Measure THESE 4 Things to Find Out If Your Marketing Is Working or Not

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Transcript:

I want to talk about the 4 marketing metrics I pay the closest attention to. There are tons of things you can measure in marketing, but as long as you have your eye on these 4, you’ll have a really good sense of where things are going and how the business is doing.

I'll start with a little story:

Back when I was in college, I was on track to be an advertising major and took a class called “Creative Strategy.” It was interesting, but the path it was putting me on was to be a Mad Men, Don Draper-type Madison Avenue advertising person [in New York].

Something felt off about it. Maybe I was too heavily influenced by TV, but based on my research and the type of work that world was putting out, it seemed really subjective — whoever could come up with a creative idea and win awards, but whether it actually made sales or was effective as an ad was a little undetermined. The focus was on winning awards rather than getting sales.

So I switched my major to journalism, because I was much more attracted to the idea of truth-seeking and storytelling. It kind of came full circle later when I stumbled upon the world of direct response marketing, sometimes called conversion marketing. It was far more measured.

Funny enough, one of those Madison Avenue agency owner types from the 1960s — David Ogilvy — is considered the godfather of modern advertising, maybe the most respected figure in that world. In his book Ogilvy on Advertising, he actually gives the most credit to the direct mail department.

Before the internet and social media, that was the direct response arm of the business — sending out physical mail and measuring how many people responded. He admired those guys because they were disciplined and measurable in their efforts. That same measurable, conversion-driven approach is what drew me in, and it was a cool full-circle moment to realize my instincts from college were right.

There is a time and place for creative, engagement-driven marketing — getting eyeballs on a business in that way [(like Superbowl commercials)] isn't always wrong... but combining the art and the science of marketing is possible, and that's why I focus on these 4 numbers:

1. CPA — Cost Per Acquisition (sometimes called CAC, or Customer Acquisition Cost). This is what it costs you to acquire a customer or client.

2. AOV — Average Order Value — the total dollar value of each order you receive.

3. LTV — Lifetime Customer Value — once you acquire someone, how much can you expect them to spend with you over the lifetime of being a customer.

4. Payback Period — here's an example to illustrate this one. Say you spend $100 on Facebook ads and acquire a customer, making your CPA $100. That customer spends [an order value of] $50 with you in the initial transaction, leaving you with a $50 loss. The payback period measures how quickly, from the moment they become a customer, they spend enough with you to recover the cost of acquiring them.

These 4 work together.

Let's say you spend $100 to acquire a customer. The initial product is a $10 book. After purchasing, they're sent to an upsell page where they buy an additional $40 item — maybe an audiobook or a video masterclass that goes deeper into the book's content. That brings the initial transaction to $50. There's another upsell after that — a $300 private consultation — but they decline. So you've spent $100 to acquire them, and they've spent $50 with you upfront.

Now it moves from the front end to the back end. You send them a 10-email sequence over a couple of weeks — educating them, providing insight, overcoming objections, and continuing to pitch the consultation. They eventually take you up on it, spending $300. So in this example, it took 2 weeks to recover that initial $50 loss. That 2-week average across your customer base becomes your payback period.

The shorter the payback period, the more quickly you can reinvest cash back into advertising. If it took a year instead of 2 weeks to recover that loss, you'd need more and more capital to keep acquiring customers.

But if they go on to purchase a high-ticket program — a $10,000 coaching program, a $25,000 mastermind — then knowing your average LTV gives you confidence to go into the red initially, because you know the back-end system will make it worthwhile.

That back end can be coaching programs, client work, events, private masterminds, advanced products, software — whatever fits your business.

Ultimately, these 4 numbers give you a clear picture of how you're bringing people in the door, and the confidence to spend money acquiring them when your back end is built to deliver over the long run.

Michael McGovern

The Wildman Path

Who I am and how I work:

I'm an ex-filmmaker turned direct-response marketing strategist who co-founded the Business Acquisition Summit (the premier virtual M&A event for entrepreneurs)...

I’ve worked with 7-and 8-figure companies in different niches like financial publishing, precious metals, online education, business coaching, real estate, eCommerce, and health & wellness.

Now, I help entrepreneurial businesses unlock hidden growth with campaigns that actually sell & drive real enterprise value — using Hollywood storytelling techniques and deep buyer psychology.

I work in one of three ways:

1. Creative strategy and/or copywriting for companies ready to grow via marketing that pays for itself [driving a LOWER cost per customer acquisition (CPA)… and a HIGHER average order value (AOV) and lifetime customer value (LTV)]

2. Equity “growth partnerships” where I bring an owner’s mindset to your long-term growth as we prepare to win back your time & freedom via an exit (either of the day-to-day operations or of the business fully) in 1-3 years, together

3. Full acquisitions of $1-10M businesses as an investor alongside my experienced M&A team at Relentless Growth Group

Behind the business stuff — I'm a former digital nomad now resettled back in my hometown of San Diego, California, a lapsed Jiu Jitsu blue belt, a student of Portuguese (because of my Brazilian wife), and a newly minted Dad of the world's cutest baby boy.

To get a conversation started with me, simply reply to this email with the word "GROWTH” now. Feel free to add extra info/ context if you’d like.