Buying Clients

What's good, everybody.Greg Hickman here and in this video I want to talk about going to the client store and buying clients.

So if you were to go to the clients' store, how much would you be willing to spend to buy a new client?

... Let's get it going.

For three years, my agency built funnels and automation systems for the biggest names in marketing today since then have transformed that agency into a hyper profitable training and consulting business. While everyone is out there talking about scale like it's some sort of destination, we'll be asking the real question, how do you transform your business into a more scalable model using the knowledge, skills, and expertise that you already have? This podcast is here to give you the answer. Join me in to follow along as I learn, apply and share the strategies I'm using to build my multimillion-dollar business. My name is Greg Hickman and welcome to scale up.

Welcome back, my friends. And in this episode, as I said, I want to talk about the mindset and the ability to go to the client store and buy clients. Now I want to share it, kind of a couple of stories to set the frame here. Um, but there is a common saying when, especially in the agency world and I believe it was that one of the traffic and conversion conferences hosted by digital marketer and it got to the Q and a session and someone got up to ask Ryan Deiss, the CEO of digital marketer, you know, what, you know, what should I be doing to get more leads? And they dove into the problem and basically the prospect, the person in the audience or the attendees said, my problem is I need more traffic. And Ryan Deiss said, no, your problem isn't traffic because you can go to the traffic store. Like you can go to Facebook or Google or youtube and you can buy traffic, you can buy, you know, buy clicks and views to your content by visits to your content.

So it's not necessarily a traffic problem because you could go by that. So why haven't you gone and done that? Right. And started this whole, uh, you know, series of conversations and it really got me thinking about the fact that well if you can buy traffic, you can buy clients. Right? And it kind of brings me back to a few years ago when I was just really starting to cut my teeth and spending money on Facebook ads and we were spending, you know, we started about a hundred dollars a day and we slowly kept ramping that up and we were about $250 a day in ad spend. And for me that at the time that was a little bit nerve-wracking and I went to a, a peer of mine who has a similar similar business model and he was spending, you know, $1,000 a day. And we had this conversation, we were just talking through our numbers and he was basically saying, hey, look like it's converting.

You just need more volume. And that's when he said, what I'm about to share with you, which really started to change how I think about rapidly growing your business and the ability to buy clients. And he said, look, you know, we were doing x dollars a month in revenue at the time it was, you know, far more than we were doing. And he said how much he was spending. I think at that time he was spending around a thousand dollars a day on ads and we were spending about two 50 and he said, the only difference between you and me is that I have more opportunity volume. And the reason I have more opportunity volume is that we're spending $1,000 a day and you're spending 250 he's like, if you scale up the numbers that you just shared with me, you would have more opportunity volume. You'd have more leads coming into your pipeline or into your funnel.

And then from that more prospects filling into your pipeline, thus you're going to have more sales conversations. And thus, if you continue to convert at your even 20% conversion on the phone, you're going to have a whole lot more revenue. So he said, if I were you, I would just bump up your daily ad spend to 500 a day. And that honestly scared the hell out of me. And I was like, Whoa, 500 like I'm not really sure I could do that because in my mind, you know, we had been spending 250 and I was thinking through this whole process around, well, I feel, I feel right, there's no data here to prove this. I feel, and I felt like I could afford to spend two 50 a day, but spending more than that was, uh, outside of my budget, so to speak. Air quotes, right?

If you're listening, you know, on, on iTunes, you know, I was afraid to go up to 500 because it felt like it was too much money to be spending on a daily basis to run Facebook ads. And that's really what kind of brought this whole conversation to the table of, well, how much am I willing to spend to get a lead? How much am I willing to spend to get a client? And at the time we had been, you know, running Facebook ads for, you know, a few months. And so I knew what it was actually costing us to get a lead and to get a qualified application and a new client. But I never knew what I would be willing to spend. And so as we go through and I'm about to share, I want to kind of break down how this really becomes a numbers game for you.

Uh, and some things that we've learned along the way. And if you're listening on iTunes, you know, just know that I'm going to be kind of jotting some things on, on the iPad here, but you can follow along for short. So here's the deal. Like the question that we're asking ourselves is how much would I be willing to pay for our client right now? This obviously depends on how much you charge, right? You know, someone who is selling something for $1,000 might not want to spend $1,000 in order to get that client. Now, if they, so a service that is $1,000 a month, and on average clients stay with them for six months, you might be willing to spend $1,000 to get that client. And essentially break even in month one knowing that you're going to collect five, 5,000 more dollars over the course of the next handful of months, right?

