EU264: The Math Equation That All Business Owners and Marketers Need to Know

eCommerce Uncensored - Email Marketing | Facebook Ads | Social Media Marketing

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Math?! Yep, we’re doing math today, get out your calculators because they guys are gonna be talking money numbers! In this episode, the guys share with you the math equation that all business owners and marketers need to know. This equation includes how much you should be spending to acquire a customer, how much they are worth over time, and how to get people who don’t know you to buy!

Don’t forget to text us to get your business set up with converting email flows!
Text EMAIL to 8 4 4 – 6 4 3 – 0 7 4 5.

This is a direct transcript. Please forgive any grammar or spelling errors.

Jason: How do I get people who don’t know me at scale to buy.

Kevin: In business, especially in today with ad costs and everything going up, you have to think about it more long-term

Jason: copywriting, right? Like once we started digging into copywriting and once we understood that it really helped us with starting new businesses that actually made sales.

Jen: You’re listening to eCommerce Uncensored with Kevin Monell and Jason Caruso

Kevin: Hey everyone. And thanks for joining us on another episode of eCommerce Uncensored. My name’s Kevin Monell, and I’m here with

Jason: Jason Caruso

Kevin: Yeah, it really just screwed up that entrance. We need to do another 260 times before I can actually get it right. Yeah. That might be a good idea. Um, before we get started, Jason, I wanted to mention our, uh, email service that we’re offering to all of our listeners. And it’s basically, um, helping you with your email, helping you with your email campaigns, your flows, getting that revenue coming in, that should from your email platform like Klayvio, uh, and if you need help and you want. Text the word email to 8 4, 4 6 4 3 0 7 4 5. We’ll write you back and we’ll learn a little bit more about your business and see if we’re a good fit to help you out.
And we’ll go from there.

Jason: That’s right. And we’re getting, we’re getting a lot of emails or text messages from people, which is nice. Um, you know, obviously some people are not quite a good fit for, for this service, but we are, there are some of you guys out there that. R.

Kevin: So we’re excited quick tip that I learned about Klaviyo with his SMS stuff. And, you know, we tell you to text the word email to this phone number, witnesses, something I didn’t know. And that I learned. So maybe this could help you in some way, but like, if we text you from Klayvio, we respond to your initial text and then you write back and your cause we ask you what your email provider is. So some people are like art. My email provider is. But like when email is in any text message that you get, you can’t, it doesn’t really start a conversation with the person. So we can’t really see the message. It’s really a strange thing. And I think it’s a little niche that they need to fix. As soon as they see the word email, it just thinks it’s like that, um, that, that initial trigger for you.
So it’s kind of weird how that works. Yeah.

Jason: So give, we were going to talk about something that I think has literally changed the course of our success. Um, I hate to say this, but I I’m going to say to keep myself accountable, but I am in the process of writing a marketing quote unquote book. Right. And one of the, um, one of the purposes of me writing this book, other than I’m going to use it as a lead magnet, or I’m going to use it as a tripwire. One of, one of the other, um, is that I think there was a. There were two things. I think that you and I learned over the years that has taken, taken us from starting unsuccessful businesses. And that couldn’t make a sale to starting businesses that actually make lots of sales. Right. And two of those two things. Hmm, you don’t know what the second one is, but I will say what it is, but the first one is what we’re going to talk about today.
So the second one is, um, understanding the life cycle of, of somebody or not the life cycle, but how you go from introducing yourself to making sales. And the second one really. Copywriting. Right? Like once we started digging into copywriting and understanding how to write a sales page that makes people or motivates people to buy.
Once we understood that it really helped us with starting new businesses that actually, uh, made sales quickly. But. The first thing, and I know I’m speaking cryptically, but I’m doing it purposely. The first one is the, the thing that we, I think discovered before copywriting, and that is basically understanding.
How much money, it costs you to acquire a customer and then how much that customer is worth to you over time. Because most people watch these quote-unquote gurus and listen to them and they think they’ve gone from zero to multi multimillionaire with a front end product that at scale. To people who don’t know them, if that makes sense.
Right. Right. So like they think the secret is how do I get people who don’t know me at scale to buy yeah.

Kevin:And showing these like huge 10 X returns on the front end and things like that. But not w without seeing like the backstory of everything else that got them to that point.

