Your Magic Profit Number

How much is each new lead worth to your business in the first 30 days?

How about the first 90 days?

It’s fun to talk about the lifetime value of a customer.

If your local pest control company earns $80 every quarter from their customers…that’s $320 a year.

If their average customer stays for 5 years, each new customer is worth $1,600.

A consultant might start with a $100 discovery call…that turns into over a million dollars in business over the next 10 years from one client.

If you know each customer is worth $500 or more over their lifetime, then spending $100 to bring them to your site for their first purchase makes sense.

You should know the lifetime value of each customer.

But it’s not the most important number…at least not for the clients I work with.

As a small business, we can’t afford to ‘go negative’ for years before we make a profit.

That’s fine for Amazon.com. They had the venture capital behind them to make it happen.

We don’t have that luxury. We need the confidence that we earn a return on any money we spend on advertising…or any time we invest in growing our business.

That’s why your 30 day or your 90 day magic profit number becomes so important.

In most consumer based business like golf, nutrition, arthritis, etc. I look at the 30 day number.

In b2b such as when selling to dentists or painting contractors, it’s the 90 day number.

How much do you earn per lead over the first 30 to 90 days?

You probably make an offer immediately after someone joins your list…or at least in the first few days, right?

This is one of the best times…because your prospect is ‘in heat.’

They’re excited about the subject. They’re searching for more information. Their desperate problem is in front of their eyes right now. What do you have that can solve their problem?

After someone buys, you may have an upsell that solves a similar, related problem.

Perhaps you move buyers to a separate list…where you follow-up on them and share content to help them get maximum value out of their product over the next two weeks.

Then you introduce another related product 14 days after their first purchase.

I’m not saying that’s the best system, but you should be following up on buyers with related products and services.

Your buyers are your best source of additional income. A buyer is a buyer.

How much are you earning from each customer over the first 30 days?

How much do you earn from each lead (a portion of your leads become customers)?

Once you know this magic number, now you know how much you can afford to spend for each lead.

Even free traffic has a cost. It costs you time. Money can be replaced, but your time is gone forever.

If every lead is worth $5 to you over the first 30 days…then you could reasonably afford to spend up to $5 on each lead.

You can ramp up your marketing as long as you stay close to this number.

You know the majority of customers will continue to buy from you long-term, racking up additional lifetime value.

That’s why this is your “Magic Profit Number.”

How do you calculate your number?

You need to go into your funnels and add up the purchases of all new customers (new customers only) for the last 30 days.

Figure out how much each new customer is worth over 30 days. You can take it all the way out to income per lead by dividing this out over all the new leads you generated in this period.

If you don’t know this number, you’re advertising blind. All you can do is HOPE your advertising works out…or that the time you invest is worth it in the long run.

It takes some time, but do your math.

Some shopping carts can help you with your magic number.

For example, my friend Welly Mulia launched Zaxaa over the past year.

Not only can it predict your income for the next 30 to 90 days based on past sales, but it can also compute your customer value over 30 days and 90 days (including lifetime value).

If you have a membership site, it can give you your average retention rates also.

This is in addition to a load of other tracking features. You can try out his cart for free…and then upgrade to a paid account once you see just how valuable it is (the customer metrics are only a part of the paid version).

https://www.mymarketingcoach.com/zaxaa

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About The Author

Terry Dean

Terry Dean has been in full-time internet business since 1996 and has helped thousands of entrepreneurs get started online through his articles and products. He lives in Dunnellon, Florida with his wife and 2 dogs. Find out more about how the Monthly Mentor Club can help you today.

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