So really starting to understand how much you're willing to spend will give yourself and kind of weaponize you with some data so that when you jump into buying clients, say using Facebook ads and this really translates to any place you're buying ads. Maybe you're even buying sponsorship on a podcast or you're buying a pain to be a sponsor at an event where you have a booth, right? Like there are costs that come to that. Maybe you spent 15 grand to be a sponsor and that gives you a booth. You've got to fly your team out there, you have to spend a couple of days there and all in all, maybe it costs you 25 grand to be at that event. How many new clients do you need to get from that event to make that event worthwhile? Right? Like those are things that you would need to start asking yourself.

And the same goes for when you spend money on Facebook ads. For me at the time, just kind of, I looked at my bank account and I'd say it feels okay to spend 250 bucks a too on my ad spend, which translated into, you know, a certain dollar per lead per application. So where do we need to start for you in your business is to understand how much you will, you should and would be willing to spend. Now should and would are a little bit of a different conversation. But to answer this question, we need to start looking at, you know, the costs and the value per the lead, the application, you know, the client. Now depending upon what you're selling and what your sales funnel and sales experience looks like, how you track it might be a little bit different. So I'm going to kind of keep this very high level and fairly simple for what I see most agencies and you know, coaching, consulting businesses doing.

So what we track in our business are leads at a high-level application and then clients. So in our sales process, we are capturing leads through a lot of different sources. And a lot of those leads, we are transitioning into a sales conversation. But before we get on the phone with someone, we are having them fill out an application and pick a time on our calendar. So that's the app, that's the applicant part. And then a certain percentage of those will become clients. Right? So, uh, for us, you know, how you define lead might be a little bit different. Um, at its simplest, you know, a lot of people are capturing an email address. Now we capture a name, email and in some cases phone number. Okay. Depending upon what we're doing, we'll dictate what that is. So you know, for us that's a lead now an applicant or an application.

So an applicant is someone that completes a series of questions, call it a survey called an application, whatever you'd like. And then obviously a client is the person that just gave us, gave us money for one of our programs or services, right? So we're all, we're all here on the, on the same page. So for us, I'll reverse kind of into this, but we've spent anywhere from, you know, $5 all the way up to, you know, I'd say like an average, we've spent more sometimes, but you know, say like 25 bucks for a lead, you know, applications we've had, depending upon the targeting and all that stuff. I'm keeping this kind of high level for you, you know, say anywhere between, um, 80 and we'll say two 50, which is on the high side. And then to acquire a client, we've had anywhere from, you know, 702, uh, in some cases, 2,500.

So you can kind of take the averages of that, which over the lifetime of our ad spend, you know, you would obviously start averaging this out and seeing where you're spending this breaks down to ad set and all of that stuff. So I'm not going to go into all of that granularity here but just say like, as an example, this is, this is a high level of a glimpse at our business. Okay. So let's translate this to your business, right? So, um, we're going to look at your costs and then the value. Okay? So let's assume for the sake of the conversation that your product is $10,000. Okay? You sell a product or a service for $10,000. So let's say you spend 1000 bucks on ads, okay? We're going to be looking at things like the cost per lead, the cost per application, and then the cost per client.

Okay? Then we want to conversely look at the value per lead, the value per application, and the value per client. Now look, we just said that you're charging $10,000 for a client. So if you got one new client, right, the value per is 10,000. Now to keep this simple, I am looking at annual client value, not lifetime value in this instance, cause I might not know. So say you're selling a service as 10 grand and that's all that someone ever buys a view or pays, pays you in that year. But some of you might have someone pay 10 grand and then you know, within six to 12 months they're paying you another 50 right? That's where you would start looking at the lifetime value, which is very important and understanding what you're willing to pay, right? If someone were to give me $10,000 and I know like 80% chance that within, you know, 90 days they're gonna give me 50.

