The one metric killing your client acquisition

So I was speaking to this business owner the other day who was making around $10K a month and wanted to get to $30K a month. Now, usually we don't necessarily take these calls because in order to work with us, you have to reach a certain revenue threshold so we can pretty much help. But I was of course listening to her issues and I thought I'd just, you know, take the call anyways. Now, the reason I'm making this video is because this is kind of like more of a common problem than I realized when it comes to business owners, where they will just fail to do any of this when it comes to marketing and just don't realize why they're not scaling. So if you're in a place where, let's say, you've been relying solely on word of mouth referrals and you want social media and you want your advertising dollars to do something for you, then watch this full video because this is going to be extremely valuable for you. Because not knowing some of your numbers and not knowing what to track and not knowing what your money is actually doing for you is one of the most costly things you can do, hands down. So I have a framework here for you, and I promise you, if you just stick around and follow this step by step, you will be more smarter and more educated on the ads and you will have an exact game plan on what to do. I took some time to kind of like develop this entire framework and it's just basically like simple math and just asking yourself the right question so you can get to the next point because I've had multiple conversations like these and just a 30-minute conversation like literally doubles businesses. I have a text message I can pretty much show you towards the end of this call where a business owner told me like, yeah, Areeb, when I spoke to you and what you told me to do, I literally doubled my business. It was— it's literally That simple as that, like a 30-minute conversation. And people spend months and years to figure out what to do to pretty much double their business. But the answer is sitting right in front of them and they're just not necessarily taking action on those. So the first thing we want to talk about is knowing your numbers. Now, if you don't necessarily know your numbers, this is the first thing you want to do pretty much hands down. And I have an entire framework on what to do and how to pretty much track your numbers. Because the math will always allow you to spend more confidently. Because right now you cannot spend more than, let's say, $100 a day without doing this, because you might have heard some businesses spending $1,000 a day, $2,000 a day, which is like $30 grand a month, $40 grand a month, $50 grand a month. And you're like, how do they even do that? Like, how is that even a possibility? It's because they know their numbers. They know exactly how much they're going to make when they spend that certain amount. So if you yourself know your numbers to the T, you yourself are going to keep doubling your budget month over month. If you know, if you're going to put $1 out, you're going to get $4 back in. You yourself are going to be way more tactical on this. Now, it's not as simple as like, okay, I'm just going to calculate how many customers I got and how much ad spend I did and just divide that. Like, it's— I wouldn't necessarily just do that because if you just do that in today's world with Facebook and like Google, what updates they have, it's not necessarily going to give you the full picture. So let's just go over the specific calculation that I made. As an example, step by step. So, and this is of course assuming that your example ticket price is $1,000. This is just an example numbers. Of course, this does not necessarily portray any single business, but let's just say these are, you know, like good numbers or like slightly above average. So example ticket price, $1,000, and your spend currently is $3,000 a month on ads. So important information to know here. So you're currently spending $100 a day. So on $100 a day, let's say you're getting a $25 cost per lead. So you're making 120 leads on a total of $3,000 ad spend. So 120 leads, if you do the math, and that is pretty much $25 per lead. Questions to ask and manually track: how many of these were actually qualified leads? So let's say out of 120, 50 of them were actually qualified. So 50 qualified leads divided by 120 leads, 41% of them were actually qualified. So almost half of these leads were not qualified. So this is the first question you need to ask and also track. Second one is How many of— how many conversations did you have from those qualified leads? So out of 50, let's say you had 35 good conversations, 35 good conversations divided by 50 qualified leads. That is 70% of, of course, qualified conversations, good conversations you had out of qualified leads. And how many of them end up becoming an actual client? So out of 35 people, you closed, let's say, 10 people. So of course, out of the 35 conversations, you close 10 people. The math is pretty much a 28% close rate out of these 35 specific people. Now, these are specific numbers that you need to be tracking. You just like some business owners just stop here. They're like, yeah, well, I'm getting 120 leads. Everything's fine. I'm getting a lot of leads. What's going on? And then like, no, no. The reason is the thing is like you're not converting anything over here. Like if you're getting 120 leads and you're not converting anything, then this, this number doesn't matter. Like most business owners, they'll just like look at this, be like, okay, yeah, my cost per lead is $25. I'm happy here. Here. And then that's where like all of the messy stuff happens because now you're just spending money into a void without knowing what's actually going on. So ask these questions first and then get all of these numbers pretty much within hand as soon as possible. Because what I'm about to show you now is like that stuff is going to be even more powerful. Like that stuff is something you need to know. So let's say close rate from total leads. So you got 10 clients out of 120 leads. That is an 8% close rate. So that means out of every 10, every 120 leads you