Part 2 | Lead Generation Arbitrage – Steps to Success
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Part 2 | Lead Generation Arbitrage – Steps to Success

Part 2 | Lead Generation Arbitrage – Steps to Success

This is the podcast you should listen to 25 times!

I’m not kidding!

This episode is worth listening to multiple times because it contains a ton of precious information on lead generation arbitrage.

Remember what we said in the previous episode – lead gen arbitrage is one of the easiest ways to make money in affiliate marketing.

But there are plenty of things you need to understand before starting your own business. 

So, I’ll walk you through the process step by step. 

Today’s episode contains six steps you need to take to avoid beginner mistakes and build a solid foundation that will bear fruit. This blog will cover three of them.

But, if you tune in, I’ll help you figure out how to calculate the risk/reward factors, determine margin goal, go into the media buy, find affiliate partners…

One thing before tuning in – make sure you have a notebook because there’ll be plenty of examples, numbers, and calculations you’ll want to write down.

So you’ll probably listen to this week’s episode again and again. 

You know what they say: repetition is the mother of all learning.

Then, let’s dive in!

 

Step 1: Know Your Value Per Lead (RPL)

 

In the previous episode, we said that you were getting paid on a sale, which means you’re taking a risk. 

You’re spending money on leads, but you don’t know what you’re getting back in return because you have zero control of converting the leads into customers.   

The idea is to figure out what you’ll make on a revenue per lead, so you can start buying traffic and paying people in real time. 

When you’re getting paid on a cost per sale, it depends on when that sale happens. 

In the home security company example, after generating a lead, they’ll have to talk to the user and schedule a meeting before the user buys the system. It could take days or weeks for that sale to happen. 

So you need to understand your revenue per lead value to know how much you’ll be able to spend. 

These are the three things you have to determine:

– Total Leads

– Total Sales

– CPA (cost per acquisition)

In addition, the advertiser must be transparent with you and willing to tell you how many leads are converted into sales. 

If you’re getting paid on a cost per sale, you need to know the conversion rate on the back end. In that way, you can see if you’re getting paid fairly in the market. 

Formula:

Leads X Sales Conv % = Total Sales

Total Sales X CPA = Gross Revenue

Gross Revenue / Gross Leads = RPL

For example, let’s figure out the revenue per lead if you’re getting $100 CPA ($100 cost per acquisition for a new customer).

Let’s say there is a company that makes home improvements, and it’s willing to pay you $100 for every customer that starts to work with the company and decides to renovate their home.

Let’s say you generate 1000 leads, and 3% of those leads are converted into sales. That means you have 30 sales. 

You’ll take your 30 sales and multiply it by the CPI to figure out the gross revenue. So 30 times 100 is $3,000 (in total gross revenue). 

You’ll calculate the revenue per lead by dividing the $3,000 by the 1000 leads. That tells us that you’re making $3 revenue per every generated lead. 

However, you’re also paying to generate every lead. So you need to arbitrage in this.

 

Step 2: What is your margin goal?

 

Now you need to determine the margins you want to work on. It’s the amount of money made after your expenses (after paying for leads).

Let’s say you want to work at 30% margins. 

The margin depends on a lot of factors. One of them is the volume.

If you generate low volume, you want to develop a higher gross margin. But if you generate thousands and thousands of leads, you can work on less margin, and you’re still able to make a ton of money. 

For example, a big company that makes $100m in revenue in a year can work on 10% margins, and they’ll make $10m. And a small boutique agency business that generates $6m works on 30% margins. The large company makes $10m, and the small one makes $2m, although the first one works on considerably lower margins. 

So, you can work on a lower margin if you can generate the volume. And you also want to be able to afford more money to generate that volume, which we’re going to get into right now. 

 

Step 3: Figure out what’s your CPL Allowable 

 

We need to figure out what is allowable – the amount of money you can afford to pay for a lead and still be profitable? 

Here’s what we know so far:

CPA =  $100

RPL = $3

Margin Goal = 30%

So the question is, what do we want to pay per lead.

