The burning question for you to consider today as an independent local business owner, is “how can I determine whether running Facebook Ad campaigns will work for my local, small but growing business?” and that’s a fair question. First, by ‘work’ we are of course referring to your potential ROI (Return on Investment) and the profitability involved with running Facebook Ads over a fixed period of time.
More simply put – how much money can you actually generate in return for investing in Facebook Marketing? After all, that is the only logical reason you would want to run paid ads in the first place, right? So, it’s a good place to start.
The (Not So Magic) Money Making Formula
The first step of the formula is to identify your average order value (AOV). To calculate this, simply divide your total revenue by the number of orders you received for any given period. This will give you an average order value.
Let’s assume your AOV is £45.
Now we have the AOV (£45), we need to determine the average lifetime value of a client (LTV).
LTV is used to predict the total revenue a business can reasonably expect from a single customer or account. We calculate this over a 12-month period. Most business owners will have a rough idea of their LTV.
Let’s assume your LTV is 6. So, for every new customer you acquire, they will purchase from you again on average 6-times per year.
Remember, your LTV needs to reflect the average lifespan of a new customer over a 12-month period. It’s no good assuming every new customer you acquire will pay you every month for 12-months, as we know this is highly unlikely.
To determine your exact LTV, you can find detailed instructions here.
Next, we would usually need to determine what type of business you are running. Why? Well, as experts in our field, we know that generating leads for a pub or restaurant is cheaper than generating leads for a hair salon, beautician or local gym.
Tip: If you want to know the average cost of a lead in your industry, contact our experts on 01489 336338 or email firstname.lastname@example.org
For the sake of this exercise, we are going to assume the average cost per lead is £10 (including ad spend and agency fees).
Being very conservative with our estimates, let’s assume we generate 100 leads a month for your business – so your total spend would be £1,000. Being conservative again, let’s now assume from the 100-leads you receive, you acquire 25 new customers (a 25% close rate).
Next, we need to multiply the number of new customers (25), by your AOV (45) to give us your average monthly revenue. 25 x 45 = £1,125. So, based on those figures, in month 1, you would return £1,125 in revenue from £1,000 spend making a profit of £125.
Next, we need to multiply this figure by the average LTV of each new customer you acquire.
£1,125 x 6 = £6,750 – and there we have it.
We know that for every £1,000 you spend on Facebook Ads; your business will make an average £6,750 back in a 12-month period (assuming the figures provided are accurate).
The Next Step – Take the Plunge with a Discounted 1-Month Trial
The scope for running successful Facebook Ads is huge for almost any independent, local business owner looking to grow. At Juno Agency, we know from running numerous campaigns for a range of different businesses how successful Facebook ads can be when executed correctly.
That’s why we offer a 1-month paid trial (at a discount, of course). What’s more, if we don’t deliver you at least 25 leads, we’ll refund you the fees. We put our money where our mouth is (we don’t actually have money on our faces but we are big on customer service and satisfaction so if you’d like us to do this, we will do so).
Here’s what you can expect from our 1-month trial:
- A custom built sales funnel, yours to keep and use as you see fit (Value: Loads of £)
- A month of targeted, cost-effective Facebook ad marketing (You just cover the ad spend/budget and a small fee for our time. No contracts, no-nonsense)
- If we don’t produce results you’re happy within the 1-month trial you can tell us to **** off, and you get to keep your funnel, and whatever leads/business we generate for you).
To see if we’re a good fit, simply contact us using the form below and we will be in touch to set-up a no-obligation strategy call.
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