Peaceful Profits Podcast Ep. 13 - “How I Manage 9 Figures With Just Two KPIs”
Synopsis:
In this episode, Mike Shreeve of Peaceful Profits breaks down the myth that customer acquisition cost (CAC) is the ultimate lever for business growth. With honesty and clarity, he shares how—after 15 years in marketing—he’s shifted his focus from obsessing over CAC to maximizing lifetime value (LTV). If you're a coach, course creator, or entrepreneur relying on low-ticket or high-ticket funnels, this episode reveals the two KPIs that truly drive scalable, peaceful profitability. Learn how Peaceful Profits clients are multiplying revenue by simply adding the right offers and following up better, not by gambling on lower ad spend.
Whether you're curious about Peaceful Profits pricing, wondering if a Mike Shreeve coaching program is worth it, or looking to create your own Peaceful Profits funnel building system—this is the episode to bookmark.
Transcript:
Peaceful Profits Podcast: How Mike Shreeve made 9 figure in sales with only 2 kPIs
[00:00:00] Hello, my friends. Hope you're doing well. Mike Shreeve here. Very excited to be sharing with you a tool that I think will be helpful for you as you are going through the planning. Process, which I hope you are. It's the beginning of the year, but this is also something that is going to be useful beyond just this Q1.
You know, beginning of the year time. This is actually something that I live and die by. This is something that is etched on the back of my brain. It is powerful both in its objective ability to look at the state of your business, but it's also helpful. As an anchor point. So, you know, as a business owner, it's a very easy to get sidetracked, shiny object.
Go from here to there, uh, deal with problems that, you know, you wake up, you start dealing with problems By the end of the day, you're like, what the heck? Why did I even spend all that time? This is an anchor point that you can constantly come back to if you train your team. To use it as an anger point as well, you will get many more results than you have gotten in the past because this can [00:01:00] become not just an anchor point for them to reduce their chaos and reduce their confusion and frustration, but it can also be a tool.
That you can use to filter anything they may want to do or ideas that they may have. And it's a filter that they can use themselves, which means you increase their ability to feel comfortable pitching ideas, right? So this is very, very powerful in I, you know, a little bit of backstory on this is that I first started making money for myself online.
My first business was an online business. And I started back in 2007. That means all the trainings, all the coachings, all the seminars, all the masterminds I was going to, I was going to stuff and buying things from. The pioneers of making money online. Uh, you know, I bought a ton of stuff from Perry Marshall, Ken McCarthy, like the people who were some of the very first people [00:02:00] to hold seminars on how to do Google ads and how to write sales copy for emails.
And you know, Matt Fury and all of the. The, the guru, the gurus, to the gurus, to the gurus are the people who I learned from originally. Now that's important because a lot of those people, a lot of those teachers, they came from very expensive advertising, direct mail, television, infomercials, et cetera, which means they didn't have the luxury.
Of ignoring fundamentals. A lot of the gurus these days, they absolutely ignore fundamentals because, because things are easy right now. Okay. Even Facebook ads now, which everyone is complaining that they're chaotic, that they're expensive, et cetera, et cetera, they still are cheaper than an infomercial than most direct mail options than a lot of [00:03:00] the advertising methodologies that, uh, a lot of direct response principles were created in.
And so here we have, uh, this generation of gurus who are starting to crumble because Facebook is having a bad hair day, month slash year, and they're crumbling because their business wasn't built on fundamentals. They don't have the fundamentals, they don't exactly know what's going wrong, et cetera, et cetera.
So now they're all hopping to other platforms and, and it's easy to see how everything's getting crazy and chaotic. Okay. Add on top of that, that we have talk of. Record inflation, possible recession, uh, you know, et cetera, et cetera. I could go on and on. The point is that now probably more than ever, we need to return to fundamentals, and personally, I prefer fundamentals that were created under difficult circumstances already.
I like the [00:04:00] fundamentals from the early pioneers because there's so much more room for error. In what they've discovered compared to what's available to us today. 'cause even if Facebook isn't your friend anymore, you've got YouTube, you've got TikTok, you've got Pinterest, you've got, um, Yahoo, uh, native advertise.
I mean, you have so many different options. So. The point is that what I'm gonna share with you here is solid, solid foundational stuff. Unfortunately, I don't have enough time in this episode to expound upon it. Probably could talk about this for 30 plus hours. So I'm gonna give you a taste of it. I'm gonna give you a bunch of examples of it, and then hopefully from this episode.
