The cost of doing business i.e. generating enquiries online is around 20% of revenue generated. So £1 in and £5 out. If you do significant business on Amazon for example, that’s what it will cost you. If you sell accommodation space, that’s what laterooms etc. will charge you. They spend a good chunk of what you pay them on advertising to drive traffic to your offer.
Those numbers compare well with pre internet costings for yellow pages, or a salesman where £1 in £3 out was considered good.
So if you’re on the business builder package, you’ll be spending £790pm including online advertising budget. The inital target then is to generate an extra £4,000 per month in revenue for your business, attributable to your online marketing.
If you’re on the consulting package, you’ll be spending £2,000pm including online advertising budget. The initial target will be to generate and extra £10,000 per month in revenue for your business, attributable to your online marketing.
I have worked with companies where we acheived a 15 x return ie. additional sales of £30,000 a month on the consulting package. What can be acheived depends upon many factors including how strong or weak your competion is and how well you follow up and close the leads generated.
Over time, the return will increase as we market to existing customers. We’ll factor in lifetime customer value too, so if for example you run a dental practice a new customer is probably worth £2,500 to your business (£250 a year x 10 years) more if you’re selling Invisalign, Tooth whitening, Botox etc.
For ppc and shopping ads for Ecommerce websites the returns are higher, so we’d be looking to hit a 10 x return initially. I have seen roi’s up to 5,500% but that’s exceptional. It depends how competitive your space is.
You’ll need to factor in your margins bearing in mid that the margins on additional revenue generated in your business are higher as fixed costs don’t usually increase. Many of the non ecommerce companies that I work with have gross profit margins around the 30% range but profit on additional sales is nearer 50%. That means that when we hit increased revenues of 2x costs you’re at break even and I’m effectively on your team at zero cost.
Finally, if you’re currently spending £97pm for example on your online marketing and it’s not generating significant returns, now you know why.