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10-29-2020 How to Estimate and Refine Your Digital Marketing Efforts
October 29, 2020 @ 11:00 am - 12:00 pm CDT
Watch the replay as Virtual CFO, Jeff Meziere and Cory Miller take a deep dive into the valuation of a lead and how to calculate the value of digital marketing campaigns. This is a live event, bring your questions. A Google spreadsheet was shared at the event.
Everyone is welcome. Please share the link with your friends and colleagues.
Machine Transcript – How to Estimate and Refine Your Digital Marketing Efforts
Cory Miller 00:02
Hey everybody welcome to another Digital Mmarketing Kitchen webinar. I’ve got my good friend and partner another project called Business Value Academy, Jeff Meziere, on this webinar today. One of the reasons I wanted to do this webinar for the Digital Marketing Kitchen is because Jeff and I have worked on a ton of things in the past couple of years, we’ve been partners, and he is a CPA by background and trade, but he’s an entrepreneur and operator. And by the way, a budding digital marketer, Rockstar. But I love working with Jeff, because I can he just says ask me a big question. And then we’ll look at it as using his financial analytical mindset operators, an entrepreneur, and we’ve come up with some really good worksheets and webinars like this in the past. And so I’m really excited to be sharing the lead value exercise. So I’ll give you a link to that in the chat just shortly. So you can follow along with this and just going to be screen sharing as well. In addition, Jeff also is a virtual CFO. So these are the type of activities he does, as part of being a virtual CFO, for many companies. He’s worked with billion dollar companies, all the way down to thousands of dollars companies, but or I should say, 10s of thousands of dollars of companies. And so I always appreciate just having that financial, analytical mindset, and then putting in a spreadsheet. So we’re just not fine by hunch and instinct. But we’ve got really good data in for you, those of you that are digital marketers, and doing digital marketing for your company, organization, whatever your role is, this is going to be power packed. And this worksheet is something you’re going to have going forward to use as a great toolset. So Jeff, do you want to share your screen? And then while you’re doing that, I will. I will find the link to the spreadsheet to give everybody to follow on?
Jeff Meziere 02:00
Got it? Hopefully you can see it.
Cory Miller 02:04
Jeff Meziere 02:05
See if we can blow it up a little bit. Is that alright?
Cory Miller 02:07
Yeah, please do
Jeff Meziere 02:12
that good enough, right there Cory?
Cory Miller 02:15
Yep, I can see it. Good. Everybody else? Can you see it? Okay. Yeah, I think it’s good. And then we’ll, you can use the chat to ask questions, of course, in the Q&A, as well, the button on the bottom of the zoom app, and I’m going to go find that link real quick. Jeff, you want to kick her off?
Jeff Meziere 02:34
Absolutely. So I think this all started with a question. And Cory, you posed this question to me some, always a couple months ago, I guess. And this is kind of the same type of thing that we would do in the virtual CFO offering, which is, what question Do I have as an owner operator? And then how do I support that with data? And so this is the the spreadsheet the the guest the the process that we would go through in order to come up and answer this question that you had, and that was, how much should I be spending to acquire a lead, right? And we came up with and we started looking through this lead value. And just in a series of a little bit of information, we’re able to actually go through some of these concepts today. And we’re going to just basically take you through a pre planning phase, that kind of get your mindset, right, as far as the amount of money that you’re spending with a marketing partner. And then we’ll go into and actually analyze the results of a specific campaign and actually look at how did we perform? How did that campaign perform against our original goals and expectations, so feel free to use this. The spreadsheet is worksheet that we have here, Korean now, I guess the shared the link, I would hope
Cory Miller 03:49
the link is in the chat.
Jeff Meziere 03:52
Yeah. And when you come up here, click on file on the top left, make a copy, use it for yourself. Share it with your friends, go right ahead. And hopefully, this will help you thinking through your future marketing campaigns. So Alright, obviously, the purpose is let’s set some baseline expectations. And this is just good business practice. So before I go and spend money doing anything, I kind of want to know, what are my goals, objectives and outcomes? What are the expectations that I would have from this dollar that I’m going to spend in my marketing campaign, a little bit of information here on the data input? This is your data, right? So we start out with average sales for a new customer. If I’m selling a single product, one and done and it’s a $49 product, then that number obviously is $49. If I’m talking about something that is a ongoing subscription, or somebody is a repeat customer, this number should really be the average lifetime value of a customer. Okay, as far as the average sales that we get when we acquire a new customer Those are some things that we would go into in detail if I were to work through this with you in a virtual CFO offering. But for timing purposes today, we just said, we’ve started at a point and said, the average sales for our example today is $600. Okay? Again, thinking through just a goal, we need to have some sort of sales target sales goal that we come up with, that we anticipate from getting from our marketing campaign. So in this case, we said, I’d like to have $60,000, for my marketing campaign, right? This this next campaign that we’re going to do, so I’ve got an average sales price of $600, I’ve got a sales target of $60,000. And here’s two assumptions that I’ve put in for you. In this model, I want you to update this based upon your known information. And if you don’t know, the beauty of this is you start out with something. And then as your marketing campaign produces, and we go back and look at that performance, we’ll update this, these assumptions as we move forward into the next marketing campaign. So the first assumption that we want to talk about is our goal conversion. Many times within this virtual world, one 2% is a really good goal conversion. And the conversion is saying that of the number of leads that come to me of the number of people that come to my website, right, and I’m going to use that as an example. So a lead would be somebody that visits our site, and then and then clicks on something, right? That is we’re not talking about impressions. Here, we’re talking about leads. And so that would be like a a contact in the contact form on our website, this might be a phone call into the business. If we’re traditional brick and mortar core, you want to give me some other examples of how we’re defining lead in this case.