You'll be able to extrapolate and start down the process of really studying and examining this fundamental, because it is one of those things where when you learn it, you can spend the rest of your life [00:05:00] studying it and understanding it, and it will be, you know, time well spent. Okay, so here is the fundamental concept.
You can and should. Manage your entire business and make plenty of money by relying on understanding and focusing on just two numbers in your business. Okay. Everything in your business should come back to these two numbers. Nothing should exist in your business unless it is to improve the outcome or improve the uh, either making higher, lower, better, et cetera.
These two numbers, okay? So it's a very simple principle. These two numbers dictate everything. Understanding them, knowing what they can and can't do, knowing what they [00:06:00] represent. It is a decision making matrix. It is a filter to run ideas through and et cetera. These are the two numbers that you need to understand.
I recommend that you update them at least quarterly, but think about them daily. The two numbers are knowing how much it costs for you to acquire a new customer. That's number, number one. And number two is knowing how much that customer on average pays you over their lifetime within your company. Okay, over the lifetime of that customer, how much do they pay you?
So there are other names for this. Some people call the cost to acquire. They call it CPA, they call it cac. They call it, uh, sometimes, uh, cost per lead, depending on the model. We'll talk a little bit about models here in a [00:07:00] second. But all it is is figuring out how much it costs you to acquire a customer.
And those of you who are into organic and free traffic methods hang tight because there's, there is a cost to free, which we'll talk about here in a second, the other number. So how much somebody pays you over the lifetime of them doing business with you. That's called LTV. It can be called EPL. So earnings per lead.
Uh, there's lots of different names for it. So if, if ever you're taking somebody else's training or you listen to somebody else, what you're just trying to listen for is, how much is it costing me to bring a customer into my world? And then how much is that customer then spending with me over the lifetime of their doing business with me?
Okay. These are the only two numbers that matter. These are the only two numbers that you should be thinking about when you're making decisions or at least beginning the decision making process. Things [00:08:00] like, which is cheaper, Facebook or YouTube. Things like, how many front end leads should I get? Things like how many customers am I gonna, all of that stuff is secondary and dictated by these two numbers, and I'll give you some examples.
On how to use these numbers and, and why what I just said is true. But first, let's ask ourselves, how the heck do we even find these numbers? So the first number is the cost to acquire a customer. I. Now, I'm assuming you're using a book or a low ticket offer. You're running ads to that book or low ticket offer.
And so that's what we're gonna talk about here. Uh, this, however, this, these same two numbers work in any business model. Okay? So I'll give you some examples. If you are running a, a webinar VSL. To a high ticket offer, you still would ask yourself, how much is it currently costing me [00:09:00] to make a sale off the back of that VSL?
And then you would say, once they've made that purchase, how much do they spend over the lifetime of them doing business with me? Okay. So again, what? We'll break that example specifically down here in a second. But the easiest way, and this is why I love using low ticket offers instead of webinars. Or VSLs or things like that.
The reason why all of the, uh, absolute legends in, uh, marketing and sales and doing stuff online, why big companies like Agora and Boardroom, et cetera, why they all use low ticket offers as well, is because it's very easy to track. So for example. If I need to figure out how much is it costing me to get a customer, then what am I gonna do?
I just go to 2021. I take a look at how many new customers did I get? Let's say I got 10,000 new customers, and then I just look at how much did I [00:10:00] spend to get them. Now there's a lot of, uh, confusion. Around people who don't use paid ads, how to measure that, right? So for example, if I spent, let's say, uh, for sake of simplicity, $10,000 to get 10,000, uh, customers, then it's just a dollar per customers how much it costs me.
But how do you, let's say that you sold 10,000 books last year and, but you didn't, uh, you know, you didn't. Use any paid traffic. You didn't buy any BookBub ads or whatever, and you just hustled those 10,000 customers. Well then it's pretty easy to think my cost per customer is zero. But that's not true because you have to factor in.
If you spent, let's say, 10,000 hours. To sell [00:11:00] 10,000 books. Again, I know that's not a realistic number, but let's just say, and you want to pay yourself a hundred dollars an hour, then it means it actually costs you a hundred dollars. Of your time for every book that you've sold. Okay? So when you're doing organic stuff and things like that, and you're solely relying on that, it can be a little bit difficult to calculate the exact cost per customer, but it's important for you to factor in some number.
So it can't be zero. There, there is no such thing as zero cost per customer. It costs you something, something in time, something in paid traffic. If you have a mix, so for example, you use paid traffic and organic, you have to factor in that. What you're looking for is. What was the overall total cost? We don't want just what Facebook tells us.
