He was willing to spend $250 to make a $69 sale…
That means that for every $1 he’d bring in, he was willing to spend almost $4 on marketing.
And that didn’t even count his cost of fulfillment!
This was a client of mine. Not an investment newsletter publisher, but close. Definitely serving an aligned market.
And one of the projects I did was an acquisition piece for a monthly print newsletter.
The annual price for the newsletter was $69.
How the heck could he afford this?
I’ll admit, he had capital. You have to, to mail 10s of thousands of potential customers, aiming for economics like that.
But he was smart with his capital. He wasn’t like some silicon valley unicorn with a fat wad of investor cash, hoping to maybe go public or become profitable if he just spent enough money.
No, he was self-funded. An entrepreneur and business owner in the truest sense. Someone risking his own money in order to create financial success for himself.
And for my campaign — and others for the offer — he’d figured it out. He would be happy as long as he could acquire a first-time customer for $250 or less.
Because he understood one critical concept: Customer Lifetime Value (LTV).
And in fact, it wasn’t even about lifetime value.
His time frame was much shorter. He had a spreadsheet that tracked 12 months, 6 months, 90 days.
And he knew that if he acquired his AVERAGE customer at $250, for a $69 sale… He’s hit breakeven at a certain point, and become profitable after that.
And then the longer he kept that customer happy, the more profitable they would become.
This sounds simple, but most marketers don’t get it…
It’s really easy to look at your ad campaign, and expect it to be profitable right away… Or within 7 days… Or 30 days… Or however long your advertising platform tracks it for.
Or, on the other side of the equation, to not even calculate any of this… To not track your ads… To not know if you’re spending $1 if it’s bringing back $0.50, $10, or ZILCH.
But the best marketers know.
And, they take calculated risks.
They invest as much as $250, to get a 12-month print newsletter subscriber at a $69 subscription fee.
Here’s how that might work out…
This new subscriber spent $69. They IMMEDIATELY get mailed another offer, and the average customer spends another $50 within 14 days. Now we’re at $119.
They get their first monthly issue, and that has a high-end, expensive offer, and the average value per subscriber is $31. Now we’re at $150, within 30 days.
Then the next month’s issue has another offer, and this one does well, adding $50 to the lifetime value. Now we’re at $200. In under 60 days.
Then there’s another special mailing, adding an average of $75 in sales per subscriber. Bringing our total up to $275, in under 90 days.
And still, there are 10 more monthly issues, each carrying an extra offer. And because you’re already mailing them the newsletter they paid for, 1) postage is cheaper to add a few pages, and 2) they’re highly-likely to open it.
Now, of course, not every subscriber spends these amounts. But if you throw an offer with a $5,000 price tag in the newsletter, only 1 in 100 subscribers needs to buy to get a $50 average value per subscriber.
By doing this systematically, he was able to very quickly increase the average customer value well above the $250 he was willing to spend to get that customer in the first place. Knowing the window in which he’d be negative on that customer would not be long.
This works even faster and better online…
It’s really easy in marketing to get caught up in the words and images. The message we send. But there’s one thing that will beat better words in your ads and landing pages, every single time.
A funnel. A chain of offers, presented one-after-another, to people who buy.
Take that same offer above.
Let’s say our sale is $69, for a 1-year subscription to a newsletter.
Now, let’s add something else behind that, at about 2.3X the price — or $159. And let’s add another sale behind that, at about 5X the original price — or $349.
And heck, while we’re at it, let’s throw just one more crazy offer in there, at $6,999 — expecting almost nobody to buy.
And let’s set it up so that once someone buys the first offer, they get a one-click upsell to the second, and then to the third, and then to the fourth.
And I had to open up a spreadsheet for this, but if you’d like to verify the numbers you can…
So let’s say that we get 1,000 orders at $69 each.
And 40% of those 1,000 — or 400 total — buy the $159 offer.
And then because buyers are buyers are buyers, 50% of those — 200 total — go for the full $349.
But then we know that the $6,999 offer is a little far out, so it doesn’t surprise us that only 5% of the remaining buyers — 10 out of the original 1,000 — converted on that.
Add all this up, and the average $69 sale was actually worth $272.39 in customer value.
Not every customer was — mind you. 60% of the customers stopped after spending $69 — at least for today.
But 10 people out of the original 1,000 ended up investing $7,576 for all four offers.
The BEST marketers who are spending millions per month on paid traffic have ALL their customer acquisition set up this way…
Of course, the numbers can differ. But the principle is the same. The goal is to maximize ROI on DAY ZERO, the first day the customer connects with you. And then all the future transactions that come from that customer, or other leads acquired through that same campaign (who didn’t buy that day) are all bonus.
If you’re the one running your business, my question is: what can YOU do in order to offer as much value as possible, and generate as much business as possible, on that day the customer first discovers you and is most excited about your business?
And if you’re working with clients: how can you help them implement or optimize this strategy in their customer acquisition efforts?
SOMEONE in your market is already doing this. Or if not yet, they will be soon. And that person who is making $272.39 for every $69 sale will spend more on media and traffic than you will, to show up bigger, higher in the rankings, earlier, and more often.
Why not make that person you?
Yours for bigger breakthroughs,
PS: If you want to get into the nitty-gritty of how you optimize and increase the Customer Lifetime Value across your entire business, and across the customers entire lifecycle, check out my training on The Most Valuable Customer Strategy. One of the biggest secrets to the rapid growth of my first client was doubling their LTV from $200 to $400, then doubling it again to $800. On the strength of that growth, the owner sold a portion of the business and ended up building the most expensive house in the county.