Formula:

RPL X Margin Goal = Net $/Lead (Net Lead Allowable)

RPL (–) Net $/Lead = Lead Cost Allowable

Lat’s explain. We have the $3 revenue per lead and we’re working at the 30% margin. 

$3 RPL X 30% Margin = $.90 Net $/Lead

$3 RPL (–) $.90 Net RPL = $2.10 Lead Cost Allowable (CPL)

That means you’ll make $0.90 for every lead you generate. 

We get our lead cost allowable by subtracting it from the $3, meaning we can go out and buy leads for $2.10. 

In these three steps, we’ve calculated the numbers we’ll base our further decisions on.

But this episode contains three more important steps.

If you tune in, you’ll find out how to test potential affiliate partners, where to find the right audience, and why it’s essential to compare apples to apples.

There’ll also be plenty of examples, calculations, figures, and formulas. 

So don’t forget to take notes!

As I said last time, Lead Generation Arbitrage is the topic of my next podcast too.

Then I’ll talk about failures, so join me next week.

If you’d like to get bonus Performance Marketer content, sign up for my SurveyDetective VIP waitlist!

🕵️‍♂️  Sign up for the SurveyDetective VIP Waitlist HERE.

See you!

 

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Transcript…

Read Full Transcript

Eric Beer 00:00

You always want to understand who the audience is. That’s how you find the people. That’s how you get traffic, right? You’re not creating traffic - traffic’s already there. You’re just finding the people where they are on the internet. You need to understand who they are.

I spent the last 17 years building my eight-figure performance business without using any of my own money, working with some of the most brilliant direct response marketers in the world today. Now I’m looking for entrepreneurs to join my affiliate army built on ethics, transparency, and good old hard work. Join me to change the perception of how people view the greatest business in the world, affiliate marketing, and follow along as I learn, apply, and share performance marketing strategies, working with some of the brightest people on the planet. My name is Eric Beer, and welcome to the Performance Marketer Podcast.

