Traffic isn’t getting easier or cheaper. You now have to know more, do more and pay more regardless of the traffic source you’re using. Google Adwords requires certification to read the stats and Facebook ad set management is a full time job in and off itself. Free traffic hasn’t gotten easier either. SEO is more competitive than ever. Social media is noisy. Buying traffic is still the best way to grow your online business. But how can you do it profitably when the costs are on the rise?
How To Breakeven With Paid Traffic
Igor Kheifets: I'm Igor Kheifets and this is the List Building Lifestyle, a podcast
for those who want to build a large profitable email list and make six figures from
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Welcome back to another addition of The List Building Lifestyle with your host
Igor Kheifets. It seems like the cost of traffic is getting higher every single
day. It's getting more competitive and it's getting super, super technical. In
fact, if you're brand new to the online industry, any time, like I talked to
someone who's brand new and we start talking about traffic, I see that most of the
things I'm seeing are literally flying over their head because in order to
understand traffic, in order to do something as simple as run the first campaign
for your business, you really need to understand a million different things.
It seems like the traffic industry has really evolved forward and if using
self-serving platforms such as Google, or Facebook, or YouTube, or Snapchat, or
Twitter, or whatever, you really just kind of don't have a choice but to hire an
agency unless you're willing to go and make a full-time job out of optimizing your
own traffic campaigns. In fact, just getting an agency in and of itself isn't
going to help you guarantee that you won't be involved in the process. For
example, I have an agency that helps me out with my Google Adword traffic for our
traffic agency and incidentally, I not only have to be involved in the process,
but I literally have to police them because they tend to overspend the budget I
assign, and they tend to miss all kinds of important details that tend to result
in losing money.
For example, recently Google has added a TV placement because a lot of people now
either browse the internet on their televisions or they use their television,
their smart TVs, to watch YouTube. Naturally, Google being Google added a
placement now, which I think is a great thing because it allows you to actually
disable it because it'd just literally be bleeding money if you're running TV ads
unless you're Samsung or Chevrolet and you're literally just doing some image
Anyway, I have to go and tell them to turn that thing off because they seem to be
either asleep or whatever, or they just don't know yet. So, I have to be the one
who tells them, "Hey guys, you need to turn this off because we're losing money
there", and the only reason I could know is because I have a reminder every day to
check my stats and see where my most profitable leads are coming from, and where
are my least profitable leads are coming from, or which campaigns are actually not
making me any money.
I guess my point is this, paid traffic has gotten super complicated and free
traffic isn't better by any means. Free traffic has always been complicated
technically and always been very time consuming and today, it only got worse
because first off, there's more options for free traffic. There's Pinterest, and
there's social media, then there's SCO, and so on, but also it is very
competitive. It is one of the most unrewarding things you can probably do in your
business is to try to get free traffic, especially if you don't already have
something that works for you because trying to break through all the noise, trying
to break through like trying to get placements and positions in places that matter
is just super, super, super difficult.
I'm really happy that early on I got exposed to the work of Dan Kennedy because
Dan Kennedy said, "If you can't spend a dollar to get customer, you don't have a
business", and this is so true because honestly most of the traffic I'm getting
today I pay for it. There's some portion of it that I'm getting for free, but I've
built my business using almost all paid traffic, and I'm really happy that I did
because I'm not afraid of the marketplace swings. Not to mention, I'm also really
happy that I didn't choose Facebook ads as the platform for my business because
Facebook as you know recently has once again changed the rules, increased their
prices, and kind of reran their algorithm to basically make more money for
Facebook, right, and make your life more difficult by strengthening the rules, by
creating strict regulations, and by pretty much doubling the cost preview and cost
per click literally overnight. So, if you've been spending $50 to get a customer,
you're now spending $100, or if you've been spending $500, you're now spending
$1,000 to get a customer, and that will make you're life difficult for sure.
Now, since paid traffic is the closest thing to running a reliable online business
or maybe even an offline business too. I mean, it's not uncommon these days to see
offline businesses relying strictly on paid traffic and paid media or at least
some kind of media because free traffic is a concept of the past. Like, I don't
see people just wonder into stores anymore. I see that location is not as
important anymore as it used to be because right now, most things are driven by
online search, online marketing.