Cory Miller 06:55
Yeah, just just think about these two assumptions for a second as baselines, you know, that this is pre campaign stuff, if you have a good sense of what the conversions are meaning. You know, there’s different ways to do that. But you know, hitting my contact form, what’s that conversion for that, or hitting the Buy Now button, you know, coming in from traffic, and then clicking the buy button. But just just make sure it’s consistent beyond the, whatever you’re doing here, just think, and maybe even make a note, this is how I’m measuring this goal, goal conversion, because we want to make sure it’s consistent throughout because then the next tab that he’s going to show you is the post afterwards, after you’ve thrown this out. So think of this all as just beforehand, trying to not fly blindly, like I’ve done for a long, long time. If you work for clients, for instance, and work for you know, do their digital marketing, things like that, you might just say, how much are you willing, you know, Jeff, on your virtual CFO offering, how much would you be willing to spend on marketing to get a client for that, and that would help you with that percentage part right here. So I want to make that note too. But whatever your goal is, and whatever you’re trying to do, just make sure that’s that percentage rate of that you put here,
Jeff Meziere 08:15
right. And what we’re talking about is that goal conversion of the percentage of customers or the percentage of leads these prospects that were able to convert to a customer, right, ultimately, who was a paying customer. So we’re not measuring ourselves by the success of impressions, or clicks, we’re actually measuring ourselves on this goal conversion of that total population, the pool of prospects that have come in, how good are we at converting those into actual paying customers, that’s what a goal conversion rate is. So again, we’re saying 5%, our example. That can that can definitely vary. I’ve seen some as high as 30. And I’ve seen some as low as less than 1%. And both of those can be successful. So it’s not, don’t hold yourself and think that, that a higher or lower conversion rate is good or bad. It’s just a measure of something we want to want to keep our finger on the pulse on.
Cory Miller 09:13
This next week, quick example. When Jeff was working this through, I said, No, no, you need to tell me that with my math. He goes Hold on. You know, pretend you have I’m trying to think of your example. You said pretend you have a $10,000 you know, sales item. Okay? You’re the entrepreneur and you sell this $10,000 How much would you be willing to give? You know, and so I don’t know what a shout out maybe $1,000. So my benchmark might be 10%. Now, that’s kind of a gut thing. But in this next thing, if you walk along these two tabs here in particular, yeah, this is trying to establish some watermark. Okay. So we’re starting with some gut stuff on some of this but like, okay, yeah, right here is what it what it will do, and then we’re going to test it with pay per click or whatever you try. to do to get some actuals and go, okay, we were this much off or that much off and start to tweak the dials kind of like remember Jeff back in the day. Like at night, I’d listen to our radio station in Ardmore, Oklahoma. And I try to tune in, you get over to it, you’d have to tune it and it’d be staticky and then come back over and you could hear it and then you get it just reading you’re like, there it is. That’s what this whole worksheet does for you.
Jeff Meziere 10:23
Absolutely. So let’s talk about the last assumption there, which is the benchmark for the budget, the marketing budget threshold. And this is something again, from a financial mind, I put in, and this is going to help us think through how much are you willing to spend, as a marketing budget as a marketing line item, as a percentage of your sales, okay. And this is really important, it’s really important for you to think about it in whether your campaign is successful or not. And that is, for every dollar that you get in, you’re having to produce something, right, you’re having to actually perform and spend dollars to produce the product or service, those are Cost of Goods Sold items, after we take out cost of goods sold. So we know that we’re not going to just take $1 that we make and go put it in the bank, we actually have to spend money to produce that product or service. Then down below that line, we actually have these things of operating overhead. And marketing is one of those line items. And when we think through that traditionally, how much are you willing to give up automatically of your dollar? How much are you willing to give up? And how much would you spend to acquire a new customer? That’s the question that we’re asking. So in my case, my example here, my $1, I’m willing to give 35 cents, right 35%. In this example, that means I’m only going to keep 65% of everything that I obtained. And I can I can perform and spend money to produce that product or service for less than 65 cents, and I’m going to take home something at the end of the day. So again, it’s just a threshold to come to other people are willing to spend more than 35%. And some just don’t have the budget for it and have to maintain something way less than 35%. So again, it’s just a number here that we’re going to go with. Now we’re going to jump into some of the actual concepts that were that we’re going to dive into today. The first one, this is our This is the fun one. This is the lead value. And the lead value I always think of is every time that the traditional marketing way was people would call us on the phone, right? Everybody kind of understands what that is, if they were interested in our product and service, they would pick up the phone and call us. Well lead value to me is every time that that phone rings, my lead is worth something, because I know, in my model 5%, I’m going to convert 5% of those into paying customers. Okay, so I know that every time that my phone rings, 5% of those are going to become customers. And I know that on average, I’m getting $600 in sales. So my lead value is $30. Every time that phone rings, I’m basically making $30. Again, assuming that my average is $600. And that I can convert 5% of those. This is top line revenue. This is our average sales price that $600 times our goal conversion rate. That is our lead value. That’s our that’s our starting point. Okay, the other the other thing that we want to talk about is target spend per lead. Again, this is that marketing budget amount, the lead value, which is this $30 that we’re talking about times our marketing budget threshold, and that 35% that’s how much that we’re willing to spend. So if I know that my lead value is $30, how much would I be willing to spend to have somebody pick up that phone and call me right? To have that, that contact on a form, I know that I can convert 5% of them. And I know that I’m making $600 on average in a sale. So if I’m willing to spend 35% on marketing, then my target spend actually becomes $10 and 50 cents. Now we understand that we have all these costs associated with running our business. My number is my lead value is $30. I can’t find a way. Cory correct me if I’m wrong, I can’t find a way to spend 29 and definitely not $31 in cost of acquisition of a client. If my lead value is 30 bucks. Right? So I can’t spend $30 in a pay per click campaign. In this example, I can never make money, right? What’s the old saying like I tried to give my services away, but I couldn’t figure out a way to make money doing it. I think that’s what we’re talking about here. Like it gives you a good baseline threshold to take a look at.
