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Lesson III- How To Crush the Competition like Ants
Ready to annihilate everyone else and dominate your niche? Today’s lesson is gonna teach you how to crush ‘em like ants.
Hey there, it’s Michael again.
Ready for today’s lesson?
Welcome to Lesson III: How To Crush the Competition like Ants
Now that we understand what most people get wrong about digital marketing & how to read your customer’s minds, we are ready to get into clear, actionable strategies you can use that guarantee success.
After this lesson your entire business & marketing strategy will be completely changed so that you can survive any “recession” that comes your way.
You’re gonna learn the key trick to profitability in online advertising & business that almost no one else knows.
Here’s what will be covered:
- The #1 Trick Most Businesses Don’t Know That Guarantee Profitability
- Secret Selling Strategies to Achieve that Trick
- How This Annihilates Competition and Makes You #1
The Secret Business Trick That Guarantees Success
Most people do business wrong. I know because I once did business wrong.
Back on my first e-com store I was trying to spend $10 to make $30. Don’t get me wrong, it’s totally possible, but you have to be an excellent marketer. Tomorrow I’ll give you another secret trick to try to accomplish that.
What’s the problem with spending $10 to make $30? Well, if you can do it, Billy down the street is willing to launch the same style of ads and he’ll out-bid you for advertising space so he’ll spend $15 to make $30.
Well, that’s okay- you can spend $20 to make $30. So you out-bid him. But Billy is determined, so he goes up to $25.
Suddenly you two are crunching up to $30 for $30 for your online stores, until finally Ralph joins the picture and says “F%!& you all” and spends $35 to make $30 because he’s an idiot and doesn’t understand how business works.
Enraged you and Billy try to out-bid him because maybe everyone else will quit and ad costs will finally drop down. Next thing you know y’all are spending $45 to make $30 and one of the Facebook shareholder’s starts laughing and buys himself a new Ferrari ‘cuz you’re giving up all your cash.
Finally you and Billy give up, angry as hell, and announce to the world that “digital marketing doesn’t work” and it’s all a scam.
Yeah, that’s it… If it was a scam why does Google & Facebook still exist today if they’re basically built on selling ads?
You call up Ralph, angry, and find out he’s still spending $45 to make $30 and you cuss him out.
You slam your phone to the ground, destroying it, because clearly Ralph is such an F$!@’n idiot for still spending $45 to make $30. Facebook reps are so happy that they decide to increase the spend to $50 to make $30, yet Ralph keeps spending.
Next month you see Ralph with a brand new car and he’s moving out of the hood to a fine mansion.
You sit there in amazement, and the only logical reason comes to mind: “he’s a drug dealer, there’s no way he actually earned this.”
No. That’s not the case. Ralph just knows the secret trick to dominating the competition. You got crushed like a tiny ant.
Okay, okay. I know that was vivid. Let’s take a step back before this actually happens. I want you to be Mr. (or Miss/Mrs.) Ralph.
What was Ralph Doing To Succeed?
Spend $45 to make $30 sounds like a very stupid idea, but not if you understand the #1 most important metric in a business: the lifetime value of a customer.
You see, most people are like Billy. They try to spend $5 to instantly make a $15 sale. If they break even, then they get all upset and claim digital marketing doesn’t work.
Let’s say you own a restaurant. Maybe you spend $50 to get one new customer inside the store.
Expensive or not? Initially this sounds expensive, but on paper this is massively profitable.
In the restaurant business people typically come in groups of 2, 3, or 4. Let’s say the average is 2.5 for simplicity (I believe it’s actually 3.7, but could be wrong, so smaller number for example).
The average order in this restaurant totals at $25 per person. So the restaurant owner, Ralph, spends an average of $50 to get one new customer but this one new customer brings an average of 2.5 people so he makes $62.50.
Right now Ralph is basically spending $50 to make $62.50 which is actually not profitable due to other costs (restaurant property rent, server costs, chef costs, food costs).
Can you guess where this is going? Mr. or Mrs./Miss customer doesn’t come just one time.
Ralph knows his restaurant is the best. He’s completed the homework from the previous lessons and understands clearly the value he provides people. When people don’t purchase or come into his restaurant, he adjusts his marketing to better convey the value provided.
The Customer he “wastes” $50 to get in the first comes back, again with an average of 2.5 people. Let’s say just 1/2 of people come back next month.
Take a look at this math. Ralph spends $50 per customer, and 50% of those customers comes back the next month.
The first time the new lead buys his food, it isn’t profitable. He loses a small bit.
Ralph knows that 50% of the customers will return in the next month, again with an average group size of 2.5.
So while Ralph actually loses a bit in the first month from his ads, he profits a lot in the second month when people return. In the third month they again return- Ralph now has customers that come in every week or month, making up for the short-term loss and expanding his business greatly.