Jason: Yeah. So like, right. So like, they, they think that.
And I say, they think we also were one of those people who, who, or we were two of those people who thought that the secret was, um, get people who don’t know you to buy. Right. And really that’s not what the secret is

Kevin: It’s funny, even probably noticed, like, as you’re telling that story, like I’m sitting here smirking, because I can remember like, when we first started working together, like seven, six or seven years ago, and I remember at this point how long ago it was, it’s crazy that it’s been that long, but, um, you know, when we started working together, we started gathering, we started acquiring these e-commerce businesses.
I remember one cosmetic customer. To be specific that we would run some Facebook ads for, and we would start the ad in the morning and it was in a small budget. Maybe it was like $20 a day or something or fit maybe even $50 a day. Start the, start the ad in the morning. We’d maybe. You know, a sale during the day or something like that.
I don’t even remember, but by the nighttime, it was always a joke between us. I’d be in there on Facebook as late at night, switching things off, took the most, not working. It’s just not working. We got to turn it off.

Jason: And it’s funny because now thinking back to those days, we had probably like two or three businesses that we started. If I, if we did that now, like we would be like static.

Kevin: Yeah. So many things. And I look back, I’m like, shit, that could have been successful if we just stuck with it. Right. Got it. Got it. No, I was just gonna say like, you turned me on to this guy, Ryan Lee. And I would, I would advise anyone out there to go to his, I don’t even know what his website is.
May it’s probably like riley.com or something like that. Yeah. He

Jason: doesn’t really, to be honest with you, man, like he starts all these other businesses. So this email list that we’re on is not even like. It’s not that it’s not a thing, but it’s like, it’s just like a page with like a sign up. Like there’s no sales page to it.

Kevin: Um, And yeah, I think it’s, if you go to I’m sure if you go to Ryan Lee, let me see. Sorry. I just hit, Jason turned me on to him. I don’t know. From what, when, but Riley, Ryan lee.com. Yeah, he, he he’d sends a daily email and I, and I save his daily emails because he, he, he just writes these really, uh, they’re not long. Every day, he just gets up in the morning and he writes an email based on his experience. It’s kinda like what we do on this podcast, but he does it every day. And I think every, every email has, has really good value. And it’s got little tips here and there that are really helpful. And I would recommend that you sign up, but he sent us his morning.
Email is today. His morning email was about this specific topic and he tells the story about these people that he talks to. And it happens to them all the time. You know, she thinks this, this woman thinks that like her, her business isn’t working, her ads aren’t working or her marketing wasn’t working. So she, he dives into a little bit, he asked her, you know, what she, what she does. And he says that she has a membership, a membership product. And he says, how much is your membership per month? And she says $30. Okay. So, and then he asks her, how long does the average person stay in your membership? And she says, seven months. And then he asks her, how much does it cost to get. Uh, customer and sh and she says $29. And at that point he’s like, well, okay, let me get this straight. Your, your subscription product is $30 a month. The average customer stays for seven months, simple math, 30 times seven is $210 and it costs you $29 to acquire a customer. That’s pretty much a no to mean it. And if you just use that simple math, it’s really that easy, but she thinks it’s not working.
And she shuts things. And that’s basically the point that we’re getting at.

Jason: Right. So the idea of what you’re talking about, um, or what Ryan’s even talking about is, um, it’s like, it’s just mad. Right. Like, it’s just math. It’s not like, and most people don’t know their numbers and that’s the problem. And most people that want to scale and they want like to, to like do all these things, don’t realize that sometimes they ha the equation is, uh, the, the answer to the equation is scale.
It’s the true scale, because like those numbers, like we, we did that, dude. If we can acquire a customer for under, under a hundred dollars, right. We feel like we’re doing pretty good. Right. We didn’t know that.

Kevin: Before? No, no. We would have shut things down immediately and we wouldn’t have gotten where we are because of it. And that’s just like the upfront product that he’s like, he even goes on to talk about like, okay, that’s just your first product too. You gotta think about all the other products that you could possibly sell these people in the long run. And it comes down to just like that mindset that you have to have that shift, because it’s really thinking about it the way this woman’s thinking about it.
Is it just a very short-sighted approach and you. In business, especially in today with ad costs and everything going up, you have to think about it more long-term. Yeah.

