Breaking even is sometimes described as the “holy grail” of business. When the amount a customer spends with you surpasses the amount you spent to acquire that customer, you break even.
Is breaking even a good thing? Of course it is.
Once you know you can spend a dollar on media and consistently get a dollar or more back in revenue, there’s no limit to how big you can scale your business. You simply increase your media spend.
In this video, I share some tips to help you reach break even point and explain what to do when you get there.
A CUSTOMER IS LIKE AN OIL WELL
In his 2012 book, No B.S. Trust-Based Marketing, Dan Kennedy wrote that his approach to acquiring a customer is like “taking title to an oil well.”
By this, he means that he doesn’t think of acquiring a customer as making a one-time sale. He thinks of it as starting a relationship that will produce repeated sales for years to come, like a well that continues to pump oil.
If you think of customer acquisition in this way, breaking even or even losing money on your media spend is nothing to sweat.
The cost of acquiring a customer is fixed. But if you follow up with that customer, maintain a good relationship with them and make offers to them, there’s no limit to how much money they can spend with you.
GETTING TO BREAK EVEN POINT
Remember that profits are made on the back end. If your front end offer brings in less revenue than the amount you spend on media, it’s OK.
You just need to make repeated offers to your customers to reach break even point. Some customers will need to see the same offer multiple times before they’ll buy, while others will say yes to multiple different offers if you have enough.
Make sure you test different offers, track all your numbers and calculate how many days it takes you to break even on your media spend. It may take 90 days or more before the amount your customers spend exceed the amount you spent to acquire them.
Once you have a campaign that consistently breaks even, you can be aggressive with your media spend and be confident that you’ll see that money come back to you.
WHAT IS YOUR TRAFFIC BUDGET?
I often ask my students what their traffic budget is. They might say $500 a month or $2,000 a month, but they don’t realize it’s a trick question.
The correct answer is, as much as possible.
When you can break even, and you know that every dollar you spend on traffic will come back to you, there’s no need to limit yourself.
These days, MOBE comfortably spends a million dollars a month on our traffic budget. Yet 7 years ago, spending just $50 a day was too much for me to afford.
The difference is we now have a customer acquisition process that breaks even. If you spend $50 a day and never see it come back, you’ll go out of business fast. But if you can spend a million dollars and get two million dollars back, you can scale quick.
The MOBE Titanium Mastermind is where advanced level entrepreneurs share the techniques they used to scale their companies through successive revenue ceilings. To learn more about the Titanium Mastermind, click HERE.