The first step in doing this, right? We’re getting paid on a sale, right? If you’re getting paid by lead, it’s very simple, right? But they’re likely doing that with a lot of other companies in the marketplace. So, you don’t have as much of an edge; versus if you’re somebody that’s willing to take some risk, right, you have ten companies that have the cost per sale offer, like you do, right? But they’re all buying media by saying, OK, if you’re getting $100 (CPA $100 cost per acquisition for new customer, right?), you may want to go out. And if you were going to 30% margins, you might go out and pay $70 for every sale, right? Or whether you’re buying the money yourself or you’re giving it to an affiliate partner. It’s not that exciting because it’s harder to generate a sale. Just you’re generating a click. You’re getting someone to sign up for something. But you also have zero control of converting that lead into a customer. You’re relying on the end partner. There’s more risk for you. Because you’re spending money as a lead gen company, but you don’t know what you’re getting back in return. So, the idea here is, if you can figure out what you’re actually going to be making on a revenue per lead, then what happens is, you can now start to get into buying traffic and paying people on that first signup right, without the sale happening. And that’s where people can send a lot of volume because the media buyers, the affiliates, will generate a lead. And in real-time, they will be told, “Yes, they’re getting paid for that lead,” or “No, they’re not getting paid for that lead.” When you’re getting paid on a cost per sale, it depends on when that sale happens, right? In a scenario like the home security company situation, they generate a lead, they have to get the user on the phone, and then they schedule a meeting at their house. A representative goes to that house, sits down with the homeowner, and then sells them to get them to install that home security system into their home. Right? So, you can see, that takes days. It could take weeks for that sale to actually happen, right? So, for someone like me, who’s out there buying traffic, I’m paying in real time on that traffic. I need to know, what am I making, right? Or at least understand what I’m projecting to make? And no that it’s going to take that much time to figure it out. And then cap how much I’m willing to spend. Right? But so the way around this is you have to understand what your revenue per lead value is. And you have to do that by looking at what are you currently doing with that partner? Right? So if you’re out there, and you go and you’re starting to generate some, some leads, and you start off on a cost per sale, or you know, you could be buying, you know, sending sending some emails to your internal database. Or you maybe you take a you know, a little test budget and you start testing it with a mailer, right, and you have somebody that mail this and you’ll pay them on a CPM just to see what happens, right? Well, you have to figure out the following one, you need to determine how many leads how many sales and you’re going to get what the CPA is, right? You need to know all those three things, right? The advertiser has to be transparent with you, the advertiser has to let you know what happens when you generate those leads. They have to open up their back end and tell you yes, we converted this many leads out of how many, how many leads you generated, how many sales you got, and you’ll know that because you’re getting paid on a cost per sale, right? So that’s really important. You know, there are times where if you’re generating leads, they may not show you, on the back end how many sales come from those leads, you want that, if you if you’re getting paid by lead from an advertiser, you still want to understand what the conversion rate is on the back end. Because that will help you understand what the value is to the advertiser. OK, once you understand a few numbers, and then you can back it out to see if you’re getting paid fairly in the market, or maybe you’re getting underpaid. Or maybe you deserve more than what you’re currently getting paid. Even if it’s what they’re paying everybody else in the market. The formula here to figure out the total sales, is you just take your leads, and you multiply that by your sales conversion, right? So earlier, we said 100,000, leads 3000 leads 3000 sales based on that 3% conversion, total sales times your CPA is what you use to get the gross revenue that you’re getting paid, right? So if you got 3000 sales, and they were paying you $1, just read the numbers on the CPA, then you’d make $3,000 in revenue. And then the way that you figure out what the revenue per lead is, is you take the total revenue, divide that by the leads, and that gives you your revenue per lead. OK, so let’s do it off of the $100, CPA, and let’s figure out what the revenue per lead is. So how are we going to do that? We have to test Listen, everything you do online, you need to test, you have to test? Well, you don’t know, right, you can guess you can try to project. But if you’re if you’re a new business that has no data, then you have to test, maybe you’ve been in business for a while, so you know what to expect. So you can use some type of numbers to project and take a guess, right, you’re still gonna have to test and you’re gonna have to test in multiple places, because every media placement has a different value. But So bottom line is, we’re gonna have to generally, we’re gonna have to track that process till the end, to see if there are any sales generated. And then we need to figure out what it backs out to, for revenue per lead. So we need to know all of our numbers.
