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Suggest You - Profitable Marketing Programs Part 2: Figuring Break Even Point
If you want to double your business, then you need to get inside your client's head through proprietary research and provocative results.By conducting proprietary research, you obtain special information that prospective clients can't find elsewhere. The foundation of client seduction is to give away useful information that demonstrates to clients you have the expertise to help them. Giving away general problem-solving information is good, but it is not good enough. You need to offer specifics, and the more provocatively you can package the results, the better.Professionals, consultants and technology entrepreneurs can use proprietary research to obtain clients, even d
CPM Break Even Point
What happens if you are paying per thousand exposures (in other words, CPM - a flat rate
I agree with Brooker T. Washington, "Few things help an individual more than to place responsibility upon him, and to let him know that you trust him." I agree with Mr. Washington because I've experienced trust. I've been on both the giving and receiving side of the equation, and I know first hand the power of trust.That's what trust is. It's power. Power to transform an ordinary, everyday, OK place to work, into an environment where people are almost unstoppable. Power to unleash creativity, commitment, enthusiasm, and fun. Power to bring out the energy, talents and gifts of individuals, to build teams, to achieve amazing results.Look around your organization. There's
Figuring Break Even Point
To figure the break even point, you should know the program’s expected response rate, the program’s expected conversion rate, and the lifetime value of a new customer.
In the formulas below, the response rate and conversion rates should be expressed as a decimal (Examples: 1%=.01. One-half percent=.005). The lifetime value should be expressed in dollars. For more details, please read Part 1 of this article.
Figuring Break Even Point Based on Lifetime Value
The lifetime value formula requires you to make assumptions about how many times a customer will purchase from you over a period of time (usually around 18 months to two years) and the average profit on each sale. For average profit, start with your total sales dollars and subtract cost of goods; distribution costs; advertising and marketing expenses; and any other variable expenses related to making product and filling orders. You may also want to figure income taxes into the equation. Divide the average profit number by your total number of transactions. You can then figure the lifetime value using this formula:
Lifetime Value = (Average # of purchases over lifetime) X (Average $ profit from each sale)
If you are paying for the program based on customer acquisition (i.e. you only pay if a lead generated by the program converts into a customer), you generally want to pay less than the lifetime value per customer in order to make a profit.
As an example, say on average you make $20.00 profit from each sale. Also, on average, a customer will buy from you 1.5 times over the course of two years (here, the "lifetime" is considered two years). Multiplying the two figures, that means each new customer will generate $30.00 in profit for your business. So, you break even on the program at a cost of $30.00 for each new customer.
Pay Per Click (PPC) Break Even Point
But what if you are paying on a pay per click (PPC) or pay per action (PPA) basis, a certain amount for each lead the program generates? In this case, you are paying for all of the leads (or visitors) who do not purchase as well as those who do. You therefore have to factor in the conversion rate to find your break even point:
Pay Per Click Break Even = (Expected conversion rate) X (Lifetime value)
Continuing the example above, the lifetime value of each new customer is $30.00. Also, on average, 1 out of every 200 leads (clicks or actions) generated from the PPC or PPA program convert into customers for you. $30.00 times .005 is .15, or 15 cents. In other words, each click or action is going to be worth no more than 15 cents to you.
If you have a two-step process to help improve conversions, you multiply in the conversion rate of the intermediary page (if you are generating leads or action for more than one program on your intermediary page, don't forget to factor all of them into your conversion rate). For example, if your PPC ad lands on a lead-generating page that sends 13% of visitors to the sales page described above, and the sales page turns 5% of those leads into customers, then you multiply the lifetime value by both conversion rates: $30.00 times .13 times .05 = .195, or 19.5 cents per click or action. In that case, you would want to pay no more than 19.5 cents for each click or action.
