How to Run Your Business the Way it Should Be Run and Making Your Investment Count
Should I run a bunch of new ads to acquire more prospects? Should I spend a bunch of money, or am I wasting my money? Is it all worth the effort? Hmm!
Suppose you decide to run an ad that cost $200.00 and you spend $50.00 on mail outs.
You decide to do a web design and you get 80 interested inquiries of which 30 decide that they are not interested in your program. 30 more are ho-hum lookie-loos, someone who just looks with no intention of getting involved.
Now you are left with 20 prospects with whom you spend some time on the phone, or to whom you send material.
Now you look carefully at the 20 you have left, and you determine that only 5 of them are serious prospects.
After all of this, only two of the original 80 respondents actually sponsor into your program. So now you look at the numbers and think about the $250 you just spent, and you decide that advertising doesn’t work.
Think About This; Making an Investment.
I just ran an ad and got 80 responses. The ad cost me $250.00. So I spend a bunch of time on the phone on follow-ups, send more mail outs, and spend another $100.00, so now what?
I immediately pick up the phone and run another ad again.
The difference between the first and second scenario is this; I know the marginal net worth of a distributor. And I know that if I can get two new distributors for $300, I’m prepared to make that investment again.
A retail customer brings about $40 a month in gross sales, or $480 yearly give or take. Discounting the product and fulfillments cost, you are left with about a $200-per-year profit from that one customer. That $200 represents the annual marginal net worth of that customer. And since customers stay active for more than a year, there is a residual income as well.
So for $50 bucks, I get a new customer. whether it’s through ads, flyers, direct mail, classifieds or whatever. Likewise, if it costs less than $200 to gain a new customer, it’s probably a good investment. It might even be an advantage to paying $200 for a customer, especially if the customer stays for four years or more: Four years times an annual marginal net worth of $200, quadruples your investment.
So How do you View Network Marketing Now?
Think about this.
After figuring in dropouts, inactive distributors, and wholesale consumers, one business builder is worth $2,800 a year to your program. So when it costs my company $150 for a new distributor, not bad!
I’m thinking, aren’t working my friends, relatives and neighbors much less expensive? Dah! You can talk to them for free. But why not begin a marketing program in addition to the above? If you can invest a few hundred dollars and get an annual return of a few thousand dollars, you’d be nuts not to do it.
“So, How Does this Apply to my Business?”
First, get what your marginal net worth will be, and find out what a distributor is worth to you. You may have to research your past business numbers. See how much revenue you’ve earned for each distributor, and how much profit that you gained.
For example, if you made $8,000 last year and you personally sponsored a total of four distributors, even if you had four-drop outs, the marginal worth of a distributor to you is $2,000.
Decide what it cost you to acquire a distributor. If you spend $3,000 on a mail-out and get 10 distributors, simple math tells you that it costs you $300 for each one. If you spend $800 and get two distributors, it costs you $400.
You Need to Answer These Two Questions:
- What is the marginal net worth of each one?
- How much does it cost me to get a distributor or customer?
So instead of running your business with, I wonder how much and guess-work, you can run it based on decisions made with precise, intelligent data, like a business.
Remember; for every $1,000 profit you add to your business, you increase the resale value of your business by $10,000!
So keep talking to your friends, neighbors, and relatives, but start investing in Marketing, business cards, brochures, ads, direct mail, email, and technology and whatever else you find successful.
If the cost of getting one new distributor is less than the marginal net worth, you are on your way to running your business the way it should be run.