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Make millions, or thousands of dollars, or billions — depending on how far you could scale paid traffic.
We’re going to go through a simple base concept, so you get an idea of how the plan overall works.
If you’re looking at paid traffic, I have a few different columns here that we’re going to take a look at.
- We have the cost to acquire a lead;
- The total that you spent;
- The conversion;
- The sales; and
- The net that you would get.
Looking at our YouTube channel, most of the money is made on the back end — that’s why we’ve named it backstageincome. It’s behind the scenes.
How the process works
A lot of people spend money on advertisers, and it doesn’t always convert.
Frequently, you try to get the lead, and then you nurture them. Then, you might offer the first product, then a second product.
The product might be $163, $396, $896, or whatever.
I did that to make numbers simple. Let’s say the average value of that customer is $296.
If we take a look at that between these products, the value of the customer, of course, it could be much more because they refer more people like a friend or colleague. You’re also making a little bit more from their friend and colleague. The value of that initial person is much more.
It’s worth more because they’re bringing you referrals.
But to understand the concept of scaling with paid traffic, let’s use this as an example.
Let’s say you target a hundred people, or you’re sending out ads — Facebook, Google, and Instagram. The concept is you’re trying to hit as many people as possible.
Let’s say the cost to acquire each person costs you $20. To get those 20 people, you’re getting the newsletter, and then after that, they may convert further and further.
It cost us $20 to acquire, which means we spent $2,000 on these ads. We convert at about 60% to make some money on our website.
What that means is from those hundred people, we got about 60 sales. Our final profit here on the money side, we’ve made $17760.
Remember, we had to spend $2,000 on the ads. Our net is only $15760.
I remember this remaining part doesn’t include things like paying for your team, software — all that other stuff that you might need to pay for.
I got to add something here. If you’re brand new to the channel, make sure you check out the backstageincome.com website, where I share with you a lot of great freebies. You can download from cheat sheets to PDF guides to checklists.
Ultimately, in the end, $6880 is your net.
Let’s say the acquisition cost went up. The price for you to get a customer went up. Maybe your ad was not very good. Perhaps you’re targeting the wrong people. Perhaps it’s the wrong season — whatever the case may be, say it cost you $50.
You spent $5000 on ads to get these people, and a 60% convert it. That means you get $60.
You’d make $12760 or if you only convert it at 30%. You got $3880 and, of course, if it costs you $75 to acquire a customer, which is almost the price of your initial or first product.
While you’re spending $7500 for that ad to get those conversions and now you’ve got 60% converted still spending that same amount, but you’re only making $10260.
On the 30% side, you’re making only $1380 on the net.
You’re almost breaking even now your end goal usually should be looking at the further stage you know try to go to the next step with your customers.
There are many numbers here at play, and of course, these are a little bit high. Some people have a 2% conversion. Some people have 15%. Some people have an 80% conversion. It’s going to depend on your new share market, your ads, what you’re offering — so many variables involved.
What to do to scale this up?
You ramp this up times 10, times 20, times 50. You keep spending more money.
Because while you’re selling more product, eventually, you’ll get to a flatline area. Maybe you’ve saturated the market. Perhaps everybody’s bought what they want.
Understand that you could scale this and ramp this up as long as there are people out there that need your product. You’re reaching them. This is the way to do it.
We’ve covered a great deal of information here and again. I want to emphasize that this is not all the stats and numbers that you can work with. There are many other stats and numbers that you can get into. You can expand these records and dig deeper within Excel and see what am I spending on this, what is my cost on that, am I getting any referrals. You can dive more into the numbers to get even more specific.