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Marketers Don’t Want You to Know This ROI Hack · Marketing For Tradies

• 0:00
  SPEAKER_00: In order to know if your marketing is performing and if you are getting a return on your ad spend, if you are relying on word of mouth and referrals as your marketing strategy, then your cost per lead is probably pretty low.
• 0:16
  SPEAKER_00: What other investment can you make in your life or your business right now?
• 0:20
  SPEAKER_00: This is how we know that your business is going to be profitable.
• 0:25
  SPEAKER_00: Welcome to Websites That Convert, the podcast where your website stops being a liability and transforms into your greatest asset.
• 0:33
  SPEAKER_00: I'm your host Shannon and I'm going to guide you through the strategies and insights you need to build a website that not only attracts but converts.
• 0:41
  SPEAKER_00: Let's dive in.
• 0:45
  SPEAKER_00: A lot of business owners will go into marketing or even stay marketing using certain strategies without a lot of clarity on what the performance is of that marketing.
• 0:55
  SPEAKER_00: Your marketing provider might be giving you all kinds of metrics like the number of clicks, the number of traffic that was coming through, how many people saw your ads, like all of those kind of things.
• 1:07
  SPEAKER_00: But at the end of the day, clarity on performance and the actual metrics that matter is how much return on your investment that you're getting.
• 1:16
  SPEAKER_00: And in advertising terms, this is called ROAS, which is return on ad spend.
• 1:23
  SPEAKER_00: Now, in order to know if your marketing is performing and if you are getting a return on your ad spend, you need to know how much you're paying per lead, how many of those leads are converting into customers, and how much those customers are paying you.
• 1:40
  SPEAKER_00: And before you go into spending another dollar on marketing, I'm going to tell you exactly how you can calculate those three figures and how you can figure out if you are or can get a positive return on your ad spend when you're going into the next service provider that you're using, or that so you're more equipped when you are speaking to the service provider that you're thinking about working with because the right marketing provider should be asking you for these metrics as well.
• 2:10
  SPEAKER_00: And if you are working with someone right now, it should be quite easy for them to give you the cost per lead that you're currently getting.
• 2:19
  SPEAKER_00: So there's three metrics that we need to know, and what I recommend that you figure out or you ask someone who can help you before you spend another dollar on marketing.
• 2:28
  SPEAKER_00: The first is your customer lifetime value.
• 2:30
  SPEAKER_00: So your customer lifetime value can be calculated based on the amount of revenue that you generated over a period of time divided by the number of customers that worked with you during that period of time.
• 2:41
  SPEAKER_00: So you should be able to run a report in your CRM or at least get that data somewhere.
• 2:46
  SPEAKER_00: At the very least, you know, you should be able to look at your bank account statement and then, you know, invoices that you sent out or that were settled by new customers during that period of time.
• 2:56
  SPEAKER_00: There'll be a way to find that, but it's going to be dependent on what systems or software that you're using and how, you know, what your sales process is right now.
• 3:05
  SPEAKER_00: So that's customer lifetime value.
• 3:07
  SPEAKER_00: The second metric that you need to know is your lead-to-sale conversion rate.
• 3:10
  SPEAKER_00: How you get your lead to sale conversion rate is to look at the one period of time, again, and just a side note on these, you want to get the most data possible.
• 3:18
  SPEAKER_00: So the longest time horizons uh would be great, but minimum, you know, three months would be you wouldn't want to collect data less than that.
• 3:27
  SPEAKER_00: It's not going to be as accurate as 12 months and or years.
• 3:31
  SPEAKER_00: But going back to your lead-to-sale conversion rate, this is the number of leads you convert into clients or customers.
• 3:38
  SPEAKER_00: So again, you need to find the number of customers that you worked with in a period of time and divide that by the number of leads that you got in the same period of time.
• 3:47
  SPEAKER_00: So let's say you worked with 100 customers and you had a 200 leads over that same period, you would just divide 100 by 200, meaning your close rate or your lead to sale conversion rate is 50%.
• 3:59
  SPEAKER_00: Now, the third metric that you need to know is what your cost per lead is.
• 4:04
  SPEAKER_00: So if you are running ads right now, the ads platform will be able to give you that specific data.
• 4:11
  SPEAKER_00: Now, I talk to a lot of business owners who are working with advertising agencies who aren't tracking conversions correctly.
