Facebook Marketing Case Study by Adrian Ulsh
How to Predict With Near Absolute Certainty If Facebook Ads Will Work for Your Coaching Clients
We know a vast number of business owners are advertising on Facebook.
The problem is those ads aren’t cheap, and many businesses don’t even come close to breaking even on their marketing costs, much less making a profit. So, let’s discuss Facebook Marketing and help you to know with close to absolute certainty if Facebook advertising will work for your business.
We’re going to hand you your own private ‘crystal ball’ so to speak. This crystal ball will detail how much you can spend and still make a profit using Facebook ads?
Often, a large part of overhead for small businesses is their marketing costs.
Unfortunately, Facebook isn’t free but it seems to be the marketing venue of choice for most small business owners.
But consider this… suppose you could “predict” the success, or failure, of a Facebook marketing campaign BEFORE you invest a cent of your own money?
What if you knew, in advance, whether or not a Facebook ad campaign would make your clients’ money?
That’s what we meant when we said we want to hand you your very own marketing ‘crystal ball’. Well, here’s the process to follow to accomplish this!
Consider this scenario… you’re an Accountant, and you’re trying to decide if you should advertise on Facebook to bring in additional clients.
You plan to host a webinar for small business owners so you can make them aware of several legal loopholes that favor them.
The first thing you MUST understand is the Lifetime Value of profit that you’ll receive from your average client. You know you charge your average client $1,500 per year for your accounting fees.
You keep your clients for 6 years on average, and you have an 88% Gross Profit Margin since you incur very little in the way of expenses when working with clients. Let’s document our stats so we can keep everything straight.
We just said our annual accounting fee is $1500. Our average client engagement is 6 years. And we have a Gross Profit Margin of 88%.
So, if we do the math, we multiply our 3 figures together and discover our average client lifetime value is $7,920.
Now that we know our lifetime value, we can calculate how much we can spend each month on Facebook marketing and feel confident that we will make a profit?
Here’s Your Facebook Marketing ‘crystal ball’ I Promised You
First, we need to set our ad budget. Let’s say we start with a monthly budget of $1,000.
We want to invest this amount running Facebook pay-per-click ads.
For the purposes of this example, let’s Google ‘average Facebook CPC’ and we discover that figure to be $1.72.
That means each time a prospect clicks our ad, Facebook deducts $1.72 from our $1,000 monthly budget.
Since we know that number, we can calculate the number of clicks we can expect to see based on our budget. So, we divide $1,000 by $1.72 and we get 581 clicks.
Now we have to figure out the approximate number of prospects who will be interested in attending our webinar that those clicks will generate.
Once again, we can turn to Facebook for the answer.
They constantly track ads like the one we want to run, so they know the average number of conversions we can expect to generate with our ad.
That figure comes out to be 9.21%. So, let’s multiply our 581 expected clicks times 9.21% which in decimal form is .0921… and we find that we can expect to generate 54 prospects for our webinar.
Unfortunately, we know only a small percentage of those prospects will actually attend.
The average is around 40%, but let’s be ultra-conservative in this example and assume only 25% will attend.
So, we’re going to conservatively estimate only 13 attendees will show up. Now we have to estimate the close rate for our webinar.
Most professional service providers like our accountant can easily average a 30 to 50% close rate, but keeping with our ultra-conservative approach, let’s calculate a close rate of just 15%.
We can now calculate our estimated number of new clients we believe our webinar will generate by multiplying our 13 attendees by 15% which equals 2 new clients. With this information, we can now determine if Facebook marketing will be profitable for our accountant.
We know conservatively we can expect to generate at least 2 new clients, and we know the average profit or lifetime value that we can expect from each client we service, which is $7,920.
We multiply those two numbers and learn that our total gross profit from our Facebook campaign will be $15,840. But we still have to subtract our ad cost which was $1,000… and we end up with a net profit of $14,840.
I would say a $1000 monthly ad budget for Facebook PPC marketing would be extremely profitable in this situation.
And when you take into account that we were ultra-conservative on virtually every calculation we made, we may find we do MUCH better than the numbers we’re projecting. But what if we took an ultra-ultra-ultra conservative approach with our numbers.
Let’s calculate your profit if you had to spend double the money on Facebook ads but you only achieved a fraction of the averages we previously used.
Let’s DOUBLE our monthly ad budget from $1,000 to $2,000. And let’s double our cost per clicks from $1.72 to $3.44.
The number of clicks we expect to get stays the same at 581. Let’s also cut our webinar conversion rate in half… from 9.21 to just 4.61%. Now we multiply our 4.61% times our 581 clicks to find the number of prospects we can expect to register… which comes to 27.
Since we were ultra-conservative with our previous percentage of those who will actually attend the webinar, we can leave the percentage at 25%.
That means that out of the 27 prospects that register, only 7 will attend. We can also keep our ultra-conservative closing rate of 15%, which means after all is said and done, we can expect to generate just one new client.
So, our math on this page is going to be simple to calculate.
We get one new client with a lifetime value of $7,920, which also represents our Gross Profit from this Facebook campaign. Now we subtract our $2,000 ad cost and that leaves us with a Net Profit of $5,920. That’s a 296% return on investment.
So, even when we use ridiculously conservative numbers, we still find that a $2,000 monthly ad budget would be extremely profitable in this situation. But here’s the bottom line.
Facebook Marketing seems to be THE popular choice for the vast majority of small business owners.
However, marketing is seldom the answer when you need to increase revenue and profits. And yet, that’s typically the first thing business owners go for, and it seldom works.
You’re much better off setting up a joint ventures, implementing upsell and cross-sell strategies, setting up drip campaigns, etc., and then work to increase revenue through a marketing campaign.
And if you decide Facebook is a viable venue for reaching your ideal client, now you have the formula to ensure success.
We hope you found this program beneficial in helping you to build a more successful and lucrative business.
Here’s wishing you all the success in the world moving forward.
About Adrian Ulsh
Adrian Ulsh is the CEO for Leader Publishing Worldwide, the largest online provider of coaching services worldwide. Adrian currently works with more than 500 coaches in 24 countries advising them on building 6 and 7 figure coaching practices.
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