You might be in a position where you're willing to spend 10 grand just to get a client because you know there's a good chance that a percentage of them, 80% in this example would convert into the say paying you 50 right? So again, all of your numbers are going to be customized to you. So you should be going off your numbers, but this is for the sake of understanding that we can buy clients, right? So, um, here's the deal. The value of you getting a new client is $10,000, right? So say we spend $1,000 on ads and we generate 100 leads. What is the cost per lead? Right? Well, cost per lead, it's 10 bucks, okay? Now let's say of those 100 leads, we get 100 sorry, not 110 10 apps, okay? The cost per app is $100 per app, right? And they'll say, of those 10 applications, we only close one client, right? So we talked about this one client right here, one client, 10,000 well that means the cost per client is $1,000 they can sense cause we got one new person.

Okay? So say we spend $1,000 on ads, we generate a hundred leads, that's $10 cost per lead. Of those 100 leads, we get 10 applications. That's $100 per application. And we just convert out of those 10 applications. One client, right? Which is, I'd say a very conservative percentage. If you're selling over the phone, we generate a new client for 10,000 and we spent a thousand. Now if that were you, wouldn't you continue to do that over and over and over and over and over again? Of course, you would. So in this case, at the very minimum, you know, you could spend $1,000 to get a no. The numbers start to get interesting, right? If you say you spent 10,000 on ads, right? And that now multiplies across the scale, right? You spent 10,000 on ads, but you still only get one client while you broke even.

But you have a whole lot of new leads and opportunities that will eventually become prospects if you have the right funnel, right? Uh, in a previous video, we talked about why your secondary sales funnel is really important, and that's because a good percentage of the leads coming into your world aren't going to convert right away. So we need to be able to stay top of mind with a lot of these folks because that'll introduce sales opportunities, right? So let's stick with the example, right? Um, the value of a client, like we said, is $10,000. And so if we spent $100 or it got a hundred leads, right? So that's in this case name and email, the value per lead is 100 bucks, right? And if we go across and we look at, okay, well we got 10 apps, which we talked is talked about being a series of, uh, questions that people are answering.

So tell us a little bit more about themselves. The value per application is $1,000, right? That value is, the value of that application is that thousand dollars. Thus we get a new client and the value of that client is $10,000. Making sense? So in this example, would you spend $1,000 to get a $10,000 client? Most smart people would say, yes, right? This is where you start now fluctuating, well, what am I actually spending on leads and what are, what am I actually spending to get those 10 apps? And what is it actually costing me to get the client right? Um, one of my mentors a sells a $10,000 program and when he was first learning this, he said, um, you know, he has this quote, he was asked this same question, what would you be willing to spend? And he's like, uh, I don't know, 7,500. And like everybody else was saying like 500 or a thousand, et cetera.

And he didn't really run the numbers, but in his mind, he knew that if someone spent 10,000 with them, the likelihood of them spending another 25 was was almost guaranteed and how he ran his business. So he was willing to spend a fair amount to get a client. Now, he never actually had to spend that much to get a client, but what that does is if you're sitting here saying, okay, I'm actually willing to say I sell my product again is 10,000 and based on your costs of fulfillment, you're willing to pay, let's just call it 5,000 to get a client and you'll see and you'll still be profitable after expenses, not stuff, cost of fulfillment. If you're running ads and all of a sudden your ads skyrocket and all of a sudden you're paying more per lead, you're paying more per app, you're paying more per client, but it's still less then 5,000 you can say to yourself, well, yes, I obviously want to bring it back down because I saw it rise, but I don't need to panic and freak out because I told myself I'd be willing to spend up to 5,000 to get that client.

And this is where, um, a lot of control and I'd say a discipline comes in. My friend Amanda Bond always talks about this thing that plagues many called add motions, right? It's the emotions around spending money on ads. Right? For me, I was like, oh, it only felt like I could spend 250 because I saw two 50 as it related to where I was in my bank account, but me spending two 50 it brought in opportunities and we were very positive on our return on ad spend for how many clients we were bringing in. So as we started ramping that up, we had more leads. We had more qualified applications, we had more sales calls. So when I was closing, you know, say 25 or 30% of the volume that I had, I had a feeling on how much I could actually make. But when I started spending more on ads and I kept converting around, you know, 25 30% but I had a whole lot more calls, right? I went from having say five calls a week to having 12 calls a week. That opportunity volume goes up, right? The opportunity volume.

