4 min read


Get to know your numbers


Do you know your numbers?

What gets measured gets managed and knowing your numbers allows you to measure key metrics in your business. 

Besides serving your ideal customer effectively, I'd say this is one of the most important things to pay attention to if you want to achieve sustainable business growth.  

You could be ‘raking in the millions', and have really healthy revenue numbers, but could still be very unprofitable.

Or maybe you’re making a ton of profit but you’re bleeding cash.

You’ve got to know your numbers. 

It’s probably one of the most important things you can do in your business.

BTW yesterday we talked about creating targeted offers that solve a problem your customer wants to solve.

If you missed yesterday’s email, you might want to go back and read that one first

Here are the key numbers you need to know:

  • Your cost per customer acquisition (this is what it costs you in terms of money and/or time to acquire a new customer)
  • Your lifetime value of your customer (CLV). Typically how much an average customer spends with you over the life of their relationship with you. The more transactions you can have with the same customer the better. This is where recurring income models become really powerful.
  • Effective Hourly rate (EHR). This is different from your billable rate. It’s the profit you make per week/month/year divided by the number of hours you generate to make that profit. So for example, if you work 50 hours a week on average and your profit works out to be $1000 per week then your effective hourly rate is $20 per hour ($1000/50)

Of the above 3 numbers, I’d say the EHR is a great place to start. 

Why is EHR important? 

2 reasons: 

  1. A lot of my members tell me they acquire their customers through word of mouth or personal outreach. In this scenario, the EHR helps to quantify the cost per customer acquisition. Let’s say it takes you approximately 2 hours all up to acquire a new customer on average. You do some networking, you do some cold calling, you do some outreach, etc and you end up with a customer. Now I appreciate it’s impossible to know exactly how long this process takes but a good guess here is better than nothing. So at 2 hours per customer acquisition, you’re looking at $40 per customer acquisition (your EHR of $20 multiplied by the 2 hours you spend). Now if you can acquire that same customer through Facebook ads or google ads for $10 per customer then you’re costing your business $20 per hour you spend on personal outreach. Sure, personal outreach has other benefits. I get that. But it’s a good idea to keep this metric in mind when it comes to customer acquisition.
  2. Getting clear on your EHR also enables you to determine what activities you should outsource and what you should do yourself. For instance, if your EHR is $20 per hour and you’re doing audio editing which you could be outsourcing for $10 per hour then doing the editing yourself is not the best use of your time. This means you should be outsourcing your editing work.

Once you’re clear on your EHR you can then figure out your cost per customer acquisition (if you’re acquiring customers manually)

If you’re using PayPerClick advertising to acquire your customers then you can plug that number in. 

Now that brings us to the final metric and that’s your customer lifetime value

Typically, your customer lifetime value determines how much money you make over the life of your relationship with the customer. 

The more frequently you transact with your customer over the life of your relationship with her, the higher your customer lifetime value. And if you’re doing things correctly, your customer lifetime profit should also increase.  

The key here is to ensure your customer lifetime value is significantly greater than your cost per customer acquisition.

If your lifetime customer profit is $100 and your cost per customer acquisition is $150 then you’re going backward. You’re making a loss on each customer. And that’s not even taking into account the running expenses of your business. 

You want your customer lifetime value to be well above your cost per customer acquisition. 

If you’re spending $150 to acquire a customer, you want to be making at least $500 per customer over the life of your business relationship with them, to give yourself a healthy profit after removing the running costs of your business. 

Makes sense right? 

So that’s the three key metrics you want to have covered off if you’re going to build a funnel. 

And that’s what we’ll talk about tomorrow!

You’ll hear from a combat-pilot-turned-marketer and he’ll tell us all about how to use automated marketing to improve customer engagement and grow your business and your brand profitably and fast! 

We’ll talk about a bunch of stuff including (but not limited to) 

  • How to use tagging to stay relevant and useful
  • How to improve email deliverability so your emails don’t get caught up in people’s spam folders
  • How to use event tracking to understand your customers better

… and lots more 

Talk to you then. 



Nothing here to share with you today but I’m glad you checked 😉