When it comes to metrics, I’m like a kid in a candy store, Always looking for ways to monitor more, better things in bigger, better ways. The After Unit is pretty straightforward: The one thing to measure there is your return on relationships.
How much business are you getting in relation to the number of clients you currently have? That’s a measurable number. And it’s easy for you to find out. But when it comes to your Before Unit, metrics seem a little limited.
For example, the standard way of measuring things is mostly based on a calendar: We spent this much on the ads in March and generated this much of business in March.
There’s talk about multipliers: “This is a 4-to–1 or 3-to–1 return on our spend.” Which is ok but not ideal. The downside is it’s only a snapshot of one point in time. It doesn’t account for the difference in leads you generated in March versus those you generated last December. You are putting equal weight on the spend for every month without knowing if the results were equal too.
It is an “expense model” of measuring your return on marketing; in my opinion, it is not necessarily the best way. What’s missing is there is no clear way to track the compounding effect your marketing has on your business through time. This means you have no idea what cumulative effect your marketing from last December has had on your leads this month…
So, I’ve been playing with this idea of improving these metrics for a while, and then it struck me. It’s so simple! What happens if you start thinking about your spending not as an expense but as a capital investment? And start looking at your leads as your capital assets?
Here’s what I mean:
When you’re running your Facebook ads or spending money on your direct mail, all these activities are generating assets. That is the names and email addresses of people who raised their hands to identify themselves. Now, if you think about the collective of those assets as an asset portfolio, you’ve now shifted into an investor’s mindset.
You are not “spending” anymore. You’re now “investing”. And this quickly changes the game, doesn’t it? Suddenly, you’re like Warren Buffett, looking at your portfolio as a snowball. And this snowball grows bigger and bigger year after year because you’re generating more and more leads.
Some of those leads turn into clients in 30 days, but some will take 30 months to “mature” and give you a return. But here’s the thing: Those 30-month-old-suddenly-matured leads would never show up in any regular measurements of your advertisement. At least not the ones you currently have in place.
The only way to correctly start tracking that is to measure the cumulative ROI. This means tracking and measuring the spending and revenue on a cumulative basis that can go three, four, or even five years out!
In other words, instead of looking at it as a monthly “money-in, result-out” activity, it becomes a long-term game that spreads over several years. And here’s something else:
Your Profit Activator 3 now becomes a pool of assets.
all prospects not yet turned into clients that eventually will, if you give them enough time. Can you see why I’m such a big fan of patiently educating and motivating your prospects?
It’s all about playing the long-term game and letting compounding do its job. And you’ll notice that the biggest results always come right at the end of it!