We want to know in 2021, how many new customers did [00:12:00] you bring into your business, and how much did you spend to bring them in? Write that number down, pause this video, audio, whatever you're, however you're consuming this, and literally write it down. What was that number for 2021? If you had five clients that you were able to hustle through manual efforts, try your best to give an accurate accounting of how much it cost to land those five clients.
I like book funnels. I like low ticket funnels because I just couple clicks in my business tracking and I can find that number out in just a couple seconds. Okay. Or a couple minutes more like. Okay, so let's say for example, so for future examples in this audio we're gonna say that I have spent $50 for each customer that I've brought into the business.
Now here's some of you saying, okay, should we start worrying about how many [00:13:00] customers we brought in? No, not yet. And, and hopefully I'll explain to you why. Worrying about volume of customers doesn't even matter until you've started to establish the basics of this very simple two, two number rule here in your business.
Okay? So we have, let's just say for example, in 2021, it cost me $50 to get a new customer. Alright? I made thousands of customers. But let's just, for sake of example, we only need two numbers, 50 bucks. Awesome. Now I'm gonna go back to 2021. Because I need to figure out how much money did each of these customers give me over their lifetime?
Right? Now, obviously if your business is more than a year old, you would extend the measure. I also like to do this measurement every quarter. So on average, how many new customers and what, how much did they spend every quarter? Now I use a rolling average, which means. I know that a lot of the [00:14:00] people who bought in that 90 day chunk of time aren't.
You know, they're not maxed out, right? Some of 'em are gonna buy six months later. Some of 'em are gonna buy a year later. But because my business was running beforehand anyways, the people who bought in Q4 right, became a customer in Q4, they might buy something else in Q1. And so just to make things easier, I just like to look at it in quarterly chunks just to kind of get a general look at how things are improving.
If we launched a new offer, did our LTV go up? Okay, so, uh, to, to get this number, it's very, very simple. Take whatever timeframe you're going to look at. Let's say 2021. That'd be a good, nice, strong average. Let's say that you made a million dollars in 2021, and let's say that you had 10,000 customers. In 2021, you bought, you were able to sell 10,000 books.
So we take the million dollars, [00:15:00] we divide it by 10,000, and what do we get? A hundred dollars? It means on average, every book buyer, every customer. Every low ticket purchaser ended up spending a hundred dollars with you last year, a hundred dollars with you last year. So now we, now we know the two numbers that will allow us to make whatever fix we want to do it in the most efficient way, and we can start figuring out how to make more profit and how to do it simply so we can see that we have a $50.
Cost to acquire a customer and over the course of their lifetime, at least in the sample size of one year that we took, they on average spend a hundred dollars. Now you may ask, how the heck is that a hundred dollars number happening? Well, the a hundred dollars number, if you look at any major direct response company, [00:16:00] if you look like, if you look at anyone who knows.
Anything about business, you realize that nobody is really running off of a single offer. Even the gurus who say they're running off of a single offer have at least two, if not three, right? They have their core coaching program plus a mastermind. They have a $2,000, a $5,000 and a $25,000. They always have more than one offer.
Uh, you go to buy a Pepsi, uh, you know, a can of Pepsi. Pepsi's not making money off of you buying one can. They're making money off of you buying that one can, and then the second can, and then the 12 pack and then the, and then the, and you keep buying more and more and more. They would never be able to stay in business if they could only sell one can to one person.
It just costs too much for them to advertise. People becoming a new Pepsi drinker in, in their company, the cost to acquire. A new [00:17:00] customer, somebody who's never tried Pepsi before, now they try it, they love it. Now how much are they gonna spend over their lifetime? Well, in the United States, some people spend a lot, they'll buy, you know, they'll drink a can a day for 20 years.
That's a pretty dang good business model, even when the cans are relatively inexpensive. Right. Okay. So we now have, in our example, a $50 cost to acquire a customer. And a hundred dollars. It's LTV, I'm just gonna say l, t, V for short. It's a lifetime value. Now, what does that mean? It means that on average, we are able to double our return on investment in not just advertising, not just marketing, not just sales, but whatever investment we make to turn someone into a customer.
So what you have now is you have two sides of the business. You have the side that [00:18:00] goes out and gets a customer and tries to do that as inexpensively as possible, and that's the cost to acquire. And then you have the other side of your business, which is trying to maximize this customer on average, how much they spend with the company.
