tweet Follow @@jrsalem
It’s a common “problem,” and there’s multiple ways to fix it.
First…let me get this out of the way.
I understand why people ask, “but how much of that is profit,” when they see a revenue screenshot.
But if you’re playing the LONG game of business (meaning you wanna be around more than a couple months), you’ve gotta understand one thing…
REVENUE is essential to short AND long-term profit.
In other words… completely disregarding revenue can be detrimental to your success in business.
Let’s say there’s a store called Jeremy’s Awesome Products (great name…).
And let’s say my main product sells for $30.
I pay $8 for it from a supplier.
Before ad spend, my profit margin is about $20 (let’s assume some CC fees, etc and round up my total cost to $10).
So I run Facebook ads, and it’s costing me on average $20 to acquire a customer (average cost per purchase).
And for ease, let’s say each sale is exactly 1 product at $30.
Let’s say over several months I get 1000 new customers at that pace.
So if you’re following…
- I now have 1000 customers.
- I’ve spent $20,000 on ads (1000 customers x $20 to acquire each).
- I’ve made $30,000 in revenue (1000 customers x $30 per purchase).
- I’ve spent $10,000 on product costs and fees.
- I’ve made ZERO in profit.
I flash up my $30,000 revenue screenshot and everyone is like DAMNNN son, teach me how!
And then you say: But wait a minute… how much of that is profit?!?
Then I say: ZERO!
Then you laugh and say, “I knew it was all a scam!”
Now that we got that out of the way, let’s discuss why asking “but how much is profit”can be a shortsighted question.
See…in Jeremy’s Awesome Products, we’re using USA suppliers.
– This means our customers get their items FAST (3 – 4 days).
– We also have our email marketing DIALED IN.
– Tons of flows, automation, up sells, cross sells, and more.
– And since our customers get their items fast and they love them, they’re more likely to buy again.
Also…at my store we MAXIMIZE the peak seasons of the year.
- Quarter 4
- Mother’s Day
- Father’s Day
- Back to School
We are more profitable these times of year than most other stretches.
Heck…we may even coast most of the year, but earn the majority of our money during those peak times of the year.
What do you notice here?
So far… what we’ve done is shed ourselves of the typical internet marketer mindset.
We’ve seen through the typical guru model of only thinking about making money from our initial ads (ie. making money TODAY and TODAY only).
And because we’ve flipped our mindset, and are able to see the LONG GAME…we’re able to MAXIMIZE each customer who comes to our store.
For instance…we might find that each customer we get from FB is worth an average of $50 in profit to us over the 12 month period after their initial purchase.
This might be a combination of effective email marketing, retargeting, and people who just come back and buy because they were happy the first time.
So in this scenario…while, “but how much profit” may be ZERO on the front end, it’s actually worth $50,000 in PROFIT over the course of a year ($50 x 1000 customers).
So we “broke even” on the front end, but ended up $50k in profit a year down the road.
If you knew you could break even on a customer’s initial purchase, but make $50 profit from them on the back end… wouldn’t you scale to the moon?
I’d think so…
Does this mean we don’t try and make money on our initial ads?
Do we just sit around all day and play the “long game?”
You might be thinking, “I don’t know if I can afford to play the long game. Can’t I make money in the SHORT game too?”
Of course you can 🙂
Check this out.
This is a student of ours that is actually going through this transformation RIGHT NOW.
- She gets 1:1 support in our program…via screen shares, calls, and our full-time support desk.
- She comes on the weekly calls with ME, gets her questions answered, and direction on what steps to take.
- And she is part of our community as a whole… so she sees what we teach and how we operate, and because of that, she is now understanding the LONG GAME of eCommerce.
LONG GAME = Building a REAL and sustainable business. Not some internet “quick start hobby.” A business that’s fulfilling… while also providing more freedom and flexibility in your life.
BUT… we’ve been able to help her in the SHORT game too, by helping her scale properly.
The short game can be improved by:
- Building up pixel data.
- Building custom audiences.
- Lookalike audiences.
- Increasing average order value.
- Unique ad strategies.
- And more.
So to be clear… I’m not telling you to ignore making $$ on the front end with your initial ads.
I’m just trying to change the way you view your business as a whole.
And not in some condescending way… but in a way that allows me to share lessons I’ve had to learn myself over the past 7+ years.
Immediate gratification in business is not always what’s best!
Those who survive and build REAL businesses, are those who work hard to succeed in the short term… but have their eye on the BIGGER picture (ie. how do I make this sustainable?).
And what I’ve found, is most people look at revenue all wrong, and look for the“Aha!” moment when they can ask how much profit comes from that revenue.
It might sound GREAT if someone says their monthly profit margin is 90%.
And while that’s awesome, if revenue is only $1000, that means they only made $900 that month.
Contrast that to a company that “only” makes a 10% profit margin.
But if their REVENUE is $1mil, they’ve made $100,000 in profit.
Which would you prefer 😉 …?
NOW THE GOOD NEWS!
Since we understand the short and long game of eCommerce, we help our students with both.
From finding products and making sales from FB ads… to generating repeat buyers and building a REAL brand.
I know the online world can be FRUSTRATING…
Full of empty promises, wannabe gurus, and people selling unrealistic dreams.
But if you have aspirations of starting and growing a store that makes you feel good.
That gets you excited to wake up each day.
That eliminates the need to attend more webinars, watch more YT vids, or read more blogs…
Let’s get you up and running ASAP.
YES… starting and growing a business entails risk.
So does getting in my car and driving each day.
But I do it, because that risk is worth taking, versus the alternative (walking everywhere).
I don’t know if the risk of starting and growing your own store is the right decision for you.
Only you can weigh it versus the alternative…
But if it IS…
I can assure you, we’ll do everything in our power to make it a risk worth taking… and help you build your ideal business and life.