Cory Miller 14:56
As we step into this. This is where you’re starting to go Okay, you’re using a little hunch here to and you’re like, Okay, Does that sound right? You know, is, is every lead that comes in? If I’m an agency, let’s say, it’s Professional Services Agency, every lead that comes in my email, does that feel? Does that feel kind of right? You can go up and adjust some of your assumptions, for instance, and those two green boxes in the same like the target. But to your point, specifically, Jeff, absolutely. That was one of our things. He, I think you even asked me that, would you?
Jeff Meziere 15:30
Well, if we’re if we’re being open and honest here, I think we went round and round about this, which was you were saying, Hey, tell me how much I can spend. And I’m like, hold on, I can’t really tell you exactly how much you can spend. This is back to that gut check. But we’re supporting it with data, right? We’re saying 35% is all we’re willing to spend on marketing. And I know that my lead value is only $30. So it can’t be 30. Right? It’s gotta be something less than 30. So it was really eye opening, which, which kind of leads us into this next thing we never really talked about, or I never even in my past life, never really understood, like, how many customers does it actually take a very simple calculation of how many customers do I need in order to be able to meet my sales goal? Right? So the sales goal that we put up here was $60,000, and the average sale of 600? Have we even run that simple calculation and mentally prepared ourselves that we need 100 customers, is that realistic for us to get 100 customers this month, or in this campaign over the next quarter? Whatever that timeframe is. So this, this target customer number, tells us how many customers we would need in order to be able to achieve our sales target. We already you told me like you’re the one who input the data and said, Our average sale is $600. And you’re the one who told me that your goal was 60,000? Well, I need 100 customers, then in order to be able to achieve that goal. It just starts with a plan. Taking that one step further. And again, all through calculation, right? We want 100 customers. And we know that we’re our goal conversion rate is 5%. So if that’s the case, then reverse engineer that, that, that formula there. And it tells us that we need 2000 leads that we’re going to at 5% convert to customers in order to achieve our sales goal. So we need 2000 leads in order to have a successful campaign.
Cory Miller 17:32
When you get down to the other, Claudia shared something in the comments is so good, but I’m going to let you finish. And then I want to say something about this comment that Claudia made. So it’s so awesome.
Jeff Meziere 17:43
Okay, this is the this is the last thing here, then, now that we know how many leads we need, let’s talk about how much we’re willing to spend or what our campaign budget would actually need to be or could be, in this case, in order to achieve our sales goals. This is our lead target. That’s 2000 times our target spend. And again, we use 35% of our lead value. So we were at $10 and 50 cents is the amount that we were willing to spend times the 2000 leads that we need to obtain, therefore our campaign budget, we need $21,000. Right, we need to we could that’s kind of our our max spend anything less than 21,000 is actually extremely profitable in this campaign. But right now 21,000 is the campaign budget. And it just gives me an idea. Like as I’m starting to think through, I know I need 100 customers, I now know that I need 2000 leads. And oh, by the way at 35% I’m willing to spend $10 and 50 cents, so therefore my campaign budget would be 21,000. Again, just baseline thresholds here.
