Determining Your Dollars-per-Subscriber
Now I’m going to take this model one step further.
Let’s say we have 100 subscribers. They’re going to get 45 emails over the course of their first 30 days on the list. There are 4500 emails that are going to go out over the course of next 30 days. Out to those 100 subscribers, 4500 total emails are going to go out. So 45 emails per person times 100 people is 4500 emails.
I want us to imagine that all we do is get an average email to convert at a 10% click-through rate. Some will be at 20%, some will be 7%, the 1st email might be 45%, but on average we can get to 10%. That’s going to give us 450 clicks to our sales pages. Let’s say 1/3 of those clicks are to our $97 product, 1/3rd of those clicks are to our $297 product, and 1/3rd of those clicks are to our $100/month coaching program. That’s 150 clicks each.
I want to think about a conversion rate that we’re going to aim for, for our $97 product. Now this is going to require a little bit of work. It’s going to require optimization. It’s going to require using software to help us optimize this. We use optimization software to help us determine what parts of our sales letter are performing and what parts are not. That way we can get as many people to buy as possible.
I just want to imagine that all we really do here is a 3% conversion rate to $97. I think in most cases we can see people doing better than that, doing much better than that, but I just want to imagine that’s the case. About a 3% conversion.
That would give use 4.5 sales at 3% out of 150 clicks to the page. That would give use 4.5 sales at $97.
Then I want to go up to our advanced program which is $297. We’re going to have some people that buy the $97 product, then get to the download page that says, “this is only 10% of what’s in the $297. If you want the whole ball of wax, you get the $297.” You’re going to get some buyers that come through that upsell.
For this optimization, though, we’ll just look at these 150 people that are exposed to the $297 product. Let’s say we only get a 2% conversion rate there. That’s going to mean out of 150 visitors to that sales page you’re going to get 3 sales at 2%. So, 3 sales at $297.
Then I’m going to give you a statistic here that I find to be pretty strong across the board, if you’re using this kind of a funnel. What I find is that for every $1 that you make selling an information product, you can usually make $1 on your coaching program. What that means is, if you were to sell 3 people a one-time $100 product, for every 3 $100 sales, you should get 1 client to enroll into your $100 / month coaching program. It may not be one of the people who purchased the $100 product, but someone will enroll. And, on average, they’ll stay in for at least 3 months.
That means if you sell $300 worth of info products, you’re probably going to also sell $300 worth of coaching.
It’s an interesting number, and I’ve found that to be pretty stable for me. Obviously sometimes it goes up, and sometimes maybe at 60% or 70%. Sometimes it’s at 30%. It depends on how aggressive I am with promoting the coaching.
Sometimes I get lazy and I say, you know what, I don’t feel like getting any new clients because the 1st month when somebody is a client, they have more questions, and they need more help, and so if I’m going on vacation for a month, I probably don’t want any new clients.
Whereas if somebody has been with me for 6 months, they’re digging in, they’re working, they’re loving what they’re working on, so they don’t need as much intensity. If I say, “hey, I’m going to be out of town for a couple of weeks, let me make sure that you’re set up, and you’re in good shape for a couple of weeks.” Everybody is cool. But if somebody comes in the very 1st day and I’m on vacation for 2 weeks, well, it might not work as well.
There’s some fluctuation there. But I really find on average it’s about that. In this model I’m going to draw it out as if that’s the case.
Let’s just say that with 150 people that see our coaching program sales page we get a 3% conversion rate. Again, this is a really conservative number if we’ve done a good job with optimization on these pages. These are not cold visits. A lot of times people try to send cold traffic to a coaching page. Or cold traffic to a $297 page. Of course conversion rates are going to be a lot lower with cold traffic. We need to compare apples to apples here. These are people who are being warmed up by these 45 high quality, top-notch articles that you’re basically writing in an e-mail every day.
How many marketers out there do you know who actually have a 45-day long content campaign, and they’re not just trying to make a sale in every email, or half of every email, or every other email? Instead, this is very gentle email campaign because everybody could just read the article and never click through and nobody would feel guilty. They’re not getting a whole bunch of email that just says buy, buy, buy. Instead, every single email is give, give, give. I’m giving good content, teaching people, and then hey, if you want more, it’s right here. If you want more, just click through. So you’re only getting your highest quality clickers.
Back to our 3% conversion rate: that means 4.5 people out of the 150 will join our coaching program for $100 a month.
Now we’re only going to get our 1st $100 the first day, but we’re going to assume that we’re going to get this money. So on average we want each person to stay in for at least 3 months. That’s a pretty typical number in the coaching business.
Retention minimum, low end retention of 3 months. You’re going to have people who quit after 1 month. You’re going to have other people that stay in your coaching program for 30 months, or 60 months, or lifetime, or whatever the case is.
We’ll just call this a $300 value. 4.5 people into your coaching program.
If we add up all this revenue (to make this really easy we’ll average $97 to $100)… So we had 4.5 sales at $97, we’ll call that $100, that’s $450. Then we had 3 sales at $300 that’s $900. Then we had 4.5 sales at $300, $100 a month for 3 months is $1350. Now if we add all of this up we come up with $2650 out of 100 subscribers. So if we get 100 subscribers and if within 30 days those individuals have invested $2650. What this means is, on an average, each subscriber is worth $26.50.
What this entire picture allows us to do, is help us determine subscriber value. We’re able to say we get 100 subscribers in.
They go through a 30-day sequence that has 45 emails. They are directed to 3 sales pages. We voraciously track open rates, click-through rates, and conversion rates for each email. We also work on the optimization of each of our 3 sales pages. We don’t have to work on lots of sales pages, just 3 sales pages.
At the end we’re able to quantify it as being a unique subscriber value. Let’s just imagine now that we’re able to generate subscribers at a cost of $3. We spend $100, we get 35 subscribers, that means we’re about $3 per subscriber. Let’s say we run a solo ad, it costs us $200, we end up with 65 subscribers, well, that’s about $3 a subscriber. We’ll just assume that we’re getting them for about $3 a subscriber. And they’re converting to $26.50. We take this to the next level, we can see that it costs us $300 to get the 100 subscribers, and we generate $2650 in revenue.
Now, what could we do next month? Next month could we invest $600. And then, could we invest $600 and generate $5300?
The next month could we then invest $1200 the following month, and then generate $10,600?
This allows you to scale. Of course this is just one number based on an imaginary funnel, but that’s just based on sales numbers that are possible for us to get to (and a lot of marketers can go a whole lot higher than this; I’m just trying to be conservative here). Remember, this is an example; obviously when you do your funnel, and you have 100 visitors through, you’re going to have different numbers. You may have a 4% conversion rate on your $97 product, a 1% on your $297 product and 5% on your $100 a month product. Whatever, but at the end of your initial testing, you’ll be able to come up with a $ per subscriber, which will allow you to scale. It gives you a vision of what you’ll be able to do.