Ryan Shank of PhoneWagon explains why you need enough data before killing a marketing campaign. Facebook lead ads cost $15-$60 per lead depending on quality. A cosmetic surgeon paying $60 per lead still profits when each client brings in $8k-$12k in revenue, so don't judge results on a handful of conversions.
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What up guys, it's Ryan Shank from PhoneWagon. We are here, day 15 morning updates. We got Blue Bottle again for the 4th day in a row, so we're back on that grind. So today, what I want to talk about is getting enough data so that there is statistically significant results. And what I mean by that and kind of why I'm talking about it is A lot of you guys will test out different, let's call it campaigns, and this is towards marketing, but it can also be used in other parts of your life. A lot of times, you know, you'll experience something, but then, and then you'll start to form an opinion about whatever you experienced, right? But you have to realize that you're just a sample size of one, and you know, depending on what it is, but you have to really look at the big picture and say like, is this happening, you know, globally? Is this happening in a macro sense, or is this, did this just happen to me and it's an isolated incident? But a lot of times, you know, to kind of take a step back and almost look at it as almost like as yourself, as like a third party, and figure out what's going on. And so what I'm talking about is, for instance, when you're testing out different ad campaigns, a lot of times, you know, you'll spend a certain amount of money. Let's say you spend $500,000, and then you haven't converted any of your leads in that certain campaign, and you want to turn it off, and you want to say that campaign was not effective, it didn't work, and I just wasted money on it. Which is fair, right? It's a fair assumption. It's a fair point to, or conclusion to draw. However, a lot of times you need to give it more time and you actually need to spend more money in order to determine if there is actually going to be a good return on investment. And one thing that I'm doing right now that I'm testing out is doing some Facebook ads. And Facebook actually has different products where they could have— they actually have a lead product where the person clicks on the ad and then they submit their information through Facebook. They don't even click off and go to your site. Then obviously they have ad products where they'll click off, they'll go to a landing page and you'll capture their information. But, you know, and what's happening is I'm getting a lot of leads. I'm getting leads for about anywhere from $15 a lead to $30 a lead. The lead quality is not that good. However, there actually are some good leads in there. And so what it's important to do in— and I've kind of made this arbitrary I had this arbitrary number in my head of like, I need to at least get 100 leads under my belt, right? And of those 100 leads, then I'll look at the funnel and say, okay, these 100 leads came in. Of those 100 leads, I was able to pitch, you know, call it 40 people. And of the 40 people I pitched, I was able to close 20 of those into paying customers. And those are sort of made-up funnel numbers. But the point is you can't just, you know, get 15, 20 leads under your belt because then you might, you know, pitch call it 8 of them, and if 0 of them buy, you might think it's bad. But if you had 40 of them, you're able to pitch 20, and 4 buy, you know, those 4 that bought might be a good return on investment for those 40 leads that you spent to acquire. And you know, if you're a business, right, if you're a— I think we've talked about, you know, chiropractors or a cosmetic surgeon. A lot of times I actually have a customer that works— they're an agency, and so they do lead generation for a cosmetic surgeon, right? And so they're generating leads and and I believe they're generating leads for around $60 a lead, so the leads are actually expensive, but the people are converting at a pretty high clip, and the thing is, the conversion is worth, I think it's like $8,000 to $10,000, $8,000 to $12,000, right? So in theory, you know, depending on what their funnel looks like, they can spend a lot of money to acquire the leads and to acquire a paying customer because they get, you know, $8,000 to $10,000, $8,000 to $12,000 in value paid in cash upfront, you know, month 1. It's not like it's— a lot of times with subscription businesses, you know, you're not going to recognize profit until into the future. So you really are dipping into the negatives in the short term. So anyway, the point is you need to, you know, you need to get enough leads, enough data under your belt in order to determine if something is effective or not. Don't just write things off. As not working just because it's expensive and nothing has closed yet, okay? Give it some time, get a lot of data, and then start to look at the actual metrics over enough time, okay? So that's what we're doing. It's Friday, it's cold in New York, don't like it, but we're super excited for the things we have coming out next week. Thank you guys, see you next week.