And just that in of itself, I could turn this episode off and say, go ponder on that. Go journal on that. Every single day, think about dividing your company into two distinct segments. The, the part of the company that goes out and gets customers as inexpensively as possible, and then the part of the company that goes and tries to get them to spend as much as possible.
And if that's all you did for the rest of your business life and career was focus in on those two halves of your business, understanding that those are the two things that are occurring in your business and that you can bring it all back to that [00:19:00] focal point. I promise you, you would be better than 90% of the people trying to make it online these days.
Most people aren't thinking about this at all, but let me give you some examples, okay. Of how you could use this. So let's say that you have a $50 cost to acquire a customer, and you only make $60 over the lifetime of that customer. That's not a very good business to run. Very often when clients come and work with me and my team, this is the state that they're in, right?
They may have a webinar that's producing very low returns, and that's all they have in their business. They may have some other kind of funnel. They may be doing organic outreach and, and when they start to actually cost out their time, they realize that they're putting $50 in and only getting $60 out or whatever the [00:20:00] numbers end up being.
They're realizing that their return is very, very low. So how do we increase the return? Well, what a lot of people do, and it's a major mistake, is they start by trying to lower. The cost to acquire a customer, they start there. But the problem with that is much of what creates the cost to bring someone into your business is outside of your control.
I consider myself well educated. I mean, I didn't go to college, but I mean well educated in. Uh, the world of marketing and selling, like I, I've bought pretty much everybody's course, everybody's coaching program. I've, and I've been doing that for more than 15 years. I have tons of hands-on experience. I've done millions and millions of dollars.[00:21:00]
You would think of all the people. I'm someone who could walk into a room and confidently say, I will reduce your cost to acquire by 50%, or, or whatever. And the answer is, and the reality is, after 15 years, I feel less confident than ever. I can't control how much Facebook charges, I can't control how a market will respond to something you put out.
I can't control all of these thousands of little factors that lead to a sale. Now, it doesn't mean we don't try to reduce the cost to acquire. For example, I. This audio that I'm creating right now, we're gonna put it up on, uh, podcasts. We're gonna put it on LinkedIn, we're gonna put it on YouTube. We're gonna do all these sorts of things in the hopes that maybe somebody listening to this might buy our book.[00:22:00]
Well, what does that mean? It means that that hopefully will, because it's something I created one time, right? I put it up. It did cost me time. So there is a cost associated with it, but we're hoping that we put it up and it sits there and a year, two years, three years, four years later, it's still out there producing sales.
And so the cost per sale is very low over time. But other than things like that, other than testing different creatives and testing your offer and things like that, it's actually quite difficult. It's very difficult to change the cost to acquire. What is much easier would be to get the people who already bought something from you.
To buy something else that is significantly easier. So if you're out there and people are, let's say you're selling a book, right? And you've, [00:23:00] uh, I think somebody the other day said they, you know, they're selling a decent amount of books on LinkedIn, which is fantastic, but that's their whole business.
That's all they have. They just go on LinkedIn and sell their books, which means at most, their LTVs what, like $5. Why? Because they haven't given their customers opportunity. To buy something else. Oftentimes the fix in your business is just giving people who already like you an opportunity to give you more money.
Another way of saying that is to take the people who you're already serving and give them an opportunity to be served more. I will give you an example. Remember in our, in our example, $50 to acquire a customer. Let's just say we're selling a book and it's costing us $50 to sell that book, but we only make $60 because maybe, you know, they buy the book and then they buy a little course or something.
And uh, you know, on average. You know, not everyone buys the course, but on [00:24:00] average it ends up being like $60 is how much we make. That's not very good. We're not gonna stay in business very long. But let's say that we add a $10,000 program and look, you don't even have to charge people the full 10 grand upfront.
Maybe it's a thousand dollars a month for 10 months, right? Maybe that's what it is. But you know that when somebody buys it signs a contract, it's gonna be at least $10,000. In their lifetime value, and let's say one out of 100 people buy, so one, one out of 100 customers, which is very realistic, one out of 100 customers signs up to your $10,000 thing.
Well, what's the math on that? You say $10,000 was generated. Across 100 customers, right? One in 100. That means on average, every customer, this is the calculation we're doing. Every customer has [00:25:00] now added a hundred dollars to their lifetime value. So we take that $100, we add it to the 60, and now for every $50 that you spend to get a customer.
Because one out of a hundred of them, they read the book. They like the, whatever the course, the mini course, whatever it is, they like it so much that they, they upgrade into your $10,000 thing. Again, whether it's a thousand dollars a month or 10,000 upfront or half there. What, however, it is, as long as they make all their payments, you've now added a hundred dollars.