Let's just say, I was looking for a barber shop couple of weeks ago, right. I look
at the location radius, so obviously I don't want to drive for 15 minutes each
direction each way just to get a haircut, but I'm not obsessed with getting the
closest barber shop to me. In fact, what I'm judging my choices by is probably the
quality of the work, do they have Instagram where I can review their gallery, do
they have any sort of message or any sort of branding, and so and so forth, as
well as testimonials. I don't really look at where are they located as long as
they're within like 10 kilometer radius from where I'm at that point.
The point of this episode where I want to chat with you about is paid traffic and
specifically, how to break even with it because a lot of times being an owner of a
paid traffic agency where we help people get traffic for their businesses,
especially if they're brand new and they have no assets and no idea how to get
more customers now to start generating sales. One of the most common concerns I
see from business owners, both online business owners and online business owners,
is basically traffic is expensive, right, so everybody can admit to that, and then
it's like, okay, how do I get expensive traffic and how do I break even if the
cost of the traffic is larger or higher than the margin of my product? Right.
So, most people think, okay, I'm selling a $47 ebook, but my traffic campaign's
going to cost me $1,000. Okay. Let's just use these numbers for example. So, when
I pay $1,000 and I'm selling a $47 ebook, that means I need to sell about 20 units
in order to break even with the campaign. That's the logic most people have. The
interesting part is that nobody thinks outside the box. This linear thinking about
traffic is probably one of the most common reasons people fail with paid traffic
other than of course them not having a high converting offer in the first place,
which I'd say is a pre-requisite to running traffic in and of itself. If you want
to scale your business using paid traffic, you can't do it without a high
converting offer. That's a given and most people understand that. If I have to
spell this out for you right now is not the right time for you to run paid traffic
or don't do it on your own. Just go talk to an expert that can help you do it.
Let's just say you're still selling that $47 ebook and you understand that on a
$1,000 traffic campaign, you need to sell 20 units, but you know, you know damn
well you're not going to sell 20 units. I mean, this could be a really good
traffic source, but you know that on 1,000 clicks after doing some tests and
running some traffic, you know you'll probably sell, I don't know, nine units or
seven units. Let's just say those are your numbers. So, how do you break even and
most importantly, how do you scale that? How do you scale your business if you can
only pull about seven to nine copies on the front end? If you're not experienced
in online marketing, this is where it pretty much ends for you. In other words,
this is where your brain sort of shuts down and says, "Ugh, this is not for me.
Yeah, yeah. Paid traffic is for rich people. Paid traffic is for people who are
already successful. It's not for me. I can't do it. Blah, blah, blah".
Well, first off get rid of this idea because paid traffic is for everybody.
There's no barrier that says paid traffic is not for you unless, like I said a
couple minutes ago, you do need a high converting offer or an offer like some kind
of offer so you can start running some tests. Now, the other thing you need to
understand is that getting free traffic and getting paid traffic are two different
games. With free traffic, if you can actually get it, which means you're probably
like in the top one percent people in the world. Like, you're probably one of the
couple thousand people online who actually can build a business on free traffic.
With free traffic, you don't need to worry about marketing costs, right. You only
need to worry about product fulfillment cost and maybe some operation cost, but in
terms of traffic costs and marketing costs, you don't need to worry about it.
Therefore, even if you get 10,000 visitors and you're only closing nine sales,
that's okay. You'll actually be fine with it. You'll be saying, "Oh my god. I'm
making money for free. I'm making money and I don't have to pay for it.
It doesn't happen. I mean, let's be honest, this kind of stuff simply doesn't
happen. You don't just get 10,000 free visitors, make nine sales, and be happy.
No. It doesn't happen. You either work really hard to get the free traffic, and
then you realize, oh, I only made nine sales. I'm in profit, but this shit ain't
scalable, which is what happened to me. I was getting some trickles here and there
and I realized look, this is not going to work out. Like, I can't be working 14
hours a day and make two sales a day. It's just not going to happen. So, I moved
to the paid traffic model and this exact same challenge that I bumped into, I was
selling a $17 product, but my traffic costs was way greater. Through some trial
and error and through some consulting, I discovered what probably one of the
biggest secrets that ended up helping me build a thriving business online and to
not only scale beyond anything I imagined possible, but to also scale my income
while scaling my freedom.
