3-Paths, by Thom Dougherty
Data-driven marketing is here to stay and so it’s important you have a basic understanding of the mechanics.
This is a story about:
🧔DIY-Doug,👦Bits-N-Pieces Pete, and 👨Delegate-Derek
They each have $30,000 they plan to spend on online advertising to build their businesses next year.
They each have a different strategy.
Let’s see how they turn out!
This example is centered around Google Ads but the same mechanics are at play with SEO and with Facebook ads.
I’ve done my best to get these numbers as accurate as I can from research and my experience.
Derek’s numbers are based on numbers our clients are getting from our Revenue Generation System.
If you want to DIY, great! Just make sure you know your stuff.
🧔 DIY-Doug is going to do it himself. He’s watched hours of youtube videos but has never spent this much on ads before.
His contractor cost for the year is $0 because he’s doing it himself.
👦 Bits-N-Pieces Pete is going to hire someone to only manage his Google Ads for him.
His contractor cost is $9,000 to have his Google Ads all looked after for him.
👨 Delegate-Derek is going to have an industry expert oversee his entire digital presence.
His contractor cost is $24,000 to have it all looked after.
Quality Score and Ad Effectiveness
🧔 DIY-Doug doesn’t know much about how quality scores work in Google Ads. Because of
He gets an average score of 2/10 (10 is the best).
He doesn’t realize that because of this he’s paying a premium to get traffic to come to his site.
He’s able to get 4000 website visits for his 30k spend.
👦 Bits-N-Pieces Pete’s Adwords guy has done a better job of setting up the ads.
He’s getting a quality score of around 5.
Things are good on his end with the ads, but he’s not quite getting the result he wants and wonders how the website is performing.
He doesn’t have
He should be telling Pete that they need to better track the leads so that they can figure out what needs to be adjusted to get a better return.
The contractor doesn’t really have the data to show how things are going so instead they rely on ‘how the calls are going’ when he talks on the phone with Pete. Together they establish that ‘it’s making money’ so they continue.
They are able to get 10,000 visitors to their site for the $30k.
👨 Delegate-Derek hasn’t done much work at all because he’s got someone doing it all for him.
He trusted his guy to look after it all and they are getting a nice reward from Google for streamlining their ads and their website to have a high-quality score.
His guy understands SEO and
Overall their account is getting around 9/10 quality score and so along with some SEO traffic they are able to get 21,505 website visitors for the $30k they spent.
Website Conversion Rate
🧔 DIY-Doug’s website was not super well set up for conversions.
He paid a great designer to create a beautiful site. They didn’t really consider how easy it would be to split test and optimize for conversions.
Doug doesn’t know much about conversion tracking and so he doesn’t have any
Doug is (unknowingly) able to get an overall average conversion rate of about 2.35%.
This means that he was able to generate 94 leads for the 30k they spent.
👦 Bits-N-Pieces Pete only hired his guy to look after his ads because he was pretty confident in his website.
It’s performing in the top 25% of sites and is getting a conversion
Pete and his Google Ads guy can sort of track the form fills but don’t really know which are from SEO or Facebook or AdWords.
They try to ask people on the phone about how they heard about them but the data is too spotty to really rely on.
Pete and his guy were able to get around 600 leads for the same 30k Doug spent.
Pete got many more leads than Doug because both of their quality scores and website conversion rates were better.
The better Pete’s website conversion rate gets the better his quality scores get because conversion rate is part of how Google assigns quality score!
They are able to get this rate because Bob’s guy is a niche specialist that understands what their avatars are looking for and knows how to get them to convert!
They are able to get 4,301 leads for the $30k.
(They are the only ones who know exactly many leads they get because each is tracked one at a time with their phone tracking system.)
Lead Conversion Rate
🧔 DIY-Doug doesn’t really have a way to track his conversion rates per channel so he doesn’t really know which leads are coming from his Google Ads.
He doesn’t know where his leads are coming from so he can’t calculate his conversion rate per marketing channel.
He unknowingly has a lead conversion rate of about 30%.
This means that of the 94 leads they get that year they are able to sign up 28 new clients.
👦 Bits-N-Pieces Pete doesn’t have call tracking set up but he has been back and forth on the phone with his guy a lot to try and see if they can improve the conversion rate.
They don’t have much data to go off of but are able to use Jack’s notes to improve things a bit.
They are getting a lead conversion rate of 40%.
This means that of the 600 leads they generated they are able to sign up 240 new clients.
👨 Delegate-Derek has phone call tracking so he doesn’t need to give his guy any feedback. They are collecting lots of useful insights and have clear reports.
His guy keeps track of waste calls and is always working on filtering them out. His guy has the data he needs to move budgets around to boost the parts of the campaigns that are generating the calls that are closing.
Derek is getting a conversion
Profit – Final Results
2/3 were able to generate a profit.
They estimate the profit they have generated by looking at their historical rates.
They are all making an average of $700 per client per year.
They are keeping their clients for an average of 3 years.
And they are all profiting at a rate of about 15%.
This means that each closed client is worth about $315 each to them in profit.
Profit Generated After Marketing Costs
👦 Bits-N-Pieces Pete:
Cost (adspend + contractor)
$30,000 + $0
👦 Bits-N-Pieces Pete:
$30,000 + $9,000
$30,000 + $24,000
Profit After Marketing
👦 Bits-N-Pieces Pete
The Lawn Authorities Revenue generation SystemBe like Delegate-Derek.
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