How much money you MAKE per prospect - How much money it COSTS to acquire a new prospect from your advertising = Your profit.
That's the "holy grail" equation which rules a successful online (and offline) business. That's all that matters.
Read the first sentence again.
If you're spending more to acquire new prospects than you're making in sales, you lose. Good luck keeping your business afloat.
But if you're making more in sales than it costs you to acquire new prospects, you win. I'll see you at the six figure mark pretty shorty.
The truth is, I wish it was that simple - but there are many hidden elements of this simple equation.
First, how much you make per prospect will depend on one simple thing - your conversion metrics. In other words, what percentage of people actually do what you want them to do? The numbers are just a way of seeing how effective and persuasive your sales process is. The higher these conversion rates are, the more money you'll make.
This applies all the way through your sales funnel. So if you aren't making a profit, it doesn't mean your entire sales funnel "doesn't work", but it means you have a bottleneck somewhere (or maybe even a few of them).
After all, which makes you more money? A sales page for a $47 product with a conversion rate of 1% or 3%? One will only make you $47 in sales from 100 visitors, whereas the other makes you $141 in sales from the exact same audience. It's all down to how effective you are at persuading people follow your calls to action.
Plus, as every page in your sales funnel leads onto the next step for the prospect, if you have low conversion rates at the beginning of your sales funnel, everything else is going to be affected, too.
For example, if only a low percentage of people are signing up to your email list, that means you'll have less people checking out your free content, and therefore less people checking out your paid offer(s) - not to mention to lack of ability to follow-up with that prospect in the long-term.
All because of a low conversion rate in just one step of the process.
So as every step in your sales funnel has a conversion rate, it's your job as a to-be-successful marketer to track that conversion rate for every step in your funnel.
Then once you know your conversion metrics, you'll be able to see what's working well and what isn't, which allows you to improve your results overall.
As for the second part of this equation, you need to be acquiring new targeted prospects for the minimum price possible.
And no, this doesn't mean getting as many prospects as possible, as you only want people who are actually interested in what you have to say and offer them. Attracting anyone else - no matter how low the price is to do so - will get you terrible results when it comes to the actual profit those prospects make you.
To get these "perfect prospect" acquisition costs as low as possible, you need to split test your ads based on the knowledge you have about your ideal prospects until you find a winning combination. The more you know about your audience, the easier it'll be to write an ad which resonates with them and the faster this will happen.
It's also worth mentioning that all of the above should be done in an ethical way which makes the prospect feel valued and helped, otherwise you'll only end up with unsatisfied customers and a high refund rate - which will affect your conversions once again.
By optimizing both parts of this equation, this results in you making more money per prospect than it costs to acquire them from your advertising in the first place.
And if you're making $5+ for every $1 you spend in advertising, there is no limit as to how high you can scale your business.
So instead of focusing on branding, "expert status" or similar, the magic is actually in the metrics. Focus on improving these conversion metrics while helping your perfect prospects, and your profit will finally be allowed to soar.
- James Francis.
P.S. If you'd like to know HOW to set up your online business and sales funnel to get the highest conversion rates possible, let me show you here.