve your business performance by 100%, you improve it by 1000%.
Something to do with the power of compounding again.
My client decided that she wanted to persevere with the decension model but that she was going to invest some more money in her marketing and advertising budget.
So that she could get more and more meaningful data to make her business decisions on.
“Good girl!” I said… “Let’s talk more next week. Come to the call with your numbers all ready!”
If you have been thinking you would like to keep a better track on your business, the first numbers you need to know are as follows:
- Unique Visits
- New Unique Visitors
- New subscribers / optins
- How many sales
- Total value of sales
- New unique visitor value (divide 5 by 2)
And if you know those, you have your finger on the pulse of your business. If it seems sick, you can diagnose which bit needs paying attention to first!
Why not share your numbers here along with your URL and if you website isn’t “working” I will try and help!
And if you’d like to harness the power of Facebook marketing, but don’t know how (or don’t have the time), let me do it for you!