So for every 50 you spend, you're now making 160. All of a sudden, your business has completely changed. You went from scrambling for, uh, a penny pinching, not being able to hire because you couldn't afford it, being forced to play the [00:26:00] horrific volume game. Where you make so little on each transaction and so little on each customer that you have to get more customers than you can actually realistically handle.
One of the reasons a lot of people, um, you know, there's something that a lot of people don't think about, which is that VC companies. Uh, VC companies, uh, or sorry, VC funded companies, uh, like uh, startups, they have to have VC money because the margins are so small that they have to build these massive teams to develop the technology to handle the scale required for the size of the transaction that they have.
They, they, they can't bootstrap themselves because they don't have the margin to be able to keep the volume low enough to service each client, each customer appropriately. Everyone loves a scale. We all wanna scale to millions and millions of dollars. I'm telling you, you can make millions and millions of dollars [00:27:00] without having to scale.
If you can think about your two numbers. Turn a $10 per customer profit into $110 per customer profit, and all you did was add another offer. Now, okay, we say, okay, that's great, but I, I still need to reduce my cost to acquire a customer. And I would say, do you, do you really, because you could also just do this, which is instead of one in 100 of your customers trying to.
You're, you know, one, one out of 100 upgrading to the 10,000 offer. You get one in 50 to upgrade. Maybe you follow up with your customers a little bit better. Maybe you do a little bit better content marketing. Maybe you email those customers a little bit more often. Maybe you improve the $10,000 offer.
Whatever it is, maybe you offer better payment terms so [00:28:00] that more people can sign up for it. Maybe you start producing case studies. Maybe there's a hundred things you could do. To go from one in 100 people buying to one in two, one in 50 people buying. And here's what happens. If one in 50 customers are buying your $10,000 offer, you've now not added a hundred dollars to your lifetime value.
You've added $200 because for every 100 customers, two people are buying at $10,000. That's $20,000 divided by 100. Is $200. So now we add that $200 to the 60, and now for every $50 that you spend, you're making $260. So now the question becomes how do you get to [00:29:00] $50 customers and turning that into $250, $260 in.
Revenue and lifetime value. What do you do after that? What are some other examples of using this model? Well, first off, let's just stop for a second and imagine what would happen if you were able to get a five x return on your customer acquisition efforts. Again, it's not five x return on ad spend. 'cause again, there's other ways that we could get customers than just spending money on ads.
Maybe we open a Facebook group. We hit the LinkedIns, we hit the et cetera, et cetera. So one of the beauties of boiling your business down to just two numbers is you can say, stay stubborn about the numbers and flexible about how to improve the numbers. Some people stay stubborn about a platform which is completely misguided, and they let the numbers [00:30:00] suffer.
So when we're thinking as teams, when we're thinking as business owners, where you stay stubborn is, Nope, I know what I need to measure. I need to measure how much it's costing me to get someone, get a customer, and then I need to measure how much they're spending with us over time. I care much less about how the customer's coming in and what we're doing or how we're doing, et cetera.
And I'm not saying you don't care at all, but you understand that there are levels of things to care about and prioritize. And for example, I personally don't care how someone buys my book. I mean, obviously I care about it being ethical and we can't do anything that's illegal and things like that. But if somebody buys it because they told their friend if somebody buys it because it came from a Facebook ad, if somebody buys it, 'cause it was shared in a group, if somebody buys it because they listened to one of these audios and they searched me [00:31:00] up, that doesn't actually matter to me.
So I'm able to stay agnostic about the specific strategy. Which is how you survive in this business for 15 plus years. If you are like so obsessed with a single way of doing things, when that way ebbs and flows as all strategies do. This is not the first time there's been a resurgence in low ticket stuff, right?
I mean, 3, 4, 5 years ago it was low ticket. Then everybody flipped to webinars. Now there's back to low ticket and it's gonna go back to webinars soon, and it always ebbs and flows. That's just how this game works. But, uh, the. The, when you're able to stay agnostic from it, you have the flexibility to actually improve the numbers.
When you are sitting there banging your head against the wall, why do I not have the money that I want to have in my business? You just go look at these two numbers. That's why I say I like to measure this every 90 days. [00:32:00] If I'm looking at 'em, I'm like, oh my gosh, we're not making enough money. I look at how much did it cost us and how much are they spending with us?