Cory Miller 18:52
Okay, so Claudia makes made a comment that I thought so pertinent to this. She said that I’ve always found it very hard to find a dentist, handyman local business in general that knows their lead value. But this is so helpful to be able to help them. Most businesses quality I, Jeff and I ran multimillion dollar businesses and then eventually sold them separate businesses. He had a medical supply business, by the way, I forgot to mention that in your bio, Jeff. I had a software business. And I’ll tell you after 11 years, I didn’t know our lead value. I had hunches you know, I could have answered the question of how much are you willing to spend to get for my instance of Backup Buddy to site customer at $80 you know, I probably would have been you know $10 something like that. But now what’s so awesome about your comment I want to say is this now you can walk through with your client for instance. So would you go back to the top real quick, Jeff? So most everybody handyman, dentist, etc, etc. knows, like probably can can gather. How much is a is an average sale worth so dentist. Okay, well, and by the way, this is a nuance we learned talking together to which Jeff and I, is that okay? That dentists might go well, if I get them in the door, okay, it’s worth that cleanings worth $100 to me, okay? But see dentist, if you’re like me, I don’t want to go to a dentist every time separate in a different dentists every time. So now the question becomes covering customer lifetime value, which is something Jeff and I and actually working with other people on this kind of helped them say okay, but is it really worth just $100? Because most time you probably keep a customer how you could probably ask them, How long do you typically keep customers? Okay, well, let’s apply that times two visits, two claims a year. Oftentimes, it’s a family. Okay, throw in braces, what’s the likelihood that you could probably get to the thing and say, Okay, very, extremely conservative. I wanted to hear what you think thousand dollars, like one customer is worth $1,000 that’s probably extremely conservative for a dentist. Okay. Now next, how much do you want to make? that’s that that’s the sales go. Right. Okay, so we’ve got 1000, we’ve walked him through that. Okay, conversions. Typically, when someone, you know, how does the question could be how does someone typically get their first appointment, dentists might say, they call the front desk, they call through, you know, whatever that is, whatever that metric, then we can start thinking about goal conversion rates. Okay. So they say it’s a website contact form, for instance, probably, I think, with a dentist, probably a phone call. Right? So they find that somewhere, Google, my business, the website, whatever that is referral. And then phone calls, how many phone calls, you’ve probably asked for this person, typically, you know, make that well, at, you know, 60%, you know, something like that? Well, that’s where you change your assumption here, for instance, right? Depending on by the way, depending on the channel that you’re marketing to, is also, like, if it’s Google pay per click, you want to show up in the ad top space, that might change a little bit, but you can measure that too on with a source like comment, call tracking metrics. But then my point, all this for Claudia and others, like, then you start to walk through and go, Okay, well, if $1,000 is true, and by the way, this is all just trying to put hunch to data, marry the two, right? So this is all pre planned. Does that sound right? You know, if we do the numbers and everything, and they go, is a lead now worth, you know, $300 to you, and see how you can just work through the process, but you’re using their data and hunch to to get some semblance of a plan. And then in the next tab, you test it with something a campaign and see how it is and start to tweak the dials, like the radio station.
Jeff Meziere 22:38
Yeah, certainly. Yeah, I think that you’re so there’s a lot to I guess, the point is, for today, we were really wanting to get to a, a, just to kind of the conversations around some of these topics, to give you a baseline around how you think about your digital marketing campaigns. And then the analysis of the post campaign analysis and some of the things that we would actually look at in there, this whole thing of average lifetime value of a customer, your data, of your own business, is probably going to help you and you know, looking past like the last year, two years, three years worth of data, you probably have access to the information, it’s probably right in front of your fingertips, if we just went through the analysis to get there. And that’s what we do in the virtual CFO offering is to help people understand this question right here. Okay, I’m ready to move on. Because it now that we understand, we kind of know what our lead value is, we kind of knew that we needed to spend, you know, $21,000 in order to achieve our target, but what were we willing to spend, right? Sometimes that’s not one in the same, right? We might say, Well, you know what, I don’t really have $21,000, I’m going to go give my marketing campaign people, my ad agency, a budget of 21,000, because I don’t know how well they perform, right? Like, they got to bring me the number of leads. And so we’re kind of dipping our toe in the water here a little bit, maybe within an individual marketing partner. So let’s jump over to the post campaign analysis. And let’s just kind of take a look at a few things again, was the campaign profitable? Was it not profitable, we’re going to actually look at the actual lead value in the in the information of the data that was the performance of the individual campaigns. And then we’re going to start setting new goals, right. So rinse and repeat. Right? So this is this, this tool, this spreadsheet will help you think through and again, go back through this this standard cadence within your marketing campaigns. So the data that we need, one is how much were you? How much did you actually end up spending? Right? sidebar, and we didn’t talk about this the last time we did this gory, but the amount you spend on a campaign is not just the pay per click campaign itself. It’s also the cost that you spend with that ad agency, right. So that agency fee if it’s $3,000, and then you spend $2,000 in a pay per click campaign, that’s how we’re coming up with this $5,000. This is the total amount that you spend on the campaign. This is your expenditure of marketing, because that 35% number should be my marketing ad agencies as well as my pay per click campaign direct costs. Okay. So again, how much did you spend? That’s the data I need. I need to know how many leads were generated? How many phone calls Did someone make how many contacts on my on my website, the contact forms were completed on the website, etc. However, we originally defined that lead, we want to know what the result of that was, out of that 500? How many of those people actually turned into customers? How many of those people wrote a check? You know, gave us a credit card, gave us some cash? How many paying customers that we have? That’s what we really care about. That’s the number of leads that were converted to customers? And then lastly, is out of that 30 customers, how much money they spend, right? Was my $600 number, right? Where were we at as far as average revenue of that customer? And then also thinking through as well. As we go back into the next campaign, we also think through, did they give us $600? Today, but they have a chance of repeating. So again, that’s going to increase that lifetime value as we look at our next campaign, or is it a one and done? Did they spend $600 with us, and we’ll never see them again? Okay. But anyway, how much revenue do we generate?