Jason: And I think if, if, if you could reduce everything you’re doing down to math and, uh, you know, data and math, obviously you’ll find that sometimes you’re doing a lot better than you think you are.
And, and that’s the thing. You know, this is where the whole upsell process comes from. You sell them something on the front end at like a price. They can’t say no to then you try to upsell them accessories or add on products to what they just bought. And that’s where you become profitable. And most people, they kind of stop at, oh, my ads.
Aren’t converting profitably without. Doing the rest of the math without doing the rest of the process of really that, that really is what makes makes you successful. And it’s, it’s interesting. The mindset change that you have to have to think like that. And I think, I think new entrepreneurs or new business owners, e-commerce business owners.
They don’t quite wrap their head around the end. It’s not just a new ones. I, I should probably correct myself. I see a lot of big businesses making this mistake. Yeah. Like, uh, you’re dealing with a client right now who has a continue, um, a continuity product that they’re actually acquiring customers at a pretty good cost.
And they’re having trouble sort of, um,

Kevin: In their head, wrapping their head around the FA and they have, they have. Pass data to look at and actually see the lifetime value of a customer. And I think that’s, that’s one of the parts that can be really difficult because it is a matter of time. If you’re a new entrepreneur starting a new store, you’re like, well, yeah, that’s great.
But like, I’m going to, I’m going to go broke. Like I can’t just continue to run ads and break even. Um, and then just hope that my lifetime value is, is, is higher as we go, but it’s, it really is just, and we do it like. We have some, we, we don’t have unlimited funds in our businesses either. So sometimes we’ll run ads for an extended period of time.
We’ll see orders come in and then we’ll kind of just pause, right. And take, take a step back, let revenue come in and see how that builds up and get some proof behind those numbers. Before we then go, go ahead and scale more.

Jason: We actually talked about this, I believe in the last episode, not, not a hundred percent sure, but we talked about how.
We look at this now as a process, like, okay, how do we get people to buy from us on the front end? Right, right. Okay. Once we got that. Okay. Now how, what, what did it cost us to acquire a customer? Okay. We got that number now from there, you have to then figure out like, okay, my product is $10. It’s costing me $20 to acquire a customer.
How do I recruit? That $10, that extra $10. Right. And that’s where upsells and cross-sells and email and follow up and all that stuff come in. But most people like us in the beginning would just walk away if it was costing us $20 to, to sell a $10 product where really that, that data is so valuable, like.
You know, like, okay, it’s going to cost me $20 to acquire a customer. Now I got to just take my average order value or my cart value actually, and make it over $20. Right. So it’s just a different way of looking at it. And when you, when you understand that and you wrap your head around that you realize it really just comes down to math, it just comes down to, um, you know, okay.
It’s costing me this to acquire a customer. This customer is worth this over time. Cool.

Kevin: Yeah. And be patient. Yeah, red is bad. Black is good. Um, and be patient and, and, and, you know, invest, invest in those first few customers or first like 10, 20, a hundred customers and see what those hundred customers are worth. See what they can buy next. Yeah. If you can upsell them something through email, once you get them, that customer into your email database, see what they’re going to be worth over six months over a year before you then start scaling and spending.

Jason: Yeah. I mean, we, we, we also look at ads a little bit differently these days than we used to.
Whereas like now we’re just trying to see what it’s going to cost us to acquire a customer. And once we have that number, then we can do the math. So we’ll say like, okay, we’re going to spend a thousand dollars. Let’s see what it costs us to acquire a customer and then kind of go from there. Um, and that’s kind of.
You know, that’s why we don’t really worry about so much the apple update. And we don’t really worry about like, we, we don’t subscribe to the fact that Facebook doesn’t work anymore. I mean, yeah. It’s not as easy. Yeah. Costs are up and yeah, all that stuff is true, but there are ways around it. You do have to just figure out how to get more money from people who are buying, um, and doing it while they’re buying is really.
The best way to do it because they’re so excited. They’re, they’re kind of like the couple of meanings is going so to speak. So, yeah.

Kevin: Yeah. And knowing, you know, in that stuff, the math can just make it so, so clear, you know, just seeing what it cost to come in and what it costs lifetime, you know, and then it’s, it’s also can be to at some point predictable, you can start predicting what your based on your spend, what’s your revenues.
And everything can just become clear and you can get more confidence in yourself as you know, those numbers. So it’s so important to, yeah,

Jason: Exactly. So that’s a quick one cab, but I think if you, if you truly understand what we just talked about, basically that information I can sell for thousands of dollars.
99% of people that we talked to have no idea about any of that. A hundred percent.

Kevin: Yeah. Yeah. So again, text the word, email to 8 4 4 6 4 3 0 7 4 5. We’ll text you back, learn a little bit more about your business and we’ll see how we can help you with your email. Grow that revenue from your email. And thank you guys so much for listening and as always, you can check us out at eCommerce Uncensored.com and we’ll talk to you guys real soon

Jason: later.

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