• 4:17
  SPEAKER_00: They might be saying in the ads platform that a conversion is just getting someone to view your website or your landing page or take some type of action, but not what a conversion actually should be, which is when you generate a lead.
• 4:31
  SPEAKER_00: So make sure you're tracking conversions properly, but the ads platform will give you that data.
• 4:35
  SPEAKER_00: The other way that you can figure that out is to just look at how much you spent on marketing over a period of time, again, finding that data, how much you spent on marketing exactly in a period of time, and divide that by the number of leads you got during that time.
• 4:50
  SPEAKER_00: Now, if you are relying on word of mouth and referrals as your marketing strategy, then your cost per lead is probably pretty low.
• 5:00
  SPEAKER_00: If you're paying for ads, you know, your cost per lead is gonna vary depending on your industry and what your offer is.
• 5:06
  SPEAKER_00: But either you're running ads and you can find the cost per lead in that platform, or just run a report based on amount of money you spent on marketing in your business and divide that by the number of leads that you got.
• 5:18
  SPEAKER_00: Why do these metrics matter?
• 5:21
  SPEAKER_00: Well, we need to figure out what your cost per lead could or should be in order for you to get a positive return on your ad spend.
• 5:29
  SPEAKER_00: How we figure that out is we take your customer lifetime value, and this is why it's important that you have this information and that it's accurate when you're talking to a service pro a marketing service provider.
• 5:40
  SPEAKER_00: We take your customer lifetime value and your close rate, and we figure out how much you could pay per lead in order to be profitable.
• 5:50
  SPEAKER_00: So let's say that your customer lifetime value is$10,000 and your close rate is 50%.
• 5:58
  SPEAKER_00: What that means is that technically to break even, you could pay$5,000 per lead.
• 6:05
  SPEAKER_00: And how that works out is that if we paid$5,000 per lead for 10 leads, that would be$50,000.
• 6:13
  SPEAKER_00: And stay with me on this because you're probably thinking, oh, I'm not spending$50,000 for$10 leads.
• 6:18
  SPEAKER_00: Don't worry, you don't have to, but this is just the example.
• 6:21
  SPEAKER_00: $50,000 for 10 leads, and you convert five of those leads and you end up making$10,000 off each of those customers, that's$50,000.
• 6:30
  SPEAKER_00: So technically you're breaking even.
• 6:32
  SPEAKER_00: Now, I don't know anyone who's paying$5,000 per lead.
• 6:36
  SPEAKER_00: Usually for our trades business clients, leads are somewhere between, you know,$20,000 to$200.
• 6:42
  SPEAKER_00: It really depends.
• 6:43
  SPEAKER_00: But the point is that those numbers may be realistic for you right now.
• 6:48
  SPEAKER_00: And if you're going into a marketing strategy that is giving you a cost per lead of$100 and your return on that lead, so let's say you're getting a lead for$100 and you're getting 10 leads and you're paying$1,000 for those leads.
• 7:06
  SPEAKER_00: And then off the back of that, you're converting five of those leads into a$10,000 offer.
• 7:12
  SPEAKER_00: Theoretically, you're paying$1,000 and making$50,000.
• 7:18
  SPEAKER_00: That's a 50 times return on your ad spend.
• 7:21
  SPEAKER_00: That is literally printing money.
• 7:23
  SPEAKER_00: Now, it's really important that these metrics, this close rate and the customer lifetime value is calculated correctly because that's going to help us estimate and we might be able to, you know, get you more leads by investing more into your ad spend because we're confident you're going to get that return.
• 7:40
  SPEAKER_00: But the point is that a 50 ROAS may not be realistic.
• 7:44
  SPEAKER_00: Like let's be honest here.
• 7:46
  SPEAKER_00: A 10 might, 20 might, 30 might.
• 7:48
  SPEAKER_00: Even if you're putting$1 in and getting$5 back, that's a huge return on an ad spend return on your investment.
• 7:55
  SPEAKER_00: What other investment can you make in your life or your business right now where you put a dollar in and you get$5 out?
• 8:02
  SPEAKER_00: This is how we can track the performance of your campaigns.
• 8:06
  SPEAKER_00: This is how we know that your business is going to be profitable by running ads, by implementing a digital marketing strategy and a marketing system that is geared towards creating a positive return on your ads band.
• 8:22
  SPEAKER_00: You need to know these numbers.