So all of this to say is you really need to understand the game of, of tracking what it actually costs and the value that you're going to get. Because if you're following someone who is saying, Hey, my conversion is x percent or whatever, and they're selling something at a completely different price point, their willingness to spend also how their funnel converts and their lifetime value are all going to be factors that come into how much you should be willing to spend, right? Someone's selling a $1,000 a course is going to have a different game and a different, you know, economics most in most cases compared to someone who's selling a $10,000 service, right? And so it's not necessarily comparing apples to apples. You can get a ballpark from other folks like this video of like, you know, averages, right? But you need to start tracking this in your own business.

And once you understand the economics of what you can spend and what you're willing to spend, you're going to start to see how you can really start to grow your business a whole lot faster simply by using money to increase your opportunity volume, which allows you to then by clients, right? Because you are spending money on ads. You spent, in this example, you spent $1,000 on ads to make 10,000 right? So you spent $1,000, you bought a client for $10,000 if this example went over to me sponsoring an event, right? The same thing would apply. I spent x dollars on my sponsorship. I needed to cover my hotel, I needed to cover my team. Being there, you know, promotional materials, Swag, whatever it costs you to be at that event as a sponsor, you need to then say, okay, well am I getting the value back in number of clients I've added because it sounds nice being a sponsor and doing that.

Some doing some of those things, but sometimes it might not work out. Now here's the thing that is maybe going to be a tough pill for some people to swallow is the only way to find out what it is is to do it right. So you gotta take action. You have to take action on this. You can ask mentors myself, whoever, all day long, you know, what should I spend and we'll all be able to give you some sort of rough ballpark. But until you start spending the money on, on, on ads or you know, sponsorship or events, whatever you're doing to by clients, you need to understand how much you can spend, how much you are willing to spend and how you can play that game. Because you might've heard the same before. The person who can spend the most to acquire a client is always going to win.

So when your competition is spending 10 times what you're spending on on traffic and ads, guess what? They're going to be taking up a lot of the opportunity volume. Now, I live in a very abundance mindset and there's so many people online right now, whatever your niche is, what whoever your ideal client is, there are plenty of them to go around, but you just need to understand the, the methodology and the mindset of the person willing to spend the most and able to spend the most to get a client is going to win, right? So if you're, you've been in the game and all you've been doing is hoping and you know, playing the game of referrals and networking, which still have a place 100% you're going to have a ceiling on how much opportunity volume you can actually create from the referrals and from the networking, right?

And so there's going to be a cap, a lid on your potential, and often that is not in your control, right? How do you get referrals? How effective your networking is. Like some of those things, you know, number of networking events that you have your right client like is out of your control. But in the example of, you know, hey, you can go find your clients by spending some money on ads, you now have the ability like Ryan Deiss talks about, is to not only go to the traffic store, but to go to the client's store and buy clients. So now that you've checked this out, I think you should ask yourself, you know, look at what, how, what it is that you sell, how much do you charge? What does that value of that client? And then what is the cost to deliver that thing?

If it's 10,000 and it costs 8,000 to deliver, you obviously will have a much clearer picture on how much you're willing to spend in order to get that client if you want to remain profitable, right? So look at the value per new client, the costs to deliver your results to that new client. And then ask yourself, how much are you willing to spend? You know, even if things go completely haywire, then you start generating the data yourself by experimenting r and d research and development. The first few thousand dollars you spend on ads. If you're new to ads, consider it research and development. It's practically going to be like burning money because you need to figure out your own audiences, your own messaging, all of the data that we talked about in this example right here, how that customizes to you. But then you'll be able to come back and say, okay, well when I'm looking at my ads now and I see things go up or down, I know not to freak out just because of, you know, ad motions, right? So we don't want to only guide our, uh, you know, our acquisition efforts based on ad motions here. We want to focus on the facts and the facts come in the form of the data that we just talked about that you need to generate on your own. So are you ready to buy clients? Do the math.

If I gave you five to 10 new clients, would you or your agency break? If so, your current agency model is broken. I struggle with this too, until I found a better way. By adding online programs, training, and coaching to our agency, we doubled profits without adding more hours. If you want to work directly with me and my team to transform your agency, visit myscalablebusiness.com to learn more.