In a nutshell…
You start with a certain amount of leads—however many you want. You make sales off those leads and put a portion of that money back into your PPC campaign. Every month, you increase the number of leads, and therefore increase your sales.
Wash. Rinse. Repeat. To infinity… and beyond.
Buzz Lightyear approves.
Now, let’s break down the actual numbers.
Say you’re a contractor that wants to start with 60 PPC leads and steadily increase that number every month. Here’s how that would go…
- 60 leads x $200 per lead = $12,000.
- Note: $200 per lead is the MAXIMUM you will spend. But we’ll go with it for this first month.
- Out of those 60 leads, let’s say you close 25%. That’s 15 sales.
- Your average sale is $10,000. Fifteen sales times $10,000 is $150,000.
- Result: You invest $12,000 and sell $150,000. (ROI = 1,150%)
- If your gross margins are 50%, that means you make $75,000 in gross profit; subtracting out lead costs and sales commissions should still NET you $25k to $40k.
- Invest SOME of those profits into more leads (and possibly more infrastructure to handle more leads) the next month…
Month 2 (your campaign is more optimized, so your cost per lead is lower):
- 100 leads x $170 per lead = $17,000.
- Out of those 100 leads, you close 25%. That’s 25 sales.
- Twenty-five sales times $10,000 is $250,000.
- Result: You invest $17,000 and make $250,000. (ROI = 1,370.59%)
- Keep going! Ramp it up even more!
Month 3 (your cost per lead is now even LESS):
- 160 leads x $140 per lead = $21,000.
- Out of those 160 leads, you close 25%. That’s 40 sales.
- Forty sales times $10,000 is $400,000.
- Result: You invest $21,000 and make $400,000. (ROI = 1,804.59%)
- Boom. Once that snowball starts rolling downhill, it keeps gaining steam and getting bigger.
You might be saying, “But Rich, my close rates aren’t that high.” Or, “But Rich, my average sale is $8K, not $10K.”
Doesn’t matter. Just adjust the numbers. Start with a smaller number of leads. Then work your way up.
I’ll do a more conservative example to prove it still works…
- 30 leads per month x $200 per lead = $6,000.
- Out of those 30 leads, you close 15%. That’s “4.5” sales. But let’s round down to 4 sales in keeping with our “conservative” approach to the numbers.
- At an $8,000 sales average, that comes to $32,000.
- Result: You invest $6,000 and make $32,000. (ROI = 433.33%)
Then follow the steps in the first set of examples above for months two, three, and beyond.
If you want to know how many PPC leads are available in your market, email us at email@example.com.
We’ll run the numbers to give you a solid idea of how many leads you can get per month. We’ll also help you determine the optimal number of leads at which to start, so you can build your way up comfortably… and profitably.
P.S. Want to run your own numbers? Visit the No-Risk PPC Lead Generation page. A little more than halfway down the page is a sales calculator. Input your numbers to instantly generate your estimated sales with No-Risk PPC.