Cory Miller 26:29
So on this one, okay, so how do we get from first tab, the second tab, one of the ways that Jeff and I and also Rebecca are looking into even more, I’ve got a client that is actually spending a lot of money on Pay Per Click is through a pay per click campaign, at whatever you’re trying to do. That’s a great way to get really fine tune numbers on something like this and test your assumptions from tab one. And the other remark I was going to make to Jeff, is, this probably doesn’t look perfectly like round numbers, it’s probably $5,034 and 25 cents, and leads it’s 479. And customer generated properties around number, right. But then revenue, you might throw in a discount code, right? So it’s gonna look all over the map. But that’s awesome, because now you’re saying, I’ve set this benchmark This feels right to me. Now, let’s test our assumptions in tab two. And this is where like, the light bulbs go, this is where, you know, Jeff, and I teach a lot at the Business Value Academy about making a enduring company, one that continues to operate even without the founder. And but really, as business goes, if you can figure this right here, out, you’ve got magic, then if you know your numbers, you can spend as much as you want within your let’s say, if it’s Pay Per Click key keyword, campaign, or whatever. And you can really like you know, put in, get out, and right here is awesome. And you keep, you know, doing this, and he’s gonna show this to you how you keep doing the cycle, this loop, and the third tab too, and just continue to get better and better than your competition. And, okay, I know exactly how many what keywords to go after how much money to spend, what a lead value worth, then you can start going back into your system like you’re doing, Jeff, by the way, you might mention one of your clients that you’re working with, it’s like you said, shut everything off. Because right now we’re pouring money into the system that’s completely broken over here. Like they can’t get their leads done.
Jeff Meziere 28:21
Absolutely. That’s it, that’s a great example. And by the way, their their cost per acquisition of a lead was around $600, right? They’re spending $600. And they have a broken process, because their their conversion rate is nearly zero, they getting all these leads in the door, but they don’t have a good sales process, right? And that’s just a real life example, that it’s happening fairly real time, right?
Cory Miller 28:46
I mean, they’re not calling customers back, like they’re getting leads to leave a message. And they’re not calling them back following up with them, or booking appointments. So this company, Jeff, your client is pouring all this money into ads, and you came in as a virtual CFO and goes… So you’re just burning money right now? Because you’re not getting anything on the other side? Yeah.
Jeff Meziere 29:08
So our number of customers was zero, right? Doesn’t matter how much money you throw at marketing and how many leads you get if you if you can’t convert any of them to customers, then your audience or your messaging or your product is wrong, right? So all those things that you would actually look at. So let’s jump right in and look at the first thing that I care about, which is campaign profitability. And just high level numbers here. I’m going to show you how I got here. And that is we had this 17,500 and revenue that we actually generated from the new customers that came in the door. And this was the information that you gave me that I input in the spreadsheet as our example right. So we said we got 30 customers, and we made 17 five from them. Again, back to my 35% this is really important is that I’m only willing to spend 35% on marketing. So if that’s the case, that’s how I calculated this marketing director. Have the real revenue that was generated 35% was attributed to marketing, or that was my comfort level that when I first started with my goal, so my marketing threshold was 6125. In my example, here, you’ve told me that we actually spent 5000, well, then that’s a good thing, right? We spent well less than our 35%, in order to obtain that 30 customers, and in order to obtain the 17,500 bucks, okay, so the campaign itself was actually a profitable campaign, based upon the fact that we spent less than 35%. In dollar spent, in order to obtain 17, five in revenue. I hope I’m making myself clear, I know that sometimes I can get too detailed and in the weeds. Let’s let’s look at lead value. What is the lead value? In this case, it’s the revenue that was generated the 75 divided by the number of leads. So we had 500 leads, our actual lead value in this campaign was $35. So when we took our assumptions before, and we said, What’s my lead value? We’re looking at the history of the company, right? We’re looking at our average sales price is $600. Okay, and so we had $600, as the as the average sales price, and we thought that we’d be able to convert maybe 5% of our leads, that’s how we came up with our 30 bucks. Well, this is actual real life, how much dollars do we get 17, five, over the number of leads of 500, our lead value is $35. Now that’s a little different, right? That helps me in thinking through what I may or may not be able to be willing to do in my next campaign. cost per lead, this is a really quick one. I mean, we have the campaign spin was the $5,000 by the number of leads that were generated that 500. So we actually our actual cost is $10 per lead is what we spent. And the target spin that we had was 1050. So again, we’re in the positive here, conversion rate, what is our actual conversion rate, the leads that were converted to customers, I think up here we had 500, right? So we had 500 leads, and we converted 30 of those into paying customers. That’s a 6% conversion rate. And our original goal conversion was 5%, we were comfortable with 5%. But you know that 1% makes a big difference in the amount of money that we’re willing to spend, and how we look at the next digital marketing campaign that we that we undertake. So again, we’re in the positive there. Now we start thinking through is now that we know all that, and we saw some of the performance, what are we going to do in the next campaign. And so we set a new sales goal, we update our average sales. As far as the average lifetime value, if there is one difference, and then update our assumptions, we were able to convert 6% Is that normal? Do we do we feel like we might be able to do that again? Or do we want to stick with our original goal of 5% before moving on to the next marketing campaign. And we just go through that same exercise then.
Jeff Meziere 33:19
So again, you’ve got your data for your next campaign, it’s $30,000 sales target, you’ve got $600, in average lifetime value, the assumption of 6% conversion in the in the next campaign, thinking that we’re going to be able to match what we just did. And I’m going to set my marketing budget threshold again, and stay consistent with the 35%. Now I can get back down into what is my target spend is now $12 and 1225 cents, because again, that’s my lead value times the marketing budget threshold. But my lead value is actually more this this go round than it was before. So if I can maintain and stay and stay that consistent, then my target spin is now $12 and 25 cents, as opposed to what it was before.