get, you're closing 10 clients at an 8% close rate. Now, this could be a sales issue. You can, of course, improve your sales process, make sure you're improving your follow-up game, whatever needs to be done on the sales side of things to improve this number more. So even if you get this to like 12%, 3%, 4%, like that's, you know, like at least 2 to 3 more clients, that, that's $3,000 more within your pocket because your ticket price is pretty much $1,000. So cost per qualified lead. So out of $3,000, you actually had 50 qualified leads because if you come back back here and you ask yourself over here, how many of them were actually qualified leads? And then we pretty much decided there were 50 qualified leads because you actually talked to them and you identified and you looked into their application and you came to a conclusion that these people are actually qualified. Now you have to be honest about yourself with what is a qualified lead and what is not. Don't— like, a qualified lead doesn't necessarily mean, oh, they didn't spend with us. Oh yeah, no, I'll call them, but they didn't buy with us, so they're not qualified. That's not what qualified means. Because if you are completely incapable of closing a person is qualified, that does not make that person unqualified. That is your inability to sell. So that needs to improve, not necessarily the lead, because if you're in that mindset, I promise you just shut down the ads. It's never going to work for you. So you need to be in the mindset of like, okay, so I have a lead. What criteria do I have in order to actually judge them as qualified? Theoretically, you should already be doing this into your marketing. You should already be speaking to qualified leads only. You shouldn't have like any other leads but qualified leads. But there will be always a certain percentage that comes in that are not qualified. So I don't know, let's say you're a local business or let's say you're an online business, but let's just do local and that the leads that you're getting are not necessarily even within your area, they are logically disqualified. But let's say now you are only targeting people who are 30+ and you're getting a lot of people who are like 18-year-olds. That is of course a disqualified lead. But let's say now your qualification is like, okay, they have to be within my certain zip code and they have to be 30. If they meet both of those criteria, they are quote unquote qualified. And even if let's say you tell them how— if you ask them as an online business or an agency, like how much revenue they make, if they put down all the right information, that means they are qualified. So you need to have the proper definition of qualified first because I I see a lot of business owners that they'll just like call a qualified lead that meets all of their criteria but doesn't buy from them because, you know, they're giving them valid objections because from ads it's a cold lead. You need to have certain sales processes in place to actually close that deal in the first place. And if you cannot do that, then that is not necessarily the marketing issue or a lead issue. That is just basically your ability to sell issue that needs to improve. So very, very important to know that you need to properly put a definition of what qualified lead is. Perfect. So cost per qualified lead, $3,000 divided by 50, your actual cost per qualified lead is actually $60. So forget about this number, $25 per lead. It doesn't mean anything because the actual people who are going to buy are over here. It's $60 per cost per qualified lead. So you already know just by doing simple math, you can get to your true numbers right off the bat. $60 cost per qualified lead. Now we can also do another math like cost per conversation. So let's say you had around 35 good conversations and you spent $3,000. So divide that by 35 and then you have $85 per conversation that you like. You have to spend $85 to have a good conversation or per conversation from these qualified leads. Now, the most important number, the cost per acquisition, which is something you need to be tracking pretty much like religiously month over month. And it's not something that's hard to do. Just take the total amount of ad spend, take the total amount of clients that you got that month from ads specifically. You need to be tracking who came from ads. And if you, if you're not doing this, you're just never going to know like what's working or not. You need to like have a CRM or something or use Google Spreadsheets and just make sure that you're actually tracking this stuff. It's just super important. So over here, let's say $300 per client acquired. So what this is basically saying is you have to spend $300 to acquire a customer. So listen to that again. You have to spend $300 to acquire a customer. This is basically what this math is saying. And your ticket price is $1,000. So that's basically $700 that you're getting in gross profit before, of course, let's say you have fulfillment costs, whatever. Like, of course, like this depends on your business and how your operations are structured. But this is pretty much kind of like what your numbers looking at this point. So revenue generated, let's say 10 clients, out of $1,000, that's of course $10,000. Return on ad spend, you had a 3.3x ROAS, meaning every dollar you spent, you got $3.3 back. Profit before fulfillment, so let's say $1,000 and you have $3,000 for the ad spend, $7,000 gross profit. And this is exactly why pretty much tracking qualified metrics looks like— this is why you need to be actually tracking metrics properly on paper, because $25 cost per lead looks amazing, but the real numbers are $60 cost per qualified lead, $300 acquisition cost, 8.33% total lead-to-client conversion, because we're counting of course course, all the 120 leads here. And that's pretty much the math that lets you confidently scale past $100 a day because now you know whether this is worth scaling or not. So even over here, you're spending $300 to acquire a $1,000 customer. On paper, this should work out. So even let's say you, I don't know, like your fulfillment costs are $200, you're still taking home $500 and that is just to acquire