And we always think of, how can I get them to spend more before we worry too much about the cost to acquire? Now, this works even if you don't want to use book funnels, low ticket funnels, acquisition style funnels. That's totally fine if you wanna stay with your webinar to high ticket. It's the exact same thing.
The numbers are still measured. So for example, you still have a cost to acquire a new customer, right? And what is your cost to acquire a new customer? It's. You know, if you spend $2,000 in ads to sell a $5,000 program, it's $2,000 is your cost to acquire a customer. 'cause your frontline customer, for somebody to become a new customer in your business, they have to buy the [00:33:00] $5,000 thing first.
I. And that's totally fine. And maybe right now in your business, that's fine. 2000 in over the lifetime of the value, you know, over the lifetime of that customer, you probably call them clients, but over the, the lifetime of that client, they spend $5,000 because that's all you've sold them. But, and so you get a two to five return, every $2, you get $5 back.
It's, it's okay. It's about two and a half x return. I would say. As a general rule, it's very difficult to hire a team, work yourself out of the business, have financial resources. If you aren't getting at least a four to six x return, regardless of what you spend, uh, I'm just talking standard sort of, uh, what you would expect to see on a p and l.
You need probably about a four to six return. So how would you do that? You have a $5,000 program. Yeah. What else could you do? Well, you could raise the price of your program that would help, [00:34:00] that would increase your, uh, lifetime value, how much somebody spends with you over the lifetime. But even that is not the best idea.
It's, it's certainly shortsighted. You will see an increase in your cost, even if it's just a little bit, so it may negate itself. There's easier ways to do it. You could offer a continuity piece. So people, once they finish the $5,000 program, is there something else they can, they can buy from you? Maybe continued support and coaching.
A thousand dollars a month, $2,000 a month, you could tack on a big ticket thing. Uh, you know, like an, an offer that's just nobody would ever actually buy it from you, except that when they do it completely changes your numbers. So, for example, you could have a a hundred thousand dollars offer. You know, there's probably only a handful of people who would ever buy that from you.
But those small handful of people when [00:35:00] averaged out against all your clients, maybe adds another two or $3,000 per client over the lifetime. You could do something like engaging in, uh, revenue share, profit share, uh, partnerships so that maybe you have a bunch of people coming in at $5,000 and then you take a percentage of them and you have a team that works with them, and then you do profit share, so every single month and they're paying you 5, 10, 15, $20,000 of the money you're generating for them.
And if, if you consider that over their lifetime. Right. You lock in strong, good deals that work over a very long period of time. You know, you're, you're the, that adds up very quickly. If somebody's paying 10, $15,000 a month, 12 months a year, year after year, that lifetime value can get up into the, I don't know, four or $500,000 range pretty quick.
And then again, you don't have to have a ton of those [00:36:00] people for the math, just do the math. If one out of a hundred of your $5,000 clients take you up on that offer, you've just about doubled the lifetime value average. You haven't even had to raise your price or really do anything other than every once in a while reach out to somebody.
Say, Hey, I see you've been doing really, really good in the group. Let's partner up. Right. So this is the kind of stuff that, uh, a lot of people don't think about 'cause we're so focused on. Yeah. But what's the email that I send at the right time of day? What's the, what's the technology platform I'm supposed to?
It all comes back to does it affect these two numbers? And if the answer is no. You don't necessarily just toss it out the window, right? Like, I'm not gonna ignore my accountant. I gotta make sure taxes are paid. I gotta make sure the money's in the bank. So the purpose of [00:37:00] of an anchoring concept like this isn't that, that you tie your anchor, anchor to your leg and, and jump in the ocean.
It's that you have something to come back to, to check. And say, okay, if this isn't making my cost per sale go lower, cost per customer, go lower. If this isn't increasing the lifetime value of my client or customer, then why am I doing it? And then really challenging yourself to figure out, are you doing it because.
It's an emotional thing. You're saying, well, I'm doing this because I want my people to feel good and, you know, whatever it might be that you're doing, uh, that's fine if that's important to you. But then don't be surprised if you don't have the returns that you were hoping for because you are spending time on stuff that didn't lower the cost per customer and didn't increase the lifetime value.[00:38:00]
And that's it. Uh, that, that's the key. I I can repeat this over and over again and give you hundreds of examples, but the point is, if you want 2022 to be the best year of your entire life, every time you're looking to buy a coaching program, every time you're looking to hire an agency, every time you're looking to grow a team, every time you're looking to make any decision in your business, start first with.
