12/27/2023 0 Comments Any way you slice it the profit![]() Remember the total profit for both A & B is the same (the same point on the y axis on our curve).Īnd profit is the average profit per lead multiplied by the total number of leads. Something serial entrepreneur & podcast host Kathleen Booth calls this the Value of Volume! These businesses really know their numbers & are willing to ‘go negative’ & actually lose money on the first transaction, because they realise doing so gives them an edge over competitors & they can afford to ‘buy’ even more leads that way.Īs Dan Kennedy once said “the winner is not the business that gets the cheapest leads, but the business that can afford to spend the most to acquire a new customer!” They also realise the fastest way to grow their business is to acquire the maximum number of leads – which means NOT making a profit on the initial transaction, but to acquire them at breakeven and profit over time. They realise that buying more leads isn’t a cost but an investment. The smart business that understands LTV, knows that profit will follow. These are the businesses that always want “cheaper leads”. The short-term business that looks at all marketing expenses as a cost generally wants to make money now. There are 3 main ‘buckets’ businesses fall into here. My hope is it will help you (& others) understand the profitability of your marketing at a glance, and make it easier to test your assumptions & set (and hit) even better marketing objectives. I searched for a way to explain this – and I’m very visual – so it had to be something I could sketch on a whiteboard, or a napkin while drinking a glass of Australian Shiraz!Įventually after many attempts (& a few vinos) I hit upon the simplicity of the Profit Curve. But you can’t reasonably expect $30 leads in a market where your competition is happy to pay $100. I even fired a couple of clients that kept moving the goalposts… every time we hit their new goal they’d keep squeezing the target down. I knew that wasn’t going to get them the best result, but I didn’t have the tool to show them WHY & worse, I couldn’t show them a better way. For years I’d roll my eyes (inwardly) when a new prospect said to me some variation on “we’re getting leads for $70 but we need that CPA to be lower”.
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