This will help you to go away from “I will experiment with other channels, try this, if this doesn’t work, then I’ll to that” to building a predictable system for turning $1 into $100, $100 into $150, etc.

There are roads which must not be followed, armies which must not be attacked, towns which must not be besieged, positions which must not be contested, commands of the sovereign which must not be obeyed.

Sun Tzu

And this applies to your marketing also. Imagine you ran a few campaigns. And you want to invest another $500 and decide the smartest place to invest. There will be campaigns which should not receive more advertising dollars and there will be campaigns where you should dedicated a lot more money to.

You can only find out which roads must not be followed if you track all your KPIs and forecast your success.

Take a look at these three campaigns.

	CPL	CAC	L2C	CC
#1	$15	$60	25%	12 days
#2	$30	$75	40%	21 days
#3	$25	$66,67	30%	16 days

(PS: If you don’t know what these numbers mean, read this.)

You can forecast how much leads, customers and revenue you could potentially make if you invest another $500 into any campaign.

$500 / $15 = ~ 33 forecasted leads for campaign #1

$500 / $30 = ~ 16 forecasted leads for campaign #2

$500 / $25 = 20 forecasted leads for campaign #3

Now you can take the Lead to Conversion Rate and find out how many of these leads will potentially become customers.

33 potential leads × 25% = ~ 8 forecasted customers (sales)

16 potential leads × 40% = ~ 6 forecasted customers (sales)

20 potential leads × 30% =  6 forecasted customers (sales)

Now, how much can you expect in revenue? If your Average Order Value is $47,33, then campaign #1 would generate $378,64 (8 times $47,33), campaign #2 $283,98 (6 times $47,33) and the same revenue for the third campaign.

Will you always be 100% right? Definitely not. But it gives you a huge advantage. You can invest based on numbers. Not on gut-feeling, or because someone told you, you should invest into this channel because it allegedly brings in so many customers.

And based on the Conversion Cycles you had so far, you know that the $378,64 can be “obtained” within the next 12 days. The $378,64 for campaign #2 in three weeks and for the third campaign within 16 days.

And you can take it even further and think about the Lifetime Customer Value (you’ll soon know what this is); how many reviews will you get? How many referrals do customers give you? You can take all of this into account when you have to