CPM Break Even Point
What happens if you are paying per thousand exposures (in other words, CPM - a flat rate
She was desperate and running from company to company handing out her resume, she needed a job, she was qualified and had a college degree, but no one wanted to hire her, they said they needed no more employees, there were no vacancies, they dont hire woman, so she had to go home alone without getting a job that could help her take charge of her life and pay her bills.The above situation its very common nowadays, because many companies are downsizing people and machines are replacing in many instances humans, it doesen't even matter if you have a degree. But what alternatives can you have in those situations, fortunately there is a new way to get legitimate free work
The lifetime value formula requires you to make assumptions about how many times a customer will purchase from you over a period of time (usually around 18 months to two years) and the average profit on each sale. For average profit, start with your total sales dollars and subtract cost of goods; distribution costs; advertising and marketing expenses; and any other variable expenses related to making product and filling orders. You may also want to figure income taxes into the equation. Divide the average profit number by your total number of transactions. You can then figure the lifetime value using this formula:
Lifetime Value = (Average # of purchases over lifetime) X (Average $ profit from each sale)
If you are paying for the program based on customer acquisition (i.e. you only pay if a lead generated by the program converts into a customer), you generally want to pay less than the lifetime value per customer in order to make a profit.
As an example, say on average you make $20.00 profit from each sale. Also, on average, a customer will buy from you 1.5 times over the course of two years (here, the "lifetime" is considered two years). Multiplying the two figures, that means each new customer will generate $30.00 in profit for your business. So, you break even on the program at a cost of $30.00 for each new customer.
Pay Per Click (PPC) Break Even Point
But what if you are paying on a pay per click (PPC) or pay per action (PPA) basis, a certain amount for each lead the program generates? In this case, you are paying for all of the leads (or visitors) who do not purchase as well as those who do. You therefore have to factor in the conversion rate to find your break even point:
Pay Per Click Break Even = (Expected conversion rate) X (Lifetime value)
Continuing the example above, the lifetime value of each new customer is $30.00. Also, on average, 1 out of every 200 leads (clicks or actions) generated from the PPC or PPA program convert into customers for you. $30.00 times .005 is .15, or 15 cents. In other words, each click or action is going to be worth no more than 15 cents to you.
If you have a two-step process to help improve conversions, you multiply in the conversion rate of the intermediary page (if you are generating leads or action for more than one program on your intermediary page, don't forget to factor all of them into your conversion rate). For example, if your PPC ad lands on a lead-generating page that sends 13% of visitors to the sales page described above, and the sales page turns 5% of those leads into customers, then you multiply the lifetime value by both conversion rates: $30.00 times .13 times .05 = .195, or 19.5 cents per click or action. In that case, you would want to pay no more than 19.5 cents for each click or action.
CPM Break Even Point
What happens if you are paying per thousand exposures (in other words, CPM - a flat rate
I didn’t realize how bad service had become until recently when I tried to get a brand new dryer repaired under warranty.I did everything right. In fact, I didn’t even press to get an earlier appointment.The repair truck pulled up, and the driver just sat there for about ten minutes before coming to the door. When he arrived, he mumbled so badly that I had to keep prompting him to repeat himself.He asked what was wrong with the machine, as if he hadn’t been briefed.“It won’t dry clothes.”Looking at the machine he said “We’ve had a lot of problems with this model. Maybe you can get them to give you a new one.”“It is new,” I pointed out.
If you are paying for the program based on customer acquisition (i.e. you only pay if a lead generated by the program converts into a customer), you generally want to pay less than the lifetime value per customer in order to make a profit.
As an example, say on average you make $20.00 profit from each sale. Also, on average, a customer will buy from you 1.5 times over the course of two years (here, the "lifetime" is considered two years). Multiplying the two figures, that means each new customer will generate $30.00 in profit for your business. So, you break even on the program at a cost of $30.00 for each new customer.
Pay Per Click (PPC) Break Even Point
But what if you are paying on a pay per click (PPC) or pay per action (PPA) basis, a certain amount for each lead the program generates? In this case, you are paying for all of the leads (or visitors) who do not purchase as well as those who do. You therefore have to factor in the conversion rate to find your break even point:
Pay Per Click Break Even = (Expected conversion rate) X (Lifetime value)
Continuing the example above, the lifetime value of each new customer is $30.00. Also, on average, 1 out of every 200 leads (clicks or actions) generated from the PPC or PPA program convert into customers for you. $30.00 times .005 is .15, or 15 cents. In other words, each click or action is going to be worth no more than 15 cents to you.