So here’s an example of us doing this. OK. So let’s say that we generate 1000 leads, OK, on this $100 CPA offer, right? Let’s say, this $100 CPA offer is somebody that is going to install window shades or do a home improvement in their kitchen. That’s OK, let’s say that, right? So we’re looking for people that are going to want to renovate their kitchen, right? And for every person that starts to work with that company and decides to renovate, then they’re going to pay us $100 cost per acquisition, right? So we go out, we generate 1000 people that raise their hand saying we’re interested in renovating their their kitchen, OK? And we now convert 3% of those leads into a sell. Right? So we needed to know how many leads and what the sales conversion rate is. So based on that 1000 leads, we’re gonna have 30 sales, right? So right here, you see it. It’s right here in front of you. Right, so now, how do we figure out what the gross revenue is? We take our 30 sales, and we multiply it by the CPI, which is the $100 CPI. So 30 times 100 is what? $3,000, right? So we have $3,000 in total gross revenue. So now we need to figure out what is the revenue per lead. And we said to do that, we need to know how many leads and what the gross revenue is. So we take that $3,000, we divided by the 1000 leads, and that tells us that we’re making $3 revenue per lead. So we’re making $3 for every lead that we’re generating. Now. We’re only converting 3% of these, these leads into sales, right? So we have 30 sales. But what we want to do is we want to back it out into all of the leads that we generated, because we’re paying to generate every lead. You don’t just say to you, OK, well, you only sold 30 of the 100,000 leads 1000 leads, well then only pay for 30. That’s not how it works, right? You’re taking risk, you’re out there, you’re buying leads, and then you’re saying I’m going to convert those leads into customers, right either you’re going to do it in Turn on your end, or that the partner is going to do it, right? So in a scenario like the person that’s going to renovate their kitchen, right? What’s the sales process? Right? If we generate a lead, we’re sending that lead in real time to the partner. What are they doing? Are they calling the customer, a potential customer? are they sending emails to the customer and hoping that the customer clicks on that email goes somewhere? are they buying it right there online? Or are we trying to get the user to go somewhere, and then call into an inbound call center, there’s a lot of different ways that these guys do that, right. And there’s a lot of different ways you can get paid for the lead in that in, in the process, right, every step in the process of a lead gen arbitrage, you can get paid, you can get paid from the impression to the click to the generating the lead to the phone call the inbound call, the duration of the call, right? And the cell, right? There’s a lot of different ways that you can do that. If you’re doing it where you’re, you know, you can generate lead, you can then trigger a text message that goes to the consumer, the consumer gets text message clicks, to dial inbound to the advertisers Call Center, the kitchen renovation company’s call center, they could pay you on that click of the text message. There’s a lot of different models, right? But we’re getting paid on the sale, which is the end game. So we’re arbitrage in this.
So what do we need to do now? Next step, step one was just figured out what the revenue per lead was. Step two, we want to know what kind of margins do want to work on. Right? So let’s say that we want to work at 30% margins, right? So what that means is, what are you making after you generate the lead? And what you’re getting paid for the lead? Right? So we need to figure out on $3? What is it that we need to actually pay out? What’s our allowable, that’s going to allow us to get to that step. But so there’s a lot of, there’s a lot of factors that determine what kind of margin you want to work on. And one of the factors is, it’s about the volume, right? If you’re generating low volume, then yeah, you’re going to want to then generate a higher gross margin. But if you’re going out to the market, and you’re generating 1000s, and 1000s, and 1000s of leads, you can work on less margin, because the volumes there, right, and you’ll still be able to make a ton of money. It’s like, I know companies that are out in the market today. And some of them, you know, these huge companies, they have tons of employees, they’ll do $100 million in revenue in one year. And they’ll work on 10% margins, and they’ll make 10 million bucks, right? versus real small boutique agency business that’s generating $6 million in top line revenue, but they work on 30% margins, right? And you can see the difference there, right? On 30% margins, what does that $2 million, right versus the 100 million is working at 10% and makes 10 million, right? So they’re making more money than the small business that’s doing the 30% margin, because they have more volume, right? So you can you can work on lower margin if you can generate the volume. And you also want to be able to be able to afford more money to generate that volume, which we’re going to get into right now. Right? Because our goal is 30%.