Jeff Meziere 34:07
And the rest of them the target the target customers. Again, we’ve got sales goals have 30,000. So the target customers needed now becomes 50 because we’re saying that our sales goals is 30,000. We’ve readjusted that we thought 60,000 might be a little bit too much. How about if we set a realistic goal in this next campaign $30,000 sales goal, average lifetime value of 600. So we actually need 50 customers, we reverse engineer that into the number of targets the leads that we need our lead target at a 6% conversion rate now because we’re able to convert 6% of the leads into customers. And so that lead target is $833. Again, these are just as part of the example right? You’d have to update these numbers for your actual results.
Cory Miller 34:53
And keep in mind if you’re missing something to like this worksheet Jeff has gotten incredible text By all this too, so you’re not sure what that means go back. And you can see it on all these tabs. In fact, if you’re working with the clients or this using the spreadsheet, again, you got anchors back to, to all this too.
Jeff Meziere 35:14
And then lastly, you’re wanting to know as far as how much should I be spending on my marketing campaign, we start with this lead target, we know that now at a 6% conversion rate, we need 833 leads. And so the target marketing budget that max spend is the 10,002 away. And that’s just calculated by that lead target times the cost per lead that we’re expecting, that gives me gives me my new campaign budget. Now, if I look at that, the reason I did this little calculation is just one sidebar that I had in the conversation with Cory. And that is, well, my my lead value at a marketing budget threshold of 35%, tells me that I could spend 10,002 away. But if I’m looking at this individual marketing partner and their success, the last campaign that we just did, my cost per lead was actually word I end up with that number, my cost per lead was actually $10. Right? So it’s actually less. So in this, in this scenario, I need $8,000 worth of budget to go ahead and give this this marketing partner at the current cost per lead. That’s my estimated campaign budget. So you can see that those are two kind of different things. And I hope that I’m not confusing anybody in that conversation. But the number of leads at the lead value in a conversion rate with a 35% budget is different than the lead target of 833. At my actual current cost per lead. So we’re just showing you that you have some, some wiggle room there within your budget of where you might be able to spend your dollars, it’s kind of a range, right? Is what we’re kind of looking at.
Cory Miller 37:05
Hey, remember, if you all have questions, please let us know you can post this in the chat, I’m watching the chat or the q&a button on the bottom of the zoom app here. We’re going to show you, I think, the next the final tab, so you can do this process over and over and keep a running track and keep dialing in, you know, efficiency effectiveness of your, your work online. But please post your questions, we’re gonna have some time here to take it. In fact, if you want to be the guinea pig and plug your own numbers in here, too, and get some feedback from us. We’ve done that for two and happy to help you do that. So let us know in the chat or the q&a button, and we’re here for you. Okay,
Jeff Meziere 37:42
yeah, if anybody wants to jump up and be a guinea pig, and give us some real live numbers, I’d be happy to have the conversation and think through your campaign and your actual, actual results. So this last tab was the last time that we did this, this type of webinar, somebody asked us if we would put this in linear form, as opposed to all the verbiage down and having to go through each of the individual worksheets. So we did this, don’t let this overwhelm you. It’s the exact same thing as what is on the last two tabs, the pre, the pre campaign planning phase, and then the post campaign analysis phase, and all it does is simply move from left to right. So right here, we’ve got one single line item called campaign one, right campaign x. And we’ve started through of the set your goals, and then into the pre pre pre campaign planning results. All this stuff over here is actually just formulas. So in the gray, don’t touch those, right, like those are calculated doesn’t doesn’t affect anything as far as your ability to be able to change that. What we care about is you inputting your estimates within this spreadsheet here. So every sales sales goal, go play with that, right? change it up and increase or decrease your sales goal and see how it all plays out across the screen. So again, you start out with the pre planning phase, and then goes right into Give me your results over here on this side of the screen. Give me the actual campaign results, then we can start looking at some of these things like campaign profitability, lead value, cost per lead, the conversion rate, etc, etc, into, okay, let’s set some new goals and move into the to the next pre planning phase. Right. So the way I see this working, as far as the spreadsheet, and this is kind of new, this is something that we just recently done is that this might be on a month by month basis, right? Like you can literally just kind of copy this thing and move it down. And this can be like, you know, this can be January, and the next one could be February and just go on and do that thing all over and over again. You can see month by month, how well your campaign is moving or at least the the trajectory Of how those things are happening for you. And for people like me, Jeff, you just what we’re doing there, it’s just copying the formula from that row and just pasting it. Right? Right. So if I wanted to, um, insert a couple rows here, give me some space, I would just highlight here and hit copy on this entire row. And I just want to paste it into the next row. And just simply hit paste. And then this can be February, right, and you can just keep moving on down the page, doing that exact same thing, copy the row, paste the row, and then you would just update the changes for that individual campaign. Now, this can also be, by the way, if you want to use an example, if we don’t have any other questions that are being posed right now, this can also be within your pay per click campaign, right? I’ve seen this with a with some of the clients that I’m working with right now, you’ve got multiple types, like multiple keyword searches, or multiple types of pay per click campaigns that are happening. And so branded, non branded, right. So this could be two different types of campaigns, and how they actually, what you may spend on a branded campaign may be completely different than what you spend on a non branded campaign.