Yo, it's Igor. If you're loving the content, hop on over to
listbuildinglifestyleshow.com for more free training and a free transcript of this
episode. Oh, and I'd really appreciate if you logged into iTunes and rated the
show. It really helps. Thanks.
And, that concept is lifetime customer value. If you never heard of it, lifetime
customer value is basically the average amount of money you are making for every
single customer that enters your funnel. In other words, for every customer that
buys your product, you should understand what is the average amount of money they
spend with you throughout the first 12 or 24 months, depending on your customer
My customer cycle actually spans all the way to roughly three years because I have
people who buy traffic today, and then they come back three years from now buying
more traffic, right. So, I know my cycle doesn't end with the first sale, and
that's actually also one of the most important things in your business is that you
don't really get a customer to make a sale which is the way most people do it. You
make a sale to get a customer. Once you've had that initial transaction take
place, you in order to have a high lifetime customer value are required to scale
your business to break even with your traffic, to make a lot of money, and to have
freedom in your life. In order to do that, you need several offers in your funnel.
Now, it doesn't necessarily mean that you need to instantly upsell them with 13
different things as soon as they buy your $47 ebook. Not at all, but you need to
have a deeper funnel than just one ebook. You need to have additional things in
it. You need to have a software, a membership site, maybe like a coaching or
consulting program where they can buy an hour of your time, maybe you want to also
recommend some tools to make some affiliate income at the same time, so you're
creating multiple streams of income and some passive income. For example, I've got
a buddy who built an online marketing system where he's teaching people who don't
have a website and don't have any clues on how to make money from home, and one of
the income streams that he's got is recommending for people to sign up to an auto
responder. That income stream is now making him a couple thousand dollars per
month. Just come in passively from all the referrals he made into that other
I think it's a comfortable position to have an extra two grand come in
automatically even if you don't plan on investing that in traffic or covering
operation's cost or whatever. That still is pretty comfortable knowing that for
every customer you're getting, you're going to have some extra come in on average,
right, for simply recommending an email auto responder. This is the secret, the
big secret, to breaking even and scaling your business with paid traffic. It is
having multiple offers in your sales funnel. Again, when I say sales funnel, I
don't necessarily mean your website. Your sales funnel spends way beyond your
website or your sales page or your webinar funnel or your screen page or your
blog. Your sales funnel is actually everything you do. Your entire ecosystem as a
marketer, as a service provider, is your sales funnel, right. So, they can start
today and then 15 days from now, you already have an offer that you're planning
out to send out to them.
For example, in my follow-up sequence, what happens is I've got a time sequence, a
drip sequence, of offers of all kinds going out on certain dates and certain times
from the moment that the customer joins my tribe. Now, what that allows me to do
is of course I'm not selling every single offer to every single customer. This
just doesn't happen. Business doesn't work like that, but on average I'm able to
increase my average customer value this way, and I'm able to know that for every
customer that I'm generating that's costing me about $100 now, I will recoup that
investment within certain period of time even if I don't do it on the front end.
That is why I'm able to go out there and spend quite literally thousands of
dollars, thousands of dollars, acquiring customers every single day while my
competitors cannot. I know that my competitors actually listen to this podcast and
you're probably thinking, "Igor, why would you say that? Right. Why would you
reveal what you're doing to your customers, to your competitors?". Well, here's
the thing, the concepts of running a business, the concepts of having a thriving
business, they didn't change at all since I started or since the people who came
in before me started.
I mean, if you go all the way back to the Gary Helber days for example. The
concepts of running a profitable business, a business that gives you the freedom
and allows you to thrive, they have not changed. There's only three ways to make
money. You either have more customers, you either have the same customers buy from
you more often, or you have more customers buy from you more often and spend more
money per transaction. These are the three major ways you can be increasing your
income and increasing your impact in your business. There's nothing else, nothing
else you can do. So, when we talk about creating a business that breaks even on
paid traffic, when we talk about business that's scalable with paid traffic, when
we talk about helping you go from somebody who can't understand how to put in $500
into traffic campaign to becoming someone who basically spends five grand a day on
traffic and does it successfully, the difference makers are these three things.
