“If you spend a $1000 on ads, how much are you bringing back on day 1?“
This is a question I asked Tom Merritt after he told me he was having trouble scaling his supplement offer.
Tom responded with “about $1200 or so”
Immediately I was confused.
Because a $1200 return on $1000 spend is pretty damn good.
So I dug deeper…
“The numbers you just gave me are pretty solid. So I’m curious, what’s actually preventing you from scaling it?” I asked.
“Well with our costs for the bottles and shipping, it’s losing money. And I want it to be a positive ROI on day 1”
Bingo.
That’s what I was waiting for.
What Tom said is a common mistake a lot of people make when trying to scale an offer.
I famously made this mistake myself back in 2014.
And it probably cost me a few million dollars in net worth.
I don’t want you to make this same mistake.
So I’ll walk you through it.
The big mistake Tom is making is that he is simply asking the wrong question.
He’s asking “how can I get this offer to be ROI positive?”
Which seems like the right question…
But it’s not.
The right question is…
“How can I live with going 20% negative, and then make it up on the backend?”
That’s the right question.
And it’s one that I broke down for Tom on my whiteboard last Friday.
I explained to him that this business is ALL about customer acquisition.
And if he was simply ok with going 20% negative when getting a buyer, he’d be able to scale his offer to a few hundred sales a day.
That means he could have a list of 100,000+ buyers within 12 months.
Which is huge.
That’s a real asset.
An asset that he could make 7 figures a year in profit from.
But that can only happen if he changes his thinking.
He has to get away from trying to be ROI positive on day 1.
Cause that’s how you scale.
It’s how companies like Agora Financial, Golden Hippo and Natural Health Sherpa are able to acquire more customers than their competitors.
They are willing to lose money on day 1.
And then they figure out how to make up that money over the next 30, 60 or even 180 days.
Now you have to know your numbers to do this.
And some people don’t have the stomach to do it.
But if you want to really scale an offer…
You have to be able to go negative, and then to make it up on the backend.
That’s the key.
Make sense?
I hope so.
Cause that’s all I got for ya today…
Feel free to forward this email on to anyone in your company who would benefit from hearing this.
Take care,
– Justin
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