Marketing

All right, so this is where I think it makes a lot of sense to have very, very strong interim chief marketing officers helping most companies with the marketing because most entrepreneurs are doing it all wrong. You do not want to manage your cost per lead as low as possible. And here's what I mean by that. The key is to really understand a few other key metrics. First, the first key is what's your lifetime value of a customer. So even if you only extrapolate that out to two or three years, and maybe it's not even true lifetime, but maybe it's within reach. And so it's a conservative lifetime value of a client. So for me, as an example with the COO alliance, they pay to join the CO alliance, about 70% renew for their second year, about 20% would renew for the third year. So I can add up, you know, the 8,500 for year one and then half of that for year two and then, you know, a fifth of that for year three. I would say that on average a CO alliance member comes to one of the three in person events per year. So they pay an additional 5,500 for that. So I can add that up. On average, they buy a seat at least in the invest in your leaders course, so I can add that up, etc. So I can calculate what my true lifetime value is for a member of the CO alliance. Now, in most marketing worlds, you're taught to drive your cost per lead down. The reason that's wrong is if I understand my gross margin or my revenue and then my gross margin. So your gross margin is subtracting your cost of goods sold. So my only cost of goods sold of my revenue is my sales commission and my advertising, especially if it's a pure trackable ad spend. So if I'm calculating my ad spend as a percentage of my cogs and my sales, because I have no other real cost of goods sold, maybe I add in a little bit of the event portion, but the rest is overhead. My team, my legal, my accounting, my software, all that's overhead is there, regardless of if I have more members or not. So once you understand your lifetime value of a customer and your gross margin for a customer, don't worry about getting your cost per lead down. Just decide on how much your cost per client could be and pay more than everybody else in the industry is paying. So if you're prepared to pay a little bit more, you will outbid everyone in the space and you actually take all of that traffic. The key is to convert your cost per acquisition to a lifetime value in as fast a cash conversion cycle as you can. So you want to be able to collect that as fast as possible to be able to kind of grow that momentum. So it's about momentum, creating momentum, and it's about really understanding your cost per acquisition, your gross margin on customer, your cash conversion cycle, and the lifetime value. So that's really what you want to sit down with, your finance team with and your sales and marketing team with is understanding those key numbers. Because if all you're doing is driving down your cost per lead, you might be leaving a lot of money on the table. Give you another another way to think of that. Let's say that I said to you right now, if you give me $1,000 and we go to Las Vegas, I'll give you $8,000. Would you say yes to that? Of course you would, because for every thousand dollars, you're going to get 8000. If I said, if you give me 10,000, I'll give you 80,000. If I said, would you say yes, of course you would. Now, if I said, if you give me 10,000, I'll give you 80,000, but I won't give it to you for 10 more years, you might say no, because the cash converting to that 80,000 takes too long, and you want to be able to turn your money faster. So it's about how fast can you get paid and how much money can you generate for your cost per acquisition? Because if you can actually figure that number out, your revenues will grow much, much faster. Marketing people tend to, if they're junior, try to drive your cost per lead down, your cost per click down. But they're missing the entire math equation of how to grow revenue quickly. Hopefully that's helpful. Sit down with your sales team, your marketing team, and your finance team. Get this stuff figured out and you win.