Facebook advertisement costs continue to increase over time. In fact, in the last year the cost to run Facebook ads escalated by 122%! Competition on the Facebook ads platform is at its peak. This is true as recent changes in Facebook’s newsfeed algorithm has led to users spending lesser time on the site.
With more and more advertisers registering on the platform, it is natural that the increased competition leads to higher ad costs. But the good news is Facebook ads are still an awesome tool for generating traffic, sales and leads. And as long as you are smart at marketing, they will stay that way for a long time.
So, how can you manage to create profitable ad campaigns in a world where costs are continually rising?
Smart advertisers know that they have to fight this battle on two different fronts in order to win. Not only you need to focus on keeping your FB ad costs down, but also need to work to bring your customer lifetime value and revenue per lead up.
That’s how you can continue to create highly profitable FB ad campaigns and keep your competition on the edge. While your competition is fighting against a rising tide to keep their costs down, you will be able to manage to absorb higher costs and make profit because every customer and lead will be worth more to you.
If you are interested in learning how to earn more for every dollar you are spending on Facebook ads and to become more profitable, and stay that way for the years to follow, keep reading.
What is Revenue Per Lead and Customer Lifetime Value?
It is essential to understand the difference between your customer lifetime value (LTV) and your revenue per lead.
Customer LTV is how much a customer spends with you over their lifetime as a customer.
Average Revenue Per Lead (ARPL) is how much revenue you are generating per lead (email/service subscriber, course sign-ups, etc) in your business.
So, how do you calculate your LTV?
Let’s assume that you have a subscription service and on average, a customer stays for about six months. If the service costs $50 a month, your customer LTV is 6*50 = $300
Let’s look at another example:
If you are selling an online course, priced at $800, then your customer LTV is simply $800. Because people can only buy that course/item once from you over the lifetime of them being your customer.
Customer LTV ONLY looks at the purchasers in its calculation. You are defining how much a person will spend with you once they become a customer.
How do you calculate your Average Revenue Per Lead?
Revenue per lead is simply the average amount of money you generate per subscriber. Here’s how you can calculate it:
How to increase your ARPL to make your Facebook Ad Campaigns more profitable
By working with both local and global brands and experimenting with different types of ad campaigns, I have learned 4 ways that can increase your ARPL:
#1 Always market your leads more than once
Pitching your leads more than once is the first way to increase your average revenue per lead.
Something I often notice with my clients is that they are running Facebook ads through a continuous campaign, collect leads, and then forget about them.
For those of you who are not familiar with continuous Facebook ads campaign (or evergreen FB campaign), it’s the one that runs all the time. It helps you gain new subscribers, put them through a sales funnel and, try and sell them a product or service.
Most evergreen sales funnel looks something like this:
It’s easier to become focused on generating new leads all the time. You start looking at the monthly spend and revenue, and forget about those leads who didn’t make a purchase.
But let’s just think about that. It is a huge ask to win a subscriber, add them onto your email series and then after a week or two, ask them to buy your $500 or $1000 course.
Building trust is the ONLY key to sell online. I cannot emphasize that enough.
If you want to generate more sales, focus on building trust before pitching your subscribers/leads the second time. To drive sales, building trust in your sales funnel is often more essential than we realize.
Here’s how you can add in the trust factor for your subscribers who are not yet convinced to buy your product or service:
Add them onto a follow-up sequence where they’d get an email every week with valuable new content from you.
Define a certain number of days before you pitch them again about your product or service. I always recommend my clients to wait atleast 30-40 days before rolling out the offer again.
If you are offering an online service, my preferred funnel is a webinar funnel. Your subscribers will watch the webinar, go through the follow-up sequence, and if they still don’t make a purchase you continue to send them emails that just offer knowledge/value.
One thing to understand here is that you are not trying to sell anything to them at this point. You are just teaching them something, giving them value with every interaction. And then after a period of 40 days, you can start marketing your webinar again via email, and start adding them to the same sales sequence, letting them know your offer is available again.
IMPORTANT: If you are informing your subscribers about a particular offer that will be closing anytime soon, it needs to be real.
You cannot just tell them that the offer will be closed for 20 days until it becomes available again, when in reality it never expired. You need to really close the cart and make the service/product unavailable to them for the specified period of time.
Deadline Funnel is a great tool you can use for opening and closing your cart at multiple times.
Following up with your leads at least once, twice or more over the year, will help make your Facebook ad campaigns much more profitable.
#2 Don’t forget to include a down sell offer
Second thing I would recommend for boosting your revenue per lead is adding a downsell offer.
A downsell offer is a service or a product that is priced lower than your main offer. You market it to people who don’t buy your main offer, and it needs to be positioned a little bit differently.
For instance, if you have a $500 worth product or service and your leads pass through the sales sequence but don’t actually buy, you can try and encourage them to purchase from you with a downsell offer.
Downsell offer is used as alternative to entice people who weren’t quite ready to buy your main offer. Maybe they were interested, but it just was not the right fit for them at that time.
So you try to get them with a downsell offer that would appeal to them right now AND will help prepare them for your main offer the next time you market it to them.
LinkedIn does this all of the time. They offer you one month free for using their premium service. And when you try to cancel their premium service, they try to entice you with a 50% cut for two months when you sign back up.
In order to create a good downsell offer, you need to understand why people wouldn’t buy your main offer. Some of the common reasons include:
#3 Add a tripwire on your Thank You page
Tripwire offer is a great way to make your Facebook ad campaigns more profitable. You may have heard about it already. It is used to shrink your customer acquisition costs or your Cost Per Purchase (CPP).
The deal with a tripwire is to set your Thank You page after your audience downloads a free offer.
For instance, you may offer them a social media calendar template or a cheat sheet as your lead magnet. Once they download that, they are directed to a Thank You page where they would be immediately offered a limited time service or product (your tripwire).
#4 Offer an upsell
Increasing the lifetime value of your customers by getting them to spend more with you is what we call upsell.
So, basically an upsell is an offer that your customer will see after they purchase your main offer. Let’s suppose you are selling a $500 product. An upsell is a complementary service or product you offer immediately after they make a purchase with you.
Have you ever been to KFC and get asked ‘would you like fries with that?’ That’s an upsell.
You need to make sure your upsell offers one of the three things:
If you are working and signing up for an online course, one of the most time-consuming things you’ll do is to create notes. So, I helped his PMP students save time by offering lecture notes that would save them a great deal of time and make the whole process easier.
You can apply the same thinking to your business to create an upsell offer.
In terms of pricing, I would recommend going with 1/3rd of your main offer price. It has worked for most of my clients and people are very likely to make the purchase.
If you are selling a $500 service, adding a $167 upsell at the end tends to be a good price point. It greatly increases the probability of your existing customer buying from you.
It is easier to get your customer to spend more with you when they are already in the middle of buying something from you, as they have already made the decision to trust you.
Lastly, the upsell is a limited-time offer. Your customer only sees it when they have purchased the initial service or product. The best part of an upsell is, you have already got your customers payment information with you as they have already purchased your main offer. It’s easier for them now to click another button without having to re-register on your website and enter their payment details again.
Which of these tactics are you aiming to work with? Let me know in the comments below.