• 8:24
  SPEAKER_00: Now, with customer lifetime value, that's over the lifetime of that customer.
• 8:29
  SPEAKER_00: So what that means is that you're not going to see that return like for a longer period of time.
• 8:34
  SPEAKER_00: So going back to our strategy, I just wanted to, you know, give you that example because overall, you know, paid marketing and the return on the investment that you could possibly get is kind of mind-blowing when you put it that way.
• 8:45
  SPEAKER_00: But that takes patience and it takes consistency and it takes trust and it takes a good strategy.
• 8:53
  SPEAKER_00: How we can better estimate this to almost, you know, make it more realistic in the beginning because we want to see a return on ad spend faster.
• 9:03
  SPEAKER_00: You might have an initial fee or an initial cost unrelated to the customer lifetime value to begin with.
• 9:10
  SPEAKER_00: So let me use our physiotherapy clients, for example.
• 9:14
  SPEAKER_00: Generally, for a physiotherapist, we're going to get a cost per booking of around$100-ish dollars.
• 9:21
  SPEAKER_00: So you might be paying$100 per booking for your Allied Health Clinic ads,$100 per booking, and you might be charging$150 or$200 for the initial consult.
• 9:33
  SPEAKER_00: In this example, you're essentially paying or breaking even for that initial booking, but all of the money that you make and all of the return on ad spend is gained after the fact.
• 9:45
  SPEAKER_00: So after that initial appointment.
• 9:47
  SPEAKER_00: So then it's up to you to close those leads or close those bookings into recurring or subsequent bookings after that.
• 9:54
  SPEAKER_00: But all of that is profit, then you've just paid for that person to come into the clinic to make that booking, and then it's up to you to kind of um retain them from there.
• 10:02
  SPEAKER_00: So the strategy and ROWIS is dependent on the business model.
• 10:06
  SPEAKER_00: The 10,000 customer lifetime value, it could be over, you know, years.
• 10:11
  SPEAKER_00: It could be just the initial invoice.
• 10:13
  SPEAKER_00: It depends on the business model.
• 10:15
  SPEAKER_00: But the point is that in order to know or have clarity of the actual performance of your marketing campaigns, we want to look at how many customers are going to come off the back of this and what your customer lifetime value is and how much money you're going to be making after those leads come through and after those leads get converted into a customer.
• 10:34
  SPEAKER_00: So if you're unsure of if your marketing is performing right now, you can probably go and calculate these figures for yourself and then ask your marketing provider, what am I paying per lead right now?
• 10:44
  SPEAKER_00: What is my cost per lead?
• 10:46
  SPEAKER_00: And then there should be a strategy in place to ensure that is a positive return on ad spend.
• 10:53
  SPEAKER_00: But just understand there are nuances to the process and calculating this depending on what your payment structure is.
• 10:59
  SPEAKER_00: But if you're unsure if you're getting the best results, you should know what your return on ad spend is.
• 11:05
  SPEAKER_00: And in order to calculate this, you need to know what your cost per lead is, what your lead-to-sale conversion rate is, and then what your customer lifetime value is.
• 11:15
  SPEAKER_00: So I know it can be overwhelming when you are either thinking about going into marketing or you're working with a marketing provider and you're unsure if you're getting results or if you know it's really helping you grow your business.
• 11:26
  SPEAKER_00: These three metrics are what you need to know before you go into an initial conversation with someone and before you make a decision on whether you should or shouldn't stay with your current provider.
• 11:37
  SPEAKER_00: And it's going to help you make the best decision for your business so that you're getting that positive return on investment and you're more equipped in the conversations that you're having with the providers that you're considering right now.
• 11:48
  SPEAKER_00: So I hope that's been helpful.
• 11:50
  SPEAKER_00: I really want to support you in ensuring you're getting the best results and performance for your marketing.
• 11:54
  SPEAKER_00: And that means understanding what the real return on investment is for your marketing.
• 11:59
  SPEAKER_00: Thank you for listening to Websites That Convert.
• 12:02
  SPEAKER_00: If you found value in this episode, please give us a five star review on Apple Podcasts and Spotify.
• 12:07
  SPEAKER_00: Follow us on all social media.
• 12:09
  SPEAKER_00: And if you're a service based business owner that's looking to double their website conversions, book a call with my team using the link below.
• 12:17
  SPEAKER_00: I'll see you in the next episode.