But Step three is we need to figure out what is the allowable what what can we pay on a cost per lead more out there generating leads? What is the allowable that we can now maintain that 30% margins? OK, so how do we figure this out? We figure out what we’re doing in the market today, where we’re buying these leads, how we’re buying these leads, and what the cost of media is. OK? So here’s a little example of what we know so far. from earlier, we knew that we’re getting paid $100 on a sale. Our CPA is $100. We know that we’re making $3 on a revenue per lead from earlier from that kitchen renovation company, right? And we know that we want to work on 30% margins. So the question is what do we want do pay per lead, right? On the making per lead, we already know it’s their dollars, right? Can we make more? We can. But it’ll all be determined on the conversion rate, how many sales you generate, right? On the $3 RPL, that we were talking about earlier, that was based on the 3% conversion, if we were able to convert customers, by 5%. Now our revenue per lead we worth $5, right? So the formula here is we take the revenue per lead, and then we multiply at times the margin goal to get what the net lead allowable is, right? So and then we take the RPL, we subtract that from the net lead, and we’re going to get our lead cost level. So let me show you that with numbers. So you’re not confused here. So all right, we have the $3 revenue per lead, we’re working at the 30% margin. So that means that we have 90 cents that we are going to make the 30% will consist of 90 cents, we’re gonna make 90 cents for every lead that we generate. So by figuring out that number, we can just take the 90 cents, subtract it from the $3. And that tells us that our lead cost allowable we can go out to the market and buy leads for is $2.10. OK, so now we know if we’re out and we’re buying traffic, if we want to pay somebody on a cost per lead. Well, right now, we feel pretty good about paying $2.10 if the metrics remain the same, OK. So at this point here, we know what the RPL is of the $3. We know our goal is to make 30% margins. And to hit that goal, we know that the allowable for us to pay per lead is $2.10.
So now that we have an idea of what we think we can actually pay for us to go out and arbitrage this kitchen renovation offer is we got to go, we got to test, we got to go find new partners, right? You can go out and buy the media yourself, if you know how to do that. I’m guessing most of you if you started off today, you don’t know how to do that. Right? So we’re going to focus on affiliates, which is you going out and finding other companies, other people that know how to drive traffic to your offer, OK. So in that instance, you don’t really need to be an expert and understanding how to Media Buy. If you do, it’s a plus, it’s great, you can go out and you can do it yourself. But for now, we’re assuming that you don’t know anything about media buying, all you know is you call up a company, and that company told you, they would pay you $100 on every sale that you generate for them. And you’re like, OK, well, great. And now you want to go out, and you want to go and buy on a cost per lead basis, you’re not going to go out and buy on a cost per sale. So we’re going to test. So as we’re doing this, there’s some rules on when you’re looking for certain affiliate partners that you’re going to test with, OK. Number one is, you want to get an idea of what your test budget is going to be, right, because we know that we need to test in the beginning, you may lose some money, you’re not paying for the media. But you are paying for every time an affiliate generates a lead for you. Right, that’s not a payable action for you. But you’re making that a payable event for your partner, right? You’re breaking it down, you’re taking on some risk. So you got to figure out how many leads are you willing to buy from them, and then send to your advertiser to watch what happens to decide, is this something I want to continue with, right? And you also want to figure out what it is, by partner, you want to understand what the overall budget is, and you want to then break out that over budget into how many partners are you going to test? OK, and that comes down to what type of media Are you looking to buy from me. And what I mean by that, if you don’t understand by media is if somebody is going to generate a lead for you by sending an email. That’s one type of media type versus if someone’s going to generate a lead for you. That’s going to click on a display ad on a website. Or if somebody is going to be scrolling through Facebook and click on an ad in their their newsfeed, right or if somebody is buying some keywords inside a search engine. That’s going To then generate a lead for you, every one of those channels, each media type is going to be valued very differently. There’s different intent, there’s different quality. So it’s really important that whatever numbers you use to model, you want to look for that type of media, OK? You want to find partners that do very similar things to the data that you are basing your decisions off of. OK. So if you are doing it off of somebody that mailed your offer in email, you want to look for mailers, you don’t want to go and buy social media, you don’t want to go and buy clicks. And in search, right now you want to go and find mailers and test this out, right, once you get more data, you can start to use those numbers and branch out slowly right to watch what those numbers back out to for you. But right now we know what a mailer will do for us, and what the revenue per lead will be on or about, and what we what we can pay on our path. Right?
