Many aspiring entrepreneurs believe building a wildly successful business will just happen with a snap of the fingers. However, vision without execution is hallucination. This course will teach you the step-by-step process of building a successful business.
Featured Coaching Excerpt - Notes & Transcript, Part 1
Editor's Note: Phase 2 – Determine Your Cost Per Customer Acquisition and Proof that Concept.
Editor's Note: Overview: The goal of this training is to teach you how to determine the real costs of acquiring each customer for your new startup business.
Ask Yourself: How much does it cost me to get a customer?
Editor's Note: https://www.valpak.com
Lesson Nugget: You need to try at least 3 marketing strategies at the same time.
Notable Quotable: “Get initial market feedback to see if it’s viable.” -Jeff Hoffman and David Finkel (Bestselling authors of SCALE )
Action Step: Determine your step by step system for acquiring customers.
Lesson Nugget: Determine who the GOATS (Greatest Of All Times) in your industry are and how they are getting customers.
- Alright, welcome back, we are on Business Startup 101, Phase Two, determine your cost per customer acquisition and proof of that concept. The goal of this training, you guys, is to teach you how to determine the real cost of acquiring each customer for your new startup business. Clay, this is a great series for those of us that are starting a business, starting up a business, what are we talking here as we're diving in?
- Well we have a lot of Thrivers who wanna know just what is the brass tacks, how do I get started. We're walking you through all the steps, okay.
- [Jose] Awesome.
- This is Phase Two, okay. Now what you're gonna wanna do here is you're gonna wanna determine how much money does it cost you to get a customer.
- [Jose] Okay.
- So you would basically, like in the example of the Elephant in the Room business that I shared, we ran ads, and we ran those ads, we did mailers through a company called Valpak.
- [Jose] Mm-mm.
- We also did online ads. Valpak by the way, those are the blue envelopes that you get in the mail, with a bunch of coupons in them.
- [Jose] How do you get in that, you go to their website?
- Yeah, you just Google Valpak, you'll find a local vendor in your community, and you can sign up for about 350 bucks a month, you get, you can mail to about 30,000 people.
- [Jose] Amazing.
- So you wanna try three different marketing things at the same time, three different marketing avenues at the same time, three different marketing strategies.
- Why three?
- Because you have to fail fast. You have to fail quickly so you can figure out what doesn't work. And so what you'll do, is you'll do, we did Valpak, we mailed Valpak to what we believed to be our ideal and likely buyers, men with enough disposable income to afford a $40 haircut. Then we did online ads targeted at men within that demographic. And the third thing we did is we did physical drop-offs, where we dropped off gift cards at physical businesses to men, you know. So we would go into the doctor's office, and knock on the door, and they'd say no soliciting, and we'd say, hey we're here to drop off a gift card for the doctor, you know it's a gift card for an exclusive premium men's grooming lounge, we want to give a free gift card to the doctor.
- And a lot of front desk ladies shut us down, but a lot of them said yes. A lot of front desk guys shut us down, but a lot of them said yes.
- [Jose] Wow.
- So we do all three and we're just trying to figure out what does it cost per customer. So the guy who's out dropping off stuff, we're paying him about 80 bucks a day to drop off gift cards. So he was getting about two people a day. So we were like, man that's $40 per customer, that's pretty expensive. Then we did our online ads and we realized we're down to about $8 per customer. That's not too bad, we're spending $8 on ads for every one customer that converts. And on the Valpak we're going, you know we're getting, we're spending $350 and we're getting like 40 customers.
- [Jose] Wow.
- That's about $8, $9 as well. So we figured out what the cost was to acquire each customer. And I'm gonna read this notable quotable to you, okay. "Get initial market feedback to see if it's viable." What am I talking about? He's saying you have to get initial market feedback to see if it's viable, this is Jeff Hoffman and David Finkle. What am I saying? I'm saying is that like you have to find if it's viable. What does viable mean? If it costs you $1,000 per customer to get a customer, that's not gonna work,
- [Jose] No. unless you're selling a product that has a huge markup. So a friend of mine, he has a mortgage business, and his profit per mortgage is about $3,000, and he will literally spend, Jose, about $500 per customer to get a customer on ads, but it's worth it for him.
- [Jose] Wow.
- Now if you're selling haircuts, there's not enough profit margin there to make it work. So you've gotta determine the viablity of your actual business model. What does it cost to acquire each customer? And you have to determine your step-by-step system for acquiring customers in a systematic way. That is your action step, okay.
- [Jose] Yeah.
- You have to figure out okay, you have to determine your step-by-step system for acquiring customers in a scalable way, what is the system? So we were defining like what businesses were for the drop-offs, what kinds of businesses did we go in? What time of day did we go?
- Was that with you or did you have a team around you that you guys, you know, brainstormed?
- Well, for Elephant in the Room, the co-founder, the guy whose it's his idea, Justin, he was the one who went.
- He actually went door to door himself, and dropped off stuff himself, to find out what worked. And then he found there's certain times of the day that work better. There's certain times of the day that don't work well. And there's certain kinds of businesses that work well, and certain kinds of businesses that don't work well. Then in the online ads we ran so many different varieties of ads. We found out this ad doesn't work, that ad doesn't work, but this one does. And we found out, and we just looked at it. So the one way you can leap frog is if you are in an industry that already exists, which I don't recommend you are in, you would look at who are the big dogs in the industry, who are the GOATs, the greatest of all time, who are the best in your industry,
- [Jose] Yeah.
- and how are they getting customers. And so we looked at our competitors and how are they doing it, and we were able to reverse engineer, or look at what they did that works, and apply it to our business model. And that's how we were able to quickly refine that model. And I say quickly, it took us about six months to get traction to where we were getting customers. Took us about a year to get to break even. Took us about a year and a half to get to profit, and now four years in we are rocking and rolling.
Featured Coaching Excerpt - Notes & Transcript, Part 2
Lesson Nugget: Be passionate about knowing "why" you are getting into the business because when rejection happens, you will still be motivated to press through those difficult times.
Editor's Note: Thrive15 workshops are included in your monthly membership!
Action Step: Determine your cost per customer acquisition.
Editor's Note: Email us any questions at:
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- So you telling me, what you're actually saying is that it takes time, sacrifice, grinding, working,
- Yeah, if you wanna start a business.
- checking it out, trial and error.
- If you wanna start a business, it's gonna take that kind of time, yeah.
- A successful business.
- Yeah, now if you wanna, you know, just have an unsuccessful business, you don't need to worry about these things. But if you wanna have a successful business, you need to. And I'll tell you, having a business requires a lot more work than people think it does. And so that's why I encourage people, if you're going to get into the world of entrepreneurship, you really really need to be passionate about knowing why you're getting into the business,
- [Jose] Yeah.
- because that should keep you motivated the entire time that you're getting all this rejection.
- They should come to a workshop here.
- If you come to the Thrive15.com workshop it's neat because you can meet people like Thrive mentors like Arthur Greeno, you know the guy who was one of the most successful Chic-fil-A store owners on the planet. You can meet Dr. Zoellner, top optometrist, top banker, all these top business people are all here.
- They've been there, done that.
- Yeah, and just when you guys, listen, this is how you do it, this is phase two,
- [Jose] Right.
- You gotta go out there and you gotta determine the cost per customer acquisition, track that stuff on a spreadsheet,
- [Jose] Awesome. and that's what's gonna help you to figure out whether your business model is in fact viable.
- There we go, for any questions, comments, you're not sure about certain things that we talked about, feel free to email us at info@Thrive15.com, or if you'd rather not email, you can always call us at 1-800-594-4457. We are here, Clay, to see you succeed.