Why Paying To Acquire Clients NEVER Fails (If You Know These 4 Crucial Metrics)

April 21, 2018

It’s true. Paying to acquire clients never fails…. but there are some key metrics and performance indicators you need to be monitoring and keeping a close eye on.

I mean free clients are GREAT, no doubt about that. But if you want to truly scale and take your business/profession to the next level, you need to be spending money to acquire clients on demand and with predictability.

Although, we do factor in free clients into this equation and I’ll show you shortly how paying to acquire clients is actually better than free clients…..

It doesn’t really matter how we pay to acquire clients, as long as we get clients. But Facebook Advertising is definitely the #1 way right now to acquire clients. Hands down. It gives you a predictable way to generate clients on demand. They also give you detailed metrics and trackable data.

So, let’s talk about the first metric we should know and be tracking.

#1. The Cost To Generate A Consultation/Sales Call/Inbound Lead

This right here is extremely important to track.

It is an important metric because not every person is going to buy or become a client every time. So by knowing this and then finding out our closing ratio it will give us our Cost To Acquire A Client — which is the 2nd metric we must be tracking. But before we dive deeper in the second metric, let’s expand the importance of this.

If you know what it is costing you to generate a consultation or inbound lead/sales call — say $100 — and your product/service is $1,500 — and $1,000 is break-even (because of over-head and what not), isn’t it satisfying knowing that even if you SUCK at sales and closing, you can spend $1,000 to try to close 10 people. I mean at least ONE person is going to buy….hopefully right?

But do you see how this metric is crucial for you to know?

Say your average close ratio is 4/10 — and it’s costing you $100 for each call, that means for every $1,000 you spend to generate 10 sales calls you are profiting $5,000!

(4 x $1,500 = $6,000 — $1,000 = $5,000 Profit)

Now, let’s talk about the second metric…..

#2. The Cost To Acquire A Client

This is probably the most important metric to track and know — and you should know it right down to the dollar.

Most businesses have NO CLUE what it is costing them to acquire a client/customer. Especially with their marketing efforts. That is just absurd.

This metric is vital for your profits & survival if you are going to be using paid methods like Facebooks PPC to acquire clients. Why?

Well, this is how you are going to measure ROI. Without knowing the cost to generate a sales call and especially a CLIENT, how can you accurately determine if you are losing money, breaking even, or profiting from a campaign? That’s right you can’t.

So, to find out the cost to acquire a client we first need the cost to generate a sales call.

Which, luckily we did the math for above.

If it’s costing you $100 per sales call and you close 4 out of every 10 clients on the calls spending $1,000 to generate those calls, then $1,000 ÷ 4 = $250 or our Cost To Acquire A Client.

Now, we know that for every $250 we spend, we are going to acquire 1 client and make a $1,500 sale. Simple as that. I’m pretty sure anyone with a brain and a dash of common sense would spend $250 to make $1,500 — that’s a 600% Return on Investment.

Because once you know these number’s, your marketing and business can scale exponentially. And you really don’t have a business if you can’t spend a predictable amount of money to make a predictable amount of new profits.

Let’s talk about the third metric we should know.

#3. The Lifetime Value Of A Client

This one is pretty huge as well.

Most people don’t know this metric as well….

Which is pretty sad. But once you finish this article you’ll be equipped with knowledge a lot of people simple don’t know.

The Life Time Value Of A Client is simply:

Average Price of Product/Service X Frequency (Ex: Monthly Recurring, Yearly Recurring, Once a week, etc) = $________ Per Year.

$_______ Per Year X Average Length of Time A Client Stays A Paying Client

= Life Time Value of A Client.

Example:

$1,500 X Monthly Recurring (12 months) = $18,000

$18,000 X 1.5 ( Avg. 18 months — 1 1/2 years) = $27,000

Your lifetime value of one client would be $27,000.

For your financial services, it will likely be WAY more than this BUT ...

It is very important to know what this number is.

Another important metric to track when paying for clients is the Average Number of Referrals That Turn Into Clients.

#4. The Average Number of Referrals That Turn Into Clients

Now, assuming you have a referral system in place where each client refers 3 people — which I think all businesses should have, especially service based businesses.

This number is also crucial because remember how I said paying for clients is better than free clients?

This is why.

If you can pay to acquire a client and THEN get 3 referrals — you can seriously throw some fuel on the fire this way.

Let’s give you an example.

Say on average for every 6 referrals you get, 2 become clients, or 1/3 because you have a referral generating system.

Now, if you PAY to generate 10 clients at $250/client — like we calculated above — you will be paying $2,500 not only for 10 clients. You will be getting 30 referrals also! Which, if 1/3 or 30% become clients — you will be generating an extra 9 clients! For the $2,500 you spent you will be getting 19 clients at a cost of $139.57/client — yes, your ROI gets even BIGGER as your cost to acquire a client decreases naturally!

Now, these number are made up — but not far fetched or unrealistic at all.

I see this happening all the time — even in my own business.

You see if you can PAY to ACQUIRE clients, you will almost NEVER lose.

BUT, you have to closely track these 4 metrics, set up a referral generating system / an incentivization program (for you current clients to give you the referrals), to scale your business with predictability and acquire clients on demand.

I go over all of this in my Free Training as well where you can learn more about setting up a predictable client generating system by using these paid methods like Facebook Ads, Google Ads, etc. It’s not as easy as paying the Monopoly Man for 10 clients next month. You have to have the right systems in place which allow you to generate those sales calls using the paid attraction methods.

If you would like to learn more check out my Free Training for Financial Advisors. I offer a FREE 30–45 Minute Breakthrough Marketing Strategy Session at the end to help you set up systems like this for your business / Financial Services, all you have to do is schedule a time and fill out an application after the video so I can see where you are right now, what systems you’re lacking, and what we can put in place right now to help you achieve your goals.

You can check the video out here:

> FREE TRAINING <

Then apply for a FREE Strategy Session.

Hopefully you found this article insightful, and I look forward to guiding you on the journey of more success.

To Your Success,

-Mitch

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