So by doing that, we’re now going to model and find new affiliate partners. That are mailers, right? And what we need to do is try to understand how is this mailer going to sell their media to us, right? So what we want to do is we want to project out what the possible CPL will be for that specific media partner. Now, if you can go and talk to a mailer, and say, Hey, run my offer to your your database, and I’ll pay you $2.10 for every lead. Oh, then. Very easy, right. But there are a lot of partners that may not want to do that. Because a lot of mailers out there that don’t want to pay it paid on a cost per lead. So we need to figure out how we can afford this media, we need to figure out Will this work for us? So let’s say we have a mailer? Who has 20 million names in their database. OK, so there’s some scale there. It’s exciting, right? Looks like they, they have the right audience for people, you know, that own a home. been there for a while and potentially want to renovate their kitchen, right? Make sense, you want to understand who their audiences you always want understand who the audience is. That’s how you find the people. That’s how you get traffic, right? You’re not just creating traffic traffic’s already there. You’re just finding the people where they are on the internet, you need to stand who they are, right? So if we have a database of homeowners who’ve been there for, you know, 510 years, oh, perhaps they want to renovate their kitchen, right? You can talk to your advertiser to get more details on the demographics, the geographics, the you know, the any sort of behaviors or psychographics, that you can now go and segment and really target those users, right? Let’s talk about this. And in using my SurveyDetective platform, like that’s, the whole goal is to segment your data to understand your users so that you can now send them relevant offers, right, you can speak their language, you can really help them find what they’re looking for, even if they don’t know what they’re looking for. Because you get them. That’s what we do. Right? So that’s what we’re doing here. When we’re talking to our partners as the mail we’re trying to understand as much as we can, because we know what type of lead we need, what kind of audience we’re looking for. The so they have 20 million people in their database, and they want to sell their emails for $2. CPM. OK, what does that mean? CPM cost per 1000. OK? When you buy media, CPM, ultimately, it’s like an impression, the person didn’t click person doesn’t fill out a lead form. person doesn’t buy anything. They’re saying, if we send a million names to your database, we want to get paid $2 1000. Right. So few things that I’d want to know, outside of the audiences. Alright, well, when you do that, have you tested anything we’re in in renovation? kitchen renovation? Anything with the homeowners? Yes or no? Yeah. OK, great. Well, if you have, what is the average open rate that you see? And what is the average click rate that you see, right? I need these numbers. Because without these numbers, it’s very hard for me to model out if this is going to work or not what I think the cost of this media will be to me on a cost per lead, right? Because right now they’re paying me I’m paying on a cost per 1000. Right? I’m paying for just them to send emails. I’m not getting getting The ability to pay them only when they fill out a lead form. So by doing that, I gotta gather all my numbers. And I got to figure this out. So again, we know $100, CPA $3 revenue per lead, we’re working on a 30% margin, but the cost of money right now is $2 1000. OK, we know that there’s a 10%, open rate, we know that there’s 5%, click rate on average. So what we’re going to do is we’re going to run some numbers, right? So let’s say that, we want to test about $2,000. So we’re going to mail to a million people and their database, they have 20 million will mail to just a piece of that database and test it out. So if we take those million names, without doing anything, all we’re going to do is we’re going to take an insert the 10%, open rate, the 5%, click rate, we’re going to take the 3% sales conversion rate that we learned earlier in this testing phase, and we’re going to apply the $100, CPA to that specific sales. So by doing that, if we send to a million, and we get a 10%, open rate 100,000 people open the email, OK? See right here. Now 5% of those people click right, so of those 100,005% click, that’s 5000 unique clicks. And now here’s a number that’s really, really important for you to understand that we didn’t talk about yet, which is not the sales conversion rate, right? Because we’re gonna drive traffic to the lead form, we’re not driving traffic to a form where they’re gonna go and buy by the product, we’re driving traffic to a