a customer. So if you're still somewhat profitable, I would still scale this because you have to understand some people or some businesses will literally be unprofitable and acquire a customer unprofitably. Just so they can provide them a good service and then upsell them later on. Because let's say you acquired a customer for $1,000. If you do a good job, that customer will stay for you for a while as well. They might repeat buy your services and you need to have backend offers in order for you to do that. Because as soon as you start doing that, you're basically stacking up more profit for the same $200 that you spent on that customer. So now the math starts even being— it starts being in your favor even more. So this is why it's extremely important that you pretty much track your numbers, because this is something that's going to be extremely important. You need to know all of this so you can pretty much confidently boost this to $6,000 because if you want 10 more clients, you can literally just boost this to $6,000. Oh yeah, you can literally just spend more like $200 a day. Now, of course, there are some other things you can do, which is like improve this number over here, which is 8%. Try to get this to like 14%, 15%. But of course, if they're not super qualified, then it doesn't necessarily matter. So even this number, I believe, is going to be like 16% because most of them were not qualified. Like half of them were not qualified. So So this is why it's super important to pretty much know your numbers at all times. Now, the other two parts, which I'm just going to fly through a little bit, is are you with the right agency or should you be running your own ads in the first place, which is going to be extremely important. You do not have to tell any of this to the person who is currently running your marketing. Like, I don't have to say more on this. Like, this is something your marketing person or whoever you have pretty much running your marketing elements to it needs to already tell you this. But I also understand because business owners who get royally screwed is because they don't necessarily have this knowledge. So if you don't have knowledge on certain things, how are you supposed to go out there and find somebody who can actually help you on? So now that you know this, go with somebody who can actually provide you these numbers and actually help you get the data you need so you can scale predictably and actually scale your business. This should be brought up to you and reported to you. There's a high chance that the person you hired, you as a business owner without proper information, just hired the wrong person or you just went with the cheaper option, which is a costly mistake. So even over here, as you can see, if you're not getting all this detail, you're just going to go month over month figuring out what's going on. Trying to scale and you're just wasting time and money. Like businesses who are making less actually waste the most money because they have no clue what they're doing and they're just getting sold a cheap offer because it makes sense to them at that point. And it's just like it's, it's all a mess. So extremely important. And I would just honestly learn this yourself as well if you can, especially if you're just starting out, because numbers like these, especially to scale your business, is going to be extremely important. And I would actually put your head down and take a look into this stuff. Which brings me to my last question is are you prepared to invest time into this? Because for some of you guys, this might just seem a little too complicated, even though it's not. Like, I promise you it's not. It's literally just addition, subtraction, division, and multiplication. Like, that's, that's, that's what's happening here. Like, that is literally what's it. And you need to be able to be prepared to invest time into this so you can be more educated, because this stuff is what makes you rich, guys. This is the stuff what makes you rich, because I cannot put emphasis enough. Like, yes, providing a good service, all that stuff is important, but if you're not making money, like, what is the point of business? Because I've spoken to so many business owners. We've spoken to thousands, like literally thousands. And like every 5 months we'll speak to like 2,000 business owners and we've come across so many of them that are doing well in their business. They provide a fantastic service, but they're still about to go out of business, mainly because they don't necessarily have a client acquisition source or something like this, or they don't necessarily understand how this side of things work because they put so much effort as the owner themselves into the fulfillment side of things that they just completely neglected on how to actually grow their business using advertising, marketing, running some content, reviewing some ads. They completely neglected all of those. Now, if this is something you're like, Areeb, I have to do the work, then just hire somebody competent, spend the money. Like, this is something that's going to be worth it for you towards the end of the day, because if you're predictably acquiring customers, you'll be fine. So cool. So that being said, this is something we also particularly help with, but it has to be kind of like a certain threshold of a business owner. So if you're making anywhere between $25K, $30K minimum, you can pretty much click the calendar link below if you need help with, of course, organic content and also paid advertising. We have a whole done-for-you offer and a 90-day program where we build something like this within your business right off the bat with some amazing videos as well. Because this is just the math component to it. There's like other components to a good ad as well, because this is assuming the ad is already functioning well. So you have a good creative, you have a good funnel, and this is already converting. But now when it comes down to actually, of course, making that funnel, like that is another, of course, video on its own. So if you need help with all of this, there's a Calendly link in the description and I'll speak to you very soon. See you next week.