Dan Kennedy breaks down marketing success as half psychology, half money math. Most business owners lack organized metrics to track what actually works, so they can't improve. He covers predictive vs. trailing indicators, front-end vs. back-end customer metrics, and why timely data beats guessing.
Success in marketing is really about two things. It's roughly 50% about behavioral psych, about how the people you are marketing to actually think, behave, etc. And 50% about math, which I call the math that's important. I call money math.
Hello, and welcome to this month's masterclass. My name's Darci Juarez and I'm here with Dan Kennedy for this month's masterclass on advanced money math. Dan, I've heard you say that those that make the most money are the wealthiest, and who are the wealthiest are the ones who know their numbers inside and out, upside down, backwards, forwards. With so many numbers to look at, I'm excited for today's masterclass and what we should be looking at. Can we start by looking at the different categories and types of money math that you talk about?
Sure. I would back up for just a second to emphasize the point you just made, and that is those who know things rather than having opinions and beliefs about things tend to make a lot more money. Success in marketing is really about two things. It's roughly 50% about behavioral psych, about how the people you are marketing to actually think, behave, et cetera, and 50% about math, which I call the math that's important. I call money math. And invariably, people who are easily stumped with their money math questions and don't know and start to guess and express opinions. Right? So, like, if you ask most docs, Dennis Cairo, et cetera, tell me about your efficacy at getting referrals, you will hardly ever get a money math answer. They will not say to you, well, we average 1.6 referrals per active patient per month. Okay. They won't give you an answer like that. They will say, we do great. Well, what's great? Right? We don't do very well. Well, what's not very well? Right. They don't know. And because they don't know the base answer. So if you press, well, what's your average per patient per month, per quarter, per year? They don't know. Well, if you don't know that now, you can't dig in and see, do all the referrals come in the first 30 days of the patient's existence and then they fall off? Do they not come till three months later? So we need to do things to see they can't do anything because they don't know anything. Right. And it's remarkable, really, that people can go years in their business and not know any of this, just like they didn't know it on day one. So the answer to your question then. So the list refer to it so I don't miss anything. So the first category of important information is predictive and trailing indicators. So what tells me about what is going to happen that I may want to intercede? What tells me has happened, which is less useful but still can be useful that I better fix. So that's a category related is present bank and future bank numbers. So most business owners, by the way, they kind of know their present bank number. So they will know what we sold today, this week, this month, how much money we took in. They won't know a future bank number. They will not be able. They will have nothing out of the revenue activity that allows them to either predict future activity or that actually represents a deposit into the future bank. Simplest example I always use is the restaurant owner can tell you what his revenue was this weekend. He won't be able to tell you how many complete contact cards they captured from first time visitors, including birthday information. They won't be able to tell you that because probably they didn't do it. Well, that's the future bank. That's so like I bought something at on Christmas shopping as we're doing this. And most retail is horrendous in part because they have a labor shortage. So they're putting anybody you know, if you were, as Ron Legrand always says, they're staffing with people too dumb to keep a job at Popeyes Chicken. But some of the stores, so like I was in a Brighton store, you know, the Brighton is right now, to be fair, it was empty. I'm the only customer. So whether this holds up under pressure, I don't know. But they were great. They handled an out of inventory issue perfectly, managed an upsell. And we don't see any activity from you since 2016. Let's update your record. And we don't have your birthday. Can we have your birthday so we can send you a birthday gift? Yes. And are you still married? Yes. We don't have your wife's birthday. Can we have your wife's birthday? And then she was pretty good because I was buying two things she said. So one's probably for the wife, is the other one for the girlfriend? Because we can put her in the system too. Right. So that's future Bank. Right. And if you don't get that, you're only making present bank deposits. That's the second category of information. Right. Third category is front end, back end. Okay, so what's happening with the newly acquired customer and the first transaction, what does that look like? So, for example, if you sold this weekend to 22 people who had not bought from you before, what percentage of them did an upsell, what percentage of them joined your rewards club, et cetera, right? So that's front end, which then gives you the ability to do back end, Right? So if your front end is messed up, you don't have the ability to do back end. Then in the back end, what's happening in the back end, when is the second transaction occurring, how fast, et cetera. And then finally, you have customer data, and you have financial data. And again, so most people, most business owners, for financial data, they'll have what the accountant or bookkeeper gives them at the end of the month, the end of the quarter, and the end of the year. It's mostly math they can't use, in part because they got it too late to do anything with it, and in part because it's really not relevant to advertising, marketing and sales. Right? And the customer data they have, they have a lot of it. They don't have much of it organized in a way that they can use.
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