Cory Miller 41:21
Look at you using those fancy marketing terms,
Jeff Meziere 41:25
you’re turning me into a monster, my friend.
Cory Miller 41:28
Hey everybody, I’ve been with Jeff Meziere, talking with Jeff Meziere’s been showing you how to value your leads in this three part spreadsheet here that I’ve given you a link for in the chat. Hey, Jeff, would you tell talk a little bit about BVA and Virtual CFO services? And why he’s doing that post your questions, if you want to be a guinea pig and plug your numbers in here? Well, that’s what we’re here for. We want to keep adding value at the Digital Marketing Kitchen. And this is this is something I’ve been so excited about the Jeff, would you tell us a little bit about BVA. And second, virtual CFO services,
Jeff Meziere 42:05
certainly, really excited about the BVA. The Business Value Academy is one where we all kind of share. It’s a community of leaders, business owners, entrepreneurs, that all share some common mindset. And that is, to put it quite simply, my business is my product, a future buyer of that business is the ultimate customer. and building a business for value is the ultimate way to do strategic planning. Right? It is it is the foundation. I know that Cory and I both when we talk about the Business Value Academy, and what were the concepts and things that we’re bringing up within that Academy are things that we, I would say by and large wish that we would have done when we had our own businesses. And that is the decisions that we make today can be good for today. But thinking through how valuable does it make my business in the future. And those business decisions actually drive what would be future value for the organization. So keeping that in mind with everything that we do, the people, the processes, the product, how we how we treat customers, right? Everything that we do, and how involved I am personally as an owner in the business affects that ultimate business value. So that’s a wonderful thing that we’re doing there, where we come together, what twice a month and have webinars talking about some of the topical conversations around business value.
Cory Miller 43:32
And so I put a link here to to the Business Value Academy.com. And also to just virtual CFO services, where you can book a 30 minute consultation with consultation with a free consultation with Jeff, I promise you, it’s gonna be worth the time. Just his thought process. It’s helped me so much, both in our partnership and my other projects. So doing things like this to go, Hey, we call ourselves Yin and Yang, because I’ll say, Hey, I have this question. And Jeff will be like, Well, I have this question back at you. And we’ll nuance that where we get something really, really good and actionable. So hit the link there to for his virtual CFO services. If you don’t think you can use virtual CFO services, I’ll tell you, your clients can you know, a dentist, for instance, like we talked about earlier, can definitely use sharper analytics about what they’re trying to do. I believe there’s a window of opportunity that every business owner has. And we all want to make the most of it. Jeff and I have had one window in our separate businesses. And we both there was a time and place where it’s time to exit. But I believe there’s a window of opportunity and have a virtual CFO, a part of that has made it so much better. That’s my story back about seven, eight years ago, Jeff and I’ve been friends for 10 plus years now. I had a virtual CFO helped me in such a big way. And that’s what those types of services where you kind of drill down into the data. Don’t just fly by hunch, fly by data and And informed by hunch, but have a data informed decision making process and every business owner can can do that. And that’s what Jeff does works with accountants and bookkeepers, including the entrepreneurs to really go next level on your business.
Jeff Meziere 45:18
Yeah, I think it’s all about actionable insights, that virtual CFO offering has been something that’s been a lot of fun in talking through and giving business owners a level of confidence and understanding their financials, but also gives them a sounding board to pose a question that they didn’t, that they didn’t necessarily know, I have a client that I that comes to mind right away that started out originally, in very, very first meeting that we had. And I said, Well, what question do you have, like what keeps you up at night and, and the thing was all around what they’re selling, and they’ve been quoting out, they’ve been quoting out projects at, you know, $300 an hour. And they have no idea where the $300 an hour is right or enough, or what it costs them, or any of that they don’t know what their margins are, it just has felt good. And they’ve been doing it for the last three or four years, right, with no price increases. And so that was a that was a real fun project of actually drilling into the numbers and giving them some sort of confidence around is $300 an hour, right.
Cory Miller 46:25
And you work with all sorts of businesses to membership businesses to supporting businesses are, you know, an Olympian, you have a mutual client that does like for right now, helping people, you know, clean up messes in their house. And so you’ve worked with a variety of clients, but more and more the digital marketing stuff of scratches each on that. Alright, if you have a question for Jeff, please post those in the chat or in the q&a. And we’ll answer those if you want to be a guinea pig and talk to your specific lead value that you’re trying to do. We’d love to work that with you as well. Okay, Claudia asked, What’s the most challenging part when you start working with a client? Claudia ass? and Claudia, could you help me? Are you talking about particularly with like, virtual CFO that Jeff does? Or just like in general? I will tell you Okay, CFO. Yep. Jeff, what’s the most challenging part when you start working with a client and your virtual CFO services?