This is a very simple example, and in reality the math equations I use to predict these types of things are rather complicated. For example, in Ralph’s situation he also knows that if a new lead comes in with an average group size of 2.5 people that one of those people will have never visited his restaurant before, and 20% of those people will return.
Suddenly what initially appeared to be a crappy, expensive ad actually turns into a vastly profitable system of marketing by focusing on the lifetime value of a customer!
Back to the previous example of spending $50 to make $30. If you track your customers via a CRM (or other methods- more on this in future lessons) then you may realize that customers come back & bring referrals so that by month II your ads are profitable.
The Secret Sauce of Marketing
Okay, wow- I know that was a lot to explain. So let me put it simply, without fancy examples and math n’ stuff.
In short, the “secret trick” is to focus on long-term value of a customer. There are also other methods which we will discuss soon.
If you spend $10 just to make $10, that is actually absolutely amazing- what you are doing is printing a customer list off of the internet!!!
Those customers can receive re-targeting ads (this is in Lesson V) & other special advertising types which are insanely cheap so that you profit.
At the very least, in the example of Ralph, you may know that these people return & bring referrals, and those referrals continue to refer more people and become repeat customers!!
Again, it is definitely possible to make an instant profit on digital marketing. All I’m saying here is that shouldn’t be the focus at all because if you’re able to make an instant profit then so is your competition, and soon ad costs will be climbing fast.
Most people don’t understand this, or actually practice it in business. If you can practice this strategy, you’ll crush the competition like ants.
Let me recap again very clearly:
A huge secret to any form of marketing is focusing on lifetime value of a customer rather than the instant spend-profit. Instead of focusing on spending $5 to make $10 NOW, figure out how long you can go (ie. 1 month, 2, 3,) without making an instant profit, and then focus on making a profit over a longer period of time (such as 2 months) from that customer so that you can spend more on ads.
Suddenly it becomes okay to spend $10 to make $10 because you know next month that customer will make another $10 purchase where you profit!
Secret Selling Strategies to Achieve Trick #1
As discussed in this long lesson, focusing on the lifetime value of a customer is key to this.
Now this doesn’t apply in every case, such as if you have a high-ticket sale item. Real estate agents are an example of this because what they’re selling costs so much money that you can typically make an instant profit.
Still it’s imperative to try to find a way to leverage this trick.
For example, one strategy which is highly effective is to create a small digital course which costs about $7 or $17 or something like that in your niche. A real estate agent for example would create “the ultimate guide to buying/selling in [city].”
Then what you do is you run ads attempting to sell the course, with the goal of breaking even and NOT making a profit!
The real estate agent that makes such a course will be able to dominate the competition. They can spend an average of $17 to make one course sale, thus breaking even. In the meanwhile they are essentially printing off a giant list of people interested in buying/selling in their city.
Not everyone will end up working with the real estate agent, but this is an effective method to “print a customer list” which then can have an automated selling system (such as Email marketing, or an assistant, etc.) that attempts to up-sell people in the course to working with the real estate agent!
Another example of this would be an up-sell funnel on your website or inside of your store.
For example, maybe someone purchases a shirt from your store. Then you code the page so that it instantly offers a second, complementary shirt at a discounted price.
You can also set up retargeting ads (more on this in another lesson) to offer cross-sells to people who already purchased from your store. If someone bought a pair of pants, you can automate online ads to advertise to them a shirt which looks great with it.
There are many methods to “printing a customer list,” and they all revolve mainly around offering something of lesser value (but still value) to your prospective customers and then building a customer list at a break-even price so that you can re-market your main, pricier offer to them later.
How This Annihilates Competition
Still with me? If so, I applaud you. You’re serious about business and I’m willing to bet you’re gonna make it (if you haven’t already, in which case you’re gonna hit that next level!).
The reason for this is because this… man, it requires brainpower. You already know that.
You don’t need to be a genius to understand any of the lessons I’ve sent you, but you do have to be willing to go through that annoying & painful stage of sitting down, defining the pleasures, pains, bla bla bla all that stuff and then putting in the extra work to make this strategy work so that you can succeed.
It’s great that it’s hard. It means your competition isn’t doing it.
Your competition is likely hiring the best copy-writers they can to spend $5 and make $15. Now that you understand the concept of lifetime value & some other strategies to “print a customer list,” you can spend $15 to make $15 initially or even $25 to make $15.
You’ll essentially buy out all of the ad space that your competition wanted to use, thus making yourself #1 in your niche.
By also understanding the lifetime value of a customer you aren’t so worried about making profit now. You can focus on giving your customers an excellent experience instead.
Now, the question I’m sure you’re wondering…
How To Calculate the Lifetime Value of a Customer
Sometimes you can’t, such as if you’ve got a new business or product. This typically only works in established businesses. Let me give some suggestions for different situations.
