How to read the economics of your business

There’s only one way to scale an info-business, or any business for that matter.

And that is - understanding the economics.

In other words, running your numbers.

Now this topic isn’t discussed often in the space of online marketing, however, it’s by far one of the most important components of scaling.

Why’s that?

Well, how else can you:

• Predictably scale your ad-spend, without becoming unprofitable

• Spot the bottlenecks and inefficiencies of your sales process, to close more deals

• Increase your funnel conversions to book more qualified appointments, and liquidate more costs

• Increase your average order value, and reinvest more profits into your business

Without understanding the economics of your business, you simply cannot.

Leading you to inconsistent revenue, and a “sinking ship business”.

Therefore every day you must conduct an analysis simply overviewing the numbers of your business.

You can do this via Google Sheets, airtable, or custom dashboards.

Here are a few of the many things you should be looking at on a daily basis:

• Closing %

• Show Rate %

• AOV (High-Ticket)

• AOV (On Funnel Purchases)

• Funnel Conversion %

• Cost-Per-Lead

• Cost-Per Qualified Application

• Cost-Per Disqualified Application

• Cost Per Appointment

• Current Downsell Revenue

• Current Ad-Spend

• Global Return On Ad-Spend

Now, to give you a bit more context on how you can use this information to scale your business, I’ll give you a real-life example of how I plan to scale one of my clients.

Please keep in mind these numbers are for paid ads exclusively and does not reflect organic traffic and sales.

For this particular client we’re running a VSL book call funnel, with a down-sell ascension funnel for disqualified applications.

The core objective of this funnel is to book more qualified appointments while liquidating our ad spend.

I’ve found this funnel to be the highest-performing funnel in the marketplace right now, for this specific objective.

Here’s a breakdown of our current numbers:

• Closing % (51.8%)

• Show Rate (68.5%)

• AOV For High-Ticket ($3,666)

• AOV On Funnel Purchases ($68.85)

• Funnel Conversions (10% Take Rate On Front End Offer, 50% Take Rate On Order Bumps, 16% Take Rate On One-Time Offer)

• Cost-Per-Lead ($4.32)

• Cost-Per Qualified Application ($126)

• Cost  Per Disqualified Application ($13.79)

• Cost Per Appointment ($279.33)

• Current Downsell Revenue ($2,650/Day)

• Current Ad Spend ($2,000/Day)

• Global Return On Ad-Spend (8.81)

Now, let’s say our goal for October is $600,000 in sales exclusively from paid traffic.

Well - based on this information I can clearly see that if we spent $4,000 per day we’d book 13 sales calls per day exclusively from paid ads.

I can also see that based on our closing rate and show rate, we’d close approximately 5 deals per day with an average order value of $3,200.

At this point, we’re on track for $480,000 in sales for the month of October, excluding our down-sell ascension funnel - which at the time of this writing brings in around $80,000 per month, with a good bulk of this being monthly recurring revenue.

Without taking you back to algebra class, you can now see the power of understanding the economics of your business.

You can take a quick look, and know what to focus on to help you reach your monthly revenue goals.

Maybe you need to increase your show rate, or maybe you need to decrease your cost-per-lead.

Simply by knowing this information, you can pay more attention to the needle-moving tasks.

That’s it for today’s email, tomorrow we’ll discuss how to actually crack cold traffic profitably which is one of the hardest things to do but by far the most fruitful.

Talk later.

Malcolm

Btw: Right now I’m in the process of recording 100+ modules for a new info-product I’ve been working on, there’s a few videos specifically on economics. 

So here’s what I’ll do - if I can get 50 referrals to sign up to this free email list over the next 48 hours from you guys, I’ll drop those videos exclusively to this list next week! 

You can use this link to refer a friend: malcolmbryant.beehiiv.com