Getting more customers, having these customers spend more money per transaction,
and having those customers buy from you more often. That is it.
That is why the whole concept of making a sale to get a customer is such a
powerful concept because your customers are the assets in your business. Your
business really will not exist unless you have a customer base or a customer list,
and a lot of people think that their "assets" or their skills or knowledge or I
don't know, their product maybe, no. You literally will not be able to survive
without your customer list. If I take everything away from you, for you to start
making money tomorrow you need that customer, you need that hungry crowd of people
who like you and trust you and want to buy from you. That's what you need.
If I take away your list, and leave you only with your product and your website,
guess what? It's going to be way harder for you to make money, way harder, because
you'll start building a brand new customer base, but if I let you keep the
customer base, you'll bounce back just like that. That's why we always see people,
for example people who are building teams, right.
Let's just say, let's take MOBE, right. MOBE has been a recently shut down by the
FTC, but within MOBE we've had always a bunch of people making a bunch of money,
right. So, I know this guy, this client of mine, who basically made as much as
$13,000 in one day with MOBE, and as he was kind of starting to really go big,
MOBE got shut down. What he did, he simply changed the product. He changed the
product and he shot a brand new video series, and then he went back to his
customer base and started over.
Guess what? Within a week, within just a week, he was already making about 70
percent of the money he was making with MOBE, which took him about six months to
build, and now he surpassed that by miles. What does that tell you? That tells you
that no matter the product you're promoting, no matter the circumstance, no matter
your website, no matter the software you're using, no matter ... Nothing matters.
Nothing other than your customer list. That's where it's all at.
So, what you do is you make a sale to get a customer, and you figure out your
lifetime customer value, and if your lifetime customer value is lower than what it
costs you to get a sale, which is not a great number for you to know. It's like
how much money do I need to spend per customer? So, if I spend $1,000 on a
campaign that gets me 10 customers, my average cost per sale is about $100. So, in
other words, if that's my average cost per sale, guess what? My average customer
value needs to be at least 100 or greater. If it's at least a 100, it's going to
be very difficult. You're not going to be making money and it's going to be very
difficult to scale, but if your average customer value is say $150 and you're
spending $100 to get the customer, then you are going to break even. You are going
to break even. You are going to make a profit and you will have some money left
over to scale your business by reinvesting back into it. Okay.
So, again, cost per sale, the important numbers for you to remember. Cost per
sale, lifetime customer value. Okay. These are two very important numbers and the
way you increase your lifetime customer value which is the number that's key to
scaling your business is by creating multiple offers within your sales funnel
allowing you to stretch that lifetime customer value to a point where it's greater
and preferably it's double, triple, five times, maybe 10 times greater than your
cost per sale. Soon as you get to that point in your business, you're off to the
races. It's game over and you don't need to worry about customer acquisition or
any of that stupid stuff that stifling most online business owners, right.
This is where you pretty much enter a new dimension, a dimension where you're
simply. It's kind of like moving your business within a vacuum rather than trying
to fight the friction of the air, right. So, you'll be moving in a much smoother,
in a much easier way without applying much effort at all compared to most
businesses that are always trying to plow through this swamp of a marketplace
struggling to get some traffic.
So, anyway, this covers today's episode. We've talked about how you can scale your
business with paid traffic, the two most important metrics to remember, and how to
get to a point where you're able to acquire customers at profit using something
called lifetime customer value. So, this concludes this episode. This is Igor.
Thank you so much for tuning in and until next time we chat, have a good one.
Thank you for tuning in to the the List Building Lifestyle. Get access to previous
episodes, the transcript of today's show, and exclusive content at our website at
listbuildinglifestyleshow.com. Also, don't forget to claim your free seat at the
traffic workshop I'm conducting this week where I'm showing how I built a list of
subscribers without losing money. And how my clients are pulling anywhere from 50
to 500 new leads per day on their list at a profit without any list-building
experience. Just go to Igor.cx to claim your free seat now.