Jeff Meziere 47:27
Pretty easy. I know that business owners have two things in common. They want to typically grow revenue, and maximize profit. But everyone is at a different stage, or as part of their journey, right? They’re at a different stage in their business, related to where their financial health is at. And so everyone is unique. Every one of these, there’s not like, I’m not a CFO that comes in and says, This is my system. And here’s a cookie cutter. And we’re just going to do that, like I grow with you. Right? Like, I want to know how I can help. How can I be of value to you? What keeps you up at night? What questions do you have, personally, I can look at financials all day long, the biggest challenge has really been trying to get a clean set of financials and clean data. And I’ve had to do a lot of work in those early. What I almost feel is like this ramp up period where it takes a couple, a couple three months worth of time to work with the the business owners with their accounting team, they’re either their accountant that has been doing their books for years, right? CFO, they prepare, they’re really good. And I’m a CPA, so I’m not necessarily talking badly about all of my friends here. But we really do a good job of preparing like balance sheet profit and loss statements, cash flow statements, and they’re not meaningful, right? They don’t really help because the business owner can’t necessarily analyze that doesn’t even understand what they’re looking at. And so I’ve gone in and worked with those accounting teams, the CPA in recoating, some things as far as the the line items where expenditures are going and and that type of stuff, so that I can actually get clean financials in order to be able to make good analytics and give actionable insights to those business owners.
Cory Miller 49:19
Yeah, I’d echo this, we just had this conversation, Jeff, you’re like, Hey, I don’t your the questions you’re asking because we were talking about, like doing a webinar about what is a p&l and balance sheet, and how do I use them? And you’re like, I don’t even know. He has, I don’t want to talk down to people. And I was like, hold on. I’m gonna raise my hand say I could always use a refresher course on how to read a p&l and balance sheet. And so and, and a lot of the people we talked to you and I’m raising my hand here, and Jeff, you’ve admitted your own mistakes too. And in entrepreneurship. A lot of us aren’t as sophisticated as we think others are. We just aren’t that sophisticated. And so we talked about the shoe box mess a lot in the Business Value Academy, because a lot of people just like, I could just picture young Jeff getting this big shoe box of receipts and going, what am I going to do with this? But, you know, that’s oftentimes a lot we see. And then that’s what we do the BVA and virtual CFO services, help them graduate, and then use data in such a powerful way that can really grow and again, back to that maximize the opportunity you have with your business. Great question, Claudia.
Jeff Meziere 50:31
Well, I’ll ask a question back since we’ve got another question. That is, what would it would it be a benefit of any value to have a webinar as Cory is suggesting in a, how to read a balance sheet how to read a profit and loss statement? Would that be of interest to anybody in the call?
Cory Miller 50:52
And by the way, Jeff, you just said something really profound. Most your clients are looking to do two things, grow revenue, maximize profit, okay, as marketers, if we understand that we know every business owner, grow revenue, maximize profit, then we mark our marketing role that we do is really vital to help that specifically online, you know, those things, you can talk the speak of the business owner, you’re taught you’re trying to sell your services to and align what you’re doing to make sure they meet their overall goals. And races, yes. And income statement as well.
Jeff Meziere 51:28
Cory Miller 51:31
Claudia and Anne Marie both said yes.
Jeff Meziere 51:34
Okay. Well, we’ve already got enough yeses, how about that. So Cory has been pushing me to do that for a while, and we will get it on the calendar. And we will do an exercise over how to read a balance sheet, how to read a profit and loss, profit loss slash income statement. And I’m looking at at, you know, when we start talking about Cory, you say, well, you’re you’re a financial mind, but you’re actually an operator, you’re an entrepreneur. Yeah, I know, understand all the facets of running a business. As a matter of fact, in this CFO offering, I’ve been attending more digital marketing, ad agency conversations and monthly regroups. With those online companies, it’s a WordPress agencies than I ever thought that I would. And it’s been really helpful, I think, to take an analytical mind, and attend that with the business owner, because I’m asking and actually pushing back to the the ad agency partner, and challenging them to show us performance. A lot of those ad partners are really good at showing us success. And they say, look how much money you made this year, because look, you made this much money, and you only spent this. And that’s not necessarily exactly what happens, because we had a lot of other expenses that had nothing to do with marketing, right. And until we understand our gross profit, and net income percentages, I can’t tell you whether a marketing campaign is actually profitable or not. So when we get back to that 35% threshold, is saying, All right, I only want to spend 35%, on marketing. And those numbers, those thresholds actually are meaningful. And in a CFO, virtual CFO offering, we would track that and look at the trends of every line item in a percentage basis.
Cory Miller 53:30
That’s excellent. Well, okay, so go to Business Value Academy.com, you can see the virtual CFO services refer the we’d love for you to refer your clients that can benefit from these type of conversations that are outside of the pure, you know, marketing services that you offer. send them our way. But if we don’t have any other questions, we’ll say thanks to Jeff, for taking the time to do this for the Digital Marketing Kitchen. This webinar, I’d repost in our members area and send out really soon afterwards, probably tomorrow sometime. And we’ll have a link to the calculator as well. But I think judging by the little icons there. We got a couple of people already looking at it. So well, Hey, everybody, thanks so much for being here today. We appreciate you. We’ll be doing more of these. And if you have specific suggestions you’d like to like, you know, mind Jeff’s brain. I’m the person to send that to and then we’ll go ask him for that. So you’re getting a lot of thank yous, and really awesome process from Bradley. So thanks so much, everybody, and thank you, Jeff Nazir, virtual CFO Business Academy Business Value Academy.com. I appreciate you
Jeff Meziere 54:41
Cory. Thanks for having me, my friend.