In the restaurant niche you could ask your servers to count how many people are at each table, how much they spent in total, and have the servers input this information into an Excel sheet after each table leaves.
Later you will be able to analyze this data and figure out the average group size, average amount of money spent per customer, etc. The hard part is figuring out repeat customers, which you can do with a rewards programs of sorts.
If you’ve got a digital tech company, you may use a CRM of some sort to track customer information. Same for an Ecom store.
Once you know this data you can figure out your max cost per sale point. This is the maximum you’re willing to spend to acquire one new customer, on average.
For example, you may own a software company that charges a customer $30 per month for their service.
In this case you may be willing to spend an average of $60 to acquire one customer because you know that the average customer says 7 months on your program, which means that medium-term your business becomes profitable.
Now what if you don’t have an established business yet? That’s okay, you can create a roadmap that keeps the end in mind.
For example I would recommend developing a simple, affordable product where you can try “print off a customer list.” Spend $17 to make $17, and in the meantime you’re building an Email list in your niche which you can survey to create better products for (or at least have a customer list to launch your new product to!).
Finally, I can’t provide all of the strategies for tracking this data- it’s too niche to explain generally. What I mean is that you have to do research for your own niche how to track the lifetime value of a customer.
It is different for every niche, but it is also possible in every niche. Some upcoming homework for you will be to research how you can track customers & discover the lifetime value!
Understanding this is key to long-term sustainability.
More Cash, Longer Wait Times
The less cash your business has, the faster you have to profit. You need to spend $5 and make $15 now because you can’t dump $5,000 in ads and wait a month to break even.
In cases like these, where you are tight on cash and can’t wait long to make your profit back, I recommend making an affordable product you can break-even on to “print a customer list.”
You can also set up up-sells or re-targeting ads (more on that later in the course) in order to profit faster.
One way or another this core principle of focusing on lifetime value of a customer is key to long-term profitability.
Once you have enough cash to go months or even years without making a profit, you win. Why?
Suddenly you can spend absurd amounts of money to acquire new customers because you know 7 months later you’ll finally start making a profit from them.
Because you can spend so much cash just to acquire one customer your competition has no hopes of possibly competing. You can crush ‘em like ants, as they won’t be able to compete with the ad costs.
The only way your competition can get ahead is by developing a completely new product or service which attracts the market, so hopefully you know already to stay ahead of the curve and keep innovating!
Grasping the Lesson
I can’t restate this enough. This is probably the #1 key to marketing. I guarantee you it’s unlikely your competition is doing this.
Most business owners aren’t doing this. You wanna be #1 restaurant? No problem, employ this strategy. Whatever your niche is, do this ASAP.
Most people give up on digital ads because the advertising cost is “too high” for them to make a huge profit now. People are too obsessed with getting things now that they forget that if they’re patient for just 1 or 2 months they can profit absurdly in the long-run!
Let’s recap shall we?
- You MUST find a way to understand the lifetime value of a customer
- Focusing on this # allows you to break-even now and profit later
- Your competition is likely not doing this trick, so you can buy-out all ad space
- By focusing on lifetime value, you become more profitable because you stop trying to make money NOW, knowing that your break-even (or losses) leads will profit down the line
- You need cash to sustain you while waiting for the leads to profit
- If you don’t have cash, focus on creating a mini-product or mini-service to “print a customer list” at a break-even price that you can later sell to
- Up-sells, cross-sells, retargeting ads, etc. should all be used to increase average order value
- If you don’t currently have a running business, then plan for this as it’ll help you break into the market quicker
- The key to crushing the competition like ants is out-bidding their ad-space (so they can’t advertise) because you have the long-term sales processes to profit down the line
This lesson was EPIC. I highly encourage you to commit this lesson to memory because this is the KEY to dominating your niche!
Time for some homework. Remember, hit “reply” and send your answers to me so that I can review them for you. I want you to succeed!!!
- What is the KEY to crushing your competition like ants?
- What is your niche, business, and product?
- How do you intend to track the lifetime value of a customer (requires external research!)
- What are some selling tricks you can use to off-set advertising costs and increase profit?
- How do you intend to apply this lesson to your own business or idea?
- How far out do you want to wait to make a profit from customers, and why?
- What questions do you have for me about this subject?
If you have any questions, feel free to ask. I’ll get back to you as soon as I possibly can personally.
Now that you know how to crush the competition with your marketing campaigns, you’re ready to learn how to create flawless ads.
That’s tomorrow’s lesson though. Give your brain a good rest and let this information settle because we’re gonna apply what we’ve learned from the previous lessons into tomorrow’s lesson.
Coming up tomorrow: How To Create Flawless Ads
See you soon!
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