If you have a two-step process to help improve conversions, you multiply in the conversion rate of the intermediary page (if you are generating leads or action for more than one program on your intermediary page, don't forget to factor all of them into your conversion rate). For example, if your PPC ad lands on a lead-generating page that sends 13% of visitors to the sales page described above, and the sales page turns 5% of those leads into customers, then you multiply the lifetime value by both conversion rates: $30.00 times .13 times .05 = .195, or 19.5 cents per click or action. In that case, you would want to pay no more than 19.5 cents for each click or action.
CPM Break Even Point
What happens if you are paying per thousand exposures (in other words, CPM - a flat rate
Trade show exhibit success requires immediate follow-up on leads and activities generated from the tradeshow floor. Giving booth visitors your company literature, collecting contact information about leads, and engaging in meaningful conversation with prospects about your products represent only a portion of the tradeshow exhibit sales process.Immediate and continual follow-up by mail, email, phone and personal visits is essential to maximizing your revenue potential.Determining how you will collect lead information and the materials you will use in your follow-up activities needs to occur during your trade show exhibit planning process.Include different informa
Pay Per Click Break Even = (Expected conversion rate) X (Lifetime value)
Continuing the example above, the lifetime value of each new customer is $30.00. Also, on average, 1 out of every 200 leads (clicks or actions) generated from the PPC or PPA program convert into customers for you. $30.00 times .005 is .15, or 15 cents. In other words, each click or action is going to be worth no more than 15 cents to you.
If you have a two-step process to help improve conversions, you multiply in the conversion rate of the intermediary page (if you are generating leads or action for more than one program on your intermediary page, don't forget to factor all of them into your conversion rate). For example, if your PPC ad lands on a lead-generating page that sends 13% of visitors to the sales page described above, and the sales page turns 5% of those leads into customers, then you multiply the lifetime value by both conversion rates: $30.00 times .13 times .05 = .195, or 19.5 cents per click or action. In that case, you would want to pay no more than 19.5 cents for each click or action.
CPM Break Even Point
What happens if you are paying per thousand exposures (in other words, CPM - a flat rate
New and aspiring entrepreneurs often are concerned about how to manage HR issues, such as payroll tax, labor laws, benefits/retirement plans when they've reached a point where they need to start hiring employees. Here are 3 tips on how startups should handle HR issues.1. First, for very small employers (under 10 employees) you don't really think in terms of "HR." You really are thinking more in terms of functions: payroll, hiring talent, paying taxes, etc. As a small business owner I personally think the best thing to do here is outsource as much of it as you can. Any good payroll service can handle all the payroll and tax issues. Keep the hiring in-house, but if you can outs
CPM Break Even Point
What happens if you are paying per thousand exposures (in other words, CPM - a flat rate for each 1,000 subscribers, visitors, or email addresses exposed to your message)? Now you should consider response rate as well as conversion rate and lifetime value. To figure out your break even CPM:
CPM Break Even = 1,000 X [(Response Rate) X (Conversion Rate) X (Lifetime Value)]
To profit from new customers gained through the program, you must pay less than your break even amount.
Before making final decisions, however, consider other factors the break even analysis does not address. Any additional internal resources required to implement the program, for example, are additional costs. Remember, too, that profit impact goes beyond the purchases your new customers make. New customers gained by word of mouth (originating from but not a direct result of the program), increased awareness due to the promotion, and increases in off-line sales are indirect benefits of the program. In the long run, these all result in additional sales. Opportunity costs may come into play as well; consider if you could better use your time and money to implement more profitable programs.
With each marketing program you implement, if you are aware of your break even point -- the point at which the program becomes profitable to you -- and make decisions based on those profits, your business will grow.
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