lead form, we’re going to pay to collect information, right? So in that scenario, we need to know what the conversion rate will be, before we ever even think about selling something, right? So here, I use 20% conversion rate, just because I know that that’s like an average on certain forms, right? So by taking that 20% of the 5000 clicks, that gets us the 1000. leads, right? So this numbers based on how this varies is going to determine what’s going to happen on the back end, right. But at the end of the day, those 1000 leads, it doesn’t really matter if we converted 20% or 40%, we’re still paying $2, CPM $2 for every 1000 emails sent, and the cost of that is going to be $2,000. So we need to figure out, what did we pay to acquire that lead. So if we paid $2,000, and we generated those 1000 leads, right, we converted 20% of the 5000 clicks. So we got 1000 leads that 2000 now divided by the 1000 equals $2. Cpl. So we just generated 1000 leads for $2 for each lead, now, we know what’s gonna happen now, right? those leads are gonna go to the advertiser, the advertiser is going to do their thing. And then if everything happens the way we expect it to, if they convert a 3%. On that sales conversion, we’re going to be in business, right? Because remember, we said $2.10? Right. So the decision time here, when we’re evaluating this is does this work? And we know to hit the 30% margins that? Yeah, we won’t we we could pay $2.10 a lead, right? And now we’re getting leads for $2. So what happens here, right? We we see that, because the actual cost per lead for this mailer, based on the numbers they’re telling us is $2. Well, then, our margin just went from 30% to 33%. Right? So that’s the beauty of lead gen arbitrage is if you can find media that converts really well, versus what you’re expecting it to convert at. That’s where you can get in to a place where your risk reward factor, you’re taking risk on buying leads yet, you might be able to make 50% 70% if you find really good traffic, right? And from the publishers perspective, the affiliate, they don’t want to take any risk. They just want to get paid. They tell you what the cost of their media is. They say, here’s what I want you to pay. You pay them that and at that point now because of the risk that you’ve taken, to pay them no matter what if you make more money, than what you’re you’re looking to make from, from your goal perspective than Bravo, you deserve it, right? Because you took a lot of risk. If it doesn’t work, you’re gonna get run over, you’re gonna lose all that money. Right? So, I mean, that’s what’s really exciting about the lead gen arbitrage side, you can work on really, really huge margins when you make something work.
So if we look at this, just to look at these numbers again, you get 100, you get a million emails that are sent 10%, open rate, you get 100 opens, 5% of those people are clicking see if 5000 clicks 20% of those people are converting into leads, you get 1000 leads, you spent the 2000. Right on our sales conversion, you get 30 sales, a 30 sales times the $100, CPA, we know that we’re making $3,000. At the $3,000, we just spent two grand to make $3,000. So we just made that’s mcse. Right? Our net revenue per lead is $1. OK, so let me, let me try to put this in perspective for you. Because this is just a test, right? The whole idea is that we test multiple partners, OK. And, yeah, it worked. Now those numbers may not sound very big. But when you find something that works, you scale it. OK, this is just the test to see if it works. If that worked, they have another 19 million in their database. So Wow, even if you just replicate that and all these numbers stay the same, that one affiliate could generate $20,000 and in profit for you, by just mailing to that database, you could do it a million at a clip, you do more if you want more volume, if the if the partner wants more volume, right? Maybe the conversion rates go from 3% to 4%. If that happens, well guess what, guys, if that happens, if we went from 3% to 4%, here, that means that we get 40, sales of 40 sales, we would make $4,000 at the $100, CPA $4,000 we would make $2,000 net profit. If we scaled that, and that held true for the 20 million, then we’d make $40,000 on that specific send to those 20 million people over a period of time, right. And keep this in mind. When you’re mailing to these people, people make this mistake, if you mail to a million people don’t think you can’t mail to them again. OK, people don’t just see things and buy things the first time. Alright, you gotta get in front of the face. Look 10% open rate. That means that 900,000 people didn’t even open the email that you now still have the ability to market to. Now maybe they’re just not interested, maybe they’re not a good audience to, to want to continue to market to. Or maybe they just didn’t look at their email that day. Right? So the idea is that you want to just keep on doing it. As long as he gets back in now you keep doing it. There’s a lot of there’s a lot of potential here, right? Only 5% actually clicked to see your offer. So of the 100,000 that that opened the email, they saw the copy the creative inside their email, on their phone and their computer, they never see your landing page. Hidden click 95,000 of those people never saw your page. Right? So now of the 1 million people that you mail to, let’s