If you’re paying for traffic or ever plan to, then you need to hear this.
These are the most important lessons I learned while managing the Facebook channel for a large media buying campaign. I was just one media buyer among several.
The client was pushing a million per month in sales, and he was doing it with two separate offers.
One day while visiting his house for a backyard BBQ and beers, I started throwing him a question here and there.
Due to the beers, I cannot remember the exact words, but these are the golden nuggets I did keep.
Before I give you the goods…
I want you to resist the urge to say “My business is different this doesn’t apply to me.”
IT MOST CERTAINLY DOES APPLY TO YOU! No business gets to avoid these fundamental rules of marketing that you’re about to read. Just because this was a BIG million dollar campaign does not mean that the same rules don’t apply to newbies and start ups.
That response is your brains natural defense to try and resist change. Fight the resistance!
Profit Is Grown Not Made
We got to talking about the early days before his product (a line of health supplements) was making millions.
When I prodded him about how he took it from nothing to millions, he replied “Well you definitely don’t luck your way into 200% returns.”
From there he went on to explain how the most expensive mistake people make is buying traffic and hoping it’ll be profitable.
It starts out with buying $100 here and $100 there. Then they buy another course, and spend some more money. Which continues all the way down to hiring this expert and that expert, all the while feeling like the traffic networks or the experts defrauded them.
Meanwhile they were defrauding themselves.
He explained to me that you’re supposed to first establish your cost per sale and average order size and then optimize your sales funnel until you’re breaking even on the front end. You keep the traffic going until this happens, you don’t stop and start and bounce from here to there.
Then you optimize your email follow up sequence, add upsells, cross sells, and high ticket backend offers.
He said “Profit is grown, not made.”
You’re supposed to first establish your cost per sale and average order size and then optimize your sales funnel until you’re breaking even on the front end. keep the traffic going. Then, optimize your email follow up sequence, add upsells, cross sell and high ticket backend offers. This is where profit is grown, not made.
Now, that he’s taught me this lesson I see the mistake he talked about everywhere.
Which is what made me write this post.
I’m hoping I can help a few of my subscribers and customers get off the expensive hamster wheel of “Buy & Pray” or what I call the “Traffic Hail Mary.”
Watch The Profit Signals Not Conversions
His sales page didn’t convert well at all.
In fact most days his conversion rate was half of 1%. Yet, he made boatloads more money, than much higher converting funnels.
When I asked him about this he said “I’m much more concerned with a high customer value, than a high conversion rate, but I’d love both.”
He then explained the key metrics he watches; Audience Size, Cost Per Acquisition, Average Order Value, and Daily Order Volume.
What good is a killer campaign with only 100 customers. Today as I watch other Facebook experts bragging about their 1,000% ROI, I shake my head.
90% of the time these campaigns are to their own list, their own Facebook fans, or a small custom audience. The ROI is great, but there is no room to scale. You can’t go from 10 orders a day to 100 orders a day to 1000 orders a day.
What you want is an audience size of 1 million or more, if you can ROI that you’ll eat well for months or even years.
Cost Per Acquisition
Arguably, the most important number any business owner can track, yet few know it off hand.
This is the number that let’s you know if every sale you make is digging you into a hole or fattening your wallet. Ideally, you want this number as low as you can get it, but it’s more important that you increase your average order value than reduce your CPA.
Sometimes, people worry too much about reducing their CPA and hand cuff their campaigns. Your goal is not to spend the least, but to be able to spend the most. THAT is how you crush the competition.
He who can buy more bullets, wins the war!
Average Order Value
This is the number you want to concern yourself most.
Knowing your CPA is important, but your AOV is the throttle behind your business. You should be spending most of your time optimizing your funnel to increase your AOV.
All you gotta remember is CPA < AOV = Profit. Spend 80% of your time increasing your AOV and 20% of your time shaving points off of your CPA.
Think about it like this, poor people stay poor because their natural response is to try and save money. Their idea of trying to have more money is to spend less on other things. It’s an oppressive scarcity type of mindset.
Rich people on the other hand default to think “how can I make more.” It’s an abundance mindset and its the little secret that keeps the rich richer.
Daily Order Volume
This number tells you the health of your campaign.
The higher it gets the healthier your campaign is and the more revenue you’re earning. If you have a big audience size and your CPA is < your AOV, then you should be able to scale your daily order volume. Just watch it closely, because sometimes scaling changes the numbers.
Lots of ad networks try to sneak in lower quality traffic when they can’t supply you with enough high quality traffic. So make sure you scale up in controlled increases.
What About Conversion Rate & CTR?
These are still useful numbers, like bounce rate and time on page. Use them as directional cues for optimizing your funnel, but always cater to the key profit signals in the end.
A great CTR or conversion rate means diddly, if it limits your ability to scale.
- Don’t buy traffic and pray it’ll be profitable, MAKE it profitable
- Blame your funnel, not the traffic
- Concern yourself with customer value more than conversion rate
- Don’t waste your time on small audience sizes, go big or go home!
- Keep an eye on your cost per acquisition, but don’t obsess on it
- Spend the bulk of your time working to increase your average order value
- Make daily order volume your big scoreboard