Is this lowering my cost to acquire a customer, and is this increasing my lifetime value? If that's the only change you made, I can promise you that just practicing that filter will expose and open up a lot of incredible opportunities for you, including the opportunities. Say no. Biggest opportunity in business is just say, no, no, I'm not gonna do that.
It doesn't look like it's actually gonna help with either of these numbers, so I'm just not gonna do it. Okay, so keep that [00:39:00] in mind. One last thing I wanna say is that oftentimes the. Things that don't seem terribly obvious are some of the most effective when it comes to increasing lifetime value. So I'm sure a lot of people have listened to this so far, quite a long episode.
I do apologize, tried to keep it short, but I am long-winded about this kind of stuff. I could go on for 40 hours about LTV and um, cost to acquire. But a lot of people will tell you that marketing is the key to increasing lifetime value, and I disagree. I think that if you're in the help business, so you're an agency owner, you're a coach, you're a consultant, you're a freelancer.
If you are in the help business, the best way to increase the lifetime value is to get results for your clients [00:40:00] in every transaction. So in our business. Our front end customer is a book buyer. They come in, they buy a book, they can get order bumps and upsells and all that kind of good stuff, which helps us to immediately increase our lifetime value, right?
'cause that does count towards the overall lifetime. How much did they spend? There's no time constraint on that of they can only spend money six months later. It's when they buy the book, do they get the order bumps? Do they get the upsell? That instantly increases our lifetime value. And we try our best to make that book and that initial experience as positive as possible because we know that people who buy something and like it are more likely to buy something else, and they are so much more likely to buy something else that it almost doesn't matter what we're doing on the marketing side because we can't out market [00:41:00] a bad initial transaction.
There's no marketing and sales strategy that is good enough to turn someone who was disappointed in an initial transaction into somebody who wants to transact again. So from the book Onward in the Help Business, if you get someone a result, it causes more problems. If you solve someone's problem, it causes more problems, and that is an opportunity to solve those other problems.
Now, that's not meant in a bad way. Just think about it. If I help you lose weight in 30 days, you have a new problem. Your new problem is keeping the weight off. If I help you. Build a book funnel and book so many [00:42:00] sales calls, you can't even handle it. You have a new problem. Yeah, I solved your problem, your calendar's filled, but now it's filled to overflowing.
You need help building a sales team, right? So every in the help business, let's say you write an amazing sales letter for a client. You're a copywriter, finance copywriter. Oh man, they're loving it. They're getting tons of customers. What do they have a problem with now? Well, you just learn what they have a problem with Now.
They have a problem with LTV, can you write them emails to follow up to sell other things? Can you help them come up with a backend offer so they can maximize the LTV? And in this business, this is, it's such a beautiful business. It's a business of human beings. And human beings are constantly evolving.
We constantly have problems. Nothing is ever resolved, and you can constantly be getting better and better and better, and there's always something else. There's always something new. You could be the richest person on earth, now you have a problem. Your money is being devalued at 25% a year. [00:43:00] So how do you stop that?
Right At 25% a year? That's a lot if you have a lot of money. So, uh, you know, this is the, it's just my kind of caveat here, because there are people who teach this. Not very many. I wish there were more, but there are people who teach. CAC and LTV, right? C-P-A-L-T-V it. I didn't invent it. There's lots of people who do it.
Again, I learned it all the way back in 2007, but there's not very many people who teach that. The real secret to those two numbers is doing what you can to get a customer, not worrying too much about the cost, maximizing the LTV, and then realizing that the best way to maximize the LTV is to serve the people who buy from you, to treat your customers well.
When you treat your customers well, a portion of them will buy enough of your other stuff to make these two numbers [00:44:00] incredibly profitable and fruitful for you. Now, if you can take this concept and teach it to your team. If you can take this concept and remember it yourself so you can be a better leader, right?
It's easy to forget this in the chaos of the day to day. But this is the way that you create peaceful profits as a business owner, is to have a team that understands that this is the main engine of business, so that they can A, understand what side of this equation they're on. Right? So your media buyers, what side are they on?
They're probably on the side of cost to acquire. So keep them there. I mean, I'm not saying like put them down, but understand that that's where they are on, on that side of the equation. Uh, operate in that way. Give them the resources they need to make that happen. [00:45:00] And then you may have, say, an email marketing specialist.
What side of the equation are they on? They're on the side of increasing LTV. When you're having conversations with them, talk to them about what other ways can we increase? What are the things, can we sell to the people who've already purchased? Are there, are we talking to the right people about the right things?
