When it comes to creating profitable PPC ad campaigns a lot of entrepreneurs get it all wrong…
They get focused on numbers that don’t really help them add to their bottom line. It’s understandable with a lot of so-called experts bragging about cheap website clicks and high click through rates, but focusing on the wrong results can end up costing you tens of thousands of dollars, if not more.
I don’t want that to happen to you, so keep reading…
If you’re going to be spending your money on PPC advertising, there are 3 critical numbers that you need to know to make sure you aren’t wasting your time and money.
The 3 Most Important Numbers To Know In Your PPC Campaigns
1. The first thing you need to ask above all else when reviewing your own advertising metrics or speaking with your advertising team is “what is my cost to acquire a customer?”.
With the wide array of metrics that is available for analysis when running an online advertising campaign, it’s really easy to get distracted with irrelevant “measures of success” such as click through rates, website clicks, video views, likes, comments, shares, etc. Now, I’m not saying that those stats don’t tell a story about what’s happening with the money you’re spending on your advertising (and some of those measures may boost your ego) but the fact of the matter is that as entrepreneurs we want our advertising to help us grow our business.
As the great management consultant and author Peter Drucker said, “The purpose of business is to create and keep a customer.”
Notice, he didn’t say the purpose of business was to get lots of video views or cheap website clicks…
So, the next time you run an ad campaign make sure you are tracking your cost to acquire a new customer, so you can get an accurate picture of how “successful” your campaign is.
Even if you stop reading right now, you’re already equipped with knowledge that will help save you a ton of money on your future advertising campaigns by making sure you aren’t fooled by great numbers that aren’t leading to sales.
2. The second critical question you need to be asking is “what is my average cart value?”. If you’re advertising online, one of your best chances to recoup your advertising dollars happens right after the first sale is made (or as an add-on order bump while they are checking out). By immediately offering another related product or service as an upsell, you have a chance to turn one sale into multiple sales and drastically increase your likelihood of having a profitable campaign.
Imagine if your initial product sells for $300 but you can get a certain percentage of your customers to buy an upsell and you’re then able to raise your average cart value from $300 to $400 or more. Can you see how that would start to make your advertising efforts much more profitable over time?
If you’re running a campaign that’s not profitable, this area may be where you need to focus to make it a winner.
3. The third critical component you need to know when reviewing your numbers is your lifetime customer value. If you have a fully optimized sales funnel and you know that your average customer ends up being worth far more to you than the initial sale, then you will be able to continue advertising with confidence. Knowing this number is so important if you’re spending a lot of money to acquire new customers because even if you’re barely breaking even or even losing money on the front end, your campaign could still be a winner for you.
The key here is to make sure that you figure out how much revenue your average customers bring in and subtract the amount that you have to spend to acquire and serve them. If you have different types of customers, make sure you figure out the lifetime customer value related to the campaign you’re running.
Once you understand all three of these critical numbers from your PPC advertising efforts, you’re going to be in an excellent position to advertise successfully.
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