How to Get 500% More Profit From Ads

Posted on: August 16, 2013 by in Uncategorized
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How often do you see ads that are designed to immediately bring in new customers that essentially say something like “we sell shoes”?

When the ad gets a pathetic response, the advertiser concludes that advertising doesn’t work or is too expensive.

But what if they offered something of value to the prospect to give them an incentive to make a purchase such as a discount, gift with purchase, free consultation/estimate, extended warranty or any other valuable incentive? Most likely it will triple their response rate.

Let me illustrate this by running some typical numbers. Note that the lifetime value of the customer (initial purchase plus all subsequent purchases) needs to be used instead of just the profit on the initial purchase.

“We sell shoes” ad
Cost: $200
Customers acquired: 4
LIFETIME value of acquired customers: $300 ($75 each)
Return on investment: 50% ($100)

Incentive ad
Cost: $200
Customers acquired: 12
LIFETIME value (less per customer because of cost of incentive):$720 ($60 each)
Return on investment: 260% ($520)

As you can see, the “we sell shoes” ad got a decent return but the incentive ad was huge! Now you understand the value of making a great offer. To learn about the importance of and how to calculate lifetime customer value click here.

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