If they purchase this, should they purchase that? How can we message that, et cetera, and et cetera. Fulfillment teams, teacher fulfillment teams, that they are part of the revenue generating engine of this business. And people in fulfillment are not just to fulfill, they are to get results so that people can get to the next thing.
If you want your team to start creating offers without you, explain to them this process. Explain to them how a cost to acquire LTV. Here's where you fall. Here's the machine we need to focus on. How can we improve this number? Mike said, this is the number that's easiest to improve. [00:46:00] Let's start there.
Let's test it ourselves. Okay, we tested it. He was right, and he's right because he learned it from people who are way more right than him. But, uh, you know, so let's keep doing that same thing, or whatever, right? This is where you can, uh, really start to make smarter, stronger decisions for yourself and for your business.
Okay, so that is it, my dear friends. I hope that this has been helpful to you. If you would like to learn more about this concept, peaceful profits.com, you can buy one of our books and become one of our customers. Uh, you can also go to, uh, if you'd like. Our hands-on help. You can go to peaceful prophets.com/call and book a call.
What we can help you do is both sides of that equation. One, we help people to create book funnels, low ticket funnels, so that you can really [00:47:00] reduce the cost to acquire a customer because, uh, low ticket funnels are, uh, typically what you would call, um, self-liquidating, which is they cover the cost plus of just getting a customer.
So your equation starts at $50 per customer. $50 per customer, meaning it costs 50 to sell a $47 mini course or whatever. And then by the time somebody goes to that funnel, they've also given you $50 or whatever. Oftentimes it's more, sometimes it's a little bit less, but it's a really good way to start the equation at net neutral.
So that the cost to acquire equals the immediate LTV, and that's what I love about these low ticket funnels is that the LTV is immediate, so you can cash flow the acquisition of new customers, right? It's hard in A VSL, you say, well, yeah, I [00:48:00] mean, I get clients and they're great clients and they pay me five grand, but how much money are you having to cash flow upfront?
Right? That becomes an issue with scale when you're not totally flush with cash. Why I like low ticket funnels is it's self-liquidating, typically within 24 hours or less. Less. It may not be fully self-liquidating. Some are higher, some are lower, some are right on net neutral, but it's a great place to start the equation.
Then someone comes in, they're a book buyer, whatever, you start emailing them, blah, blah, blah, blah, into your. Whatever your core offers, your high ticket stuff, your continuity, whatever it is, you have this net neutral equation, 50 equals 50, and now you've got one outta 50 people buying a $10,000 program.
Now it's 50 equals two 50. You add on a $25,000 done for you funnel thing, whatever, and one out of, let's say 500 people buy it now, it's $50 to acquire [00:49:00] a customer turns into $300. Now you've got six x returns. You're in a sweet spot. You can scale it, you can keep it that way. Uh, but you should see pretty high profit margins.
Okay. Again, I could go on and on about this kind of stuff. I love it. It's some of my favorite stuff because it's so simple. Just bring it all back to the two numbers that you need. This is something I've been doing for more than a decade. It's gotten me out of some really tough spots. It is helped me to launch multiple companies.
It's, it's, I I wish that there was a way for me to accurately describe to you. How helpful it is as a tool, I can't, so all I can do is implore you to try it. Just try it this week, run some of the numbers, do some projections, and do some conservative projections. For example, I. You are thinking of, gosh, I don't know.
Maybe I should do a [00:50:00] $25,000 offer. Maybe I should, maybe should. And then ask yourself realistically, how many of your current customers are gonna go buy that and then do the math. And you can ask yourself if it's even worth it, if it's even worth doing the offer. And the example that I just gave you here, where one out of 500 customers are buying the $25,000, it only added $50 to the lifetime value.
That's probably not worth it for me, for what it takes to fulfill a $25,000 offer. I probably wouldn't do it if one out of 250 people are buying that $25,000 offer. I might do it. That's a, that's a, a decent little, uh, thing. It'd be probably about a hundred dollars added. That gets us up into some really interesting numbers.
More than six x return. I think I might go through that trouble. I think I might have the team look at that stuff, et cetera. Okay. So anyways, again, could go on for hours and hours on this. Hopefully this has been helpful. We're gonna post this up all over [00:51:00] again. If you'd like more information, peaceful privates.com.
You can buy our book to find out more about how we do this kind of stuff, peaceful privates.com/call. Chat with my team if you'd like, hands on help from us directly, uh, to be able to help you build this kind of stuff. Help you be able to create high ticket offers that you can add and all that kind of good stuff.
So that's it my friends. Hope you have a good one. Talk to you later. Bye.