just so we put things in perspective here. 995,000 people have not seen your landing page of the million. Right? You guys see that? And you’re still profitable. You’re still making money. That’s the power of online marketing of lead generation arbitrage. So you have a ton of potential with this partner, ton of potential, right? It’s not just like mail a million, a million, a million a million get to 20 and it’s done. It’s not. That’s not No, you can continue to mail, you might have to tweak the creative write, you might have to take a different angle to how you position it. To get that click to get that person to open an email what that comes down to the from line, the subject line, the copy on the ad creative inside the email, right. To get an open, you need to focus on the front line and the subject line. To get a click. You got to focus on the ad creative inside The email that’s optimizing right? And then to increase your conversion where you get to work on your, your lead form. That’s all stuff that you control before the advertiser. On the back end, your kitchen renovation company ever, ever touches this lead? So is it worth the test? Yeah, I think we go for it. I think it’s worth it a test, it makes sense, it’s scalable.
Now, like I said, you got to compare apples to apples. I said it earlier, I’ll say it again, every single Media Buy has a value every one of them, right, it could be worth zero. If it’s really bad traffic, but somebody that’s getting an email, they’re not expecting that email today, you’re sending an email to them hoping that they see it, you pique their interest, they open it, they see the ad creative, they click it, and then your pitch, right? If somebody was going to go into Bing, and search for home renovation, they’ve initiated that search. They’re the ones that are saying I need to renovate my kitchen, I’m interested. Search Engine is powerful, because of the intent of the consumer. They’re the ones triggering the ad to show up on their page. They’re searching for kitchen renovation, right? Now, that’s a very different type of lead, the quality of that lead will be higher, should be higher. And if it will be but it should be right. It should convert higher, it should be valued at a higher rate. Hence why earlier when I was explaining to you on how you have your affiliate payouts and your media by payouts, the media by payout which would be buying on Google, that the value to pay for kitchen renovation, that keyword is likely expensive, right? You cannot make it work with the affiliate payout that they’re willing to pay you the $100 CPA. They likely might be able to pay you $500 CPA on a lead coming from your Bing search engine buys, right? So, once you start getting into bed with an advertiser generating leads, those leads start converting. There’s a Delta there, where that $100 CPA, you may not get paid $500 on a sale. But you might be able to get paid $200 on the sale if it’s working for them, right? So, if we go back here and look at it, all these metrics can remain the same. But, if we have 30 sales at $200 per sale, that’s $6,000 in revenue. It still costs you the same amount of money to generate that same lead. Those same sales have to grant Stein making $4,000 by just getting an increase in payout because you’re showing them that you’re driving good, high-quality traffic. So, you have to figure out what the value of that media is to you. And when you do, it gives you leverage. You’re driving traffic to an advertiser. You’re doing it on a lead basis, where you’re sending them leads. You’re not charging them for leads. You’re only charging them when a sale happens. There’s not much risk for the advertiser. And if you’re able to do it, where you scale it, these guys who are paying on sale, it’s hard to get scaled from affiliates on a cost per sale. Most people don’t want to go and market a cost-per-sale offer unless they know that it’s going to convert because it’s just there’s too much risk for them on the front end. These leads and companies don’t want to do that. They want to get paid by leads. Right? If you’re out there buying media, you want to get paid on the lead. You want to know when you’re getting paid as quickly as possible. Because you’re in real-time buying clicks, buying impressions, right? And if you have immediate costs, but you don’t know what the revenue coming in from that immediate buy is for you, it’s very hard to operate. You can’t. You have to lay out money and hope that you get it back. So, most people don’t do it. Now there are ways to do it, right? You got to take some risk, got to buy some media, you got to wait and see what the conversion rates are. All those numbers, right: lead conversion, rate sales conversion rate back, and get out to what the cost of the media is versus what the revenue is that you’re making on a revenue per lead basis, right? We’re going over all that. So, there’s a lot of things that need to happen. But most people don’t like to go through all this, right? It’s a lot. You know, you might feel like Holy cow! like crazy… Go on for this video 25 times, right? Listen to the podcast 25 times. Take out a notebook, start writing down each piece. Pause it after each step. Pause it, write the numbers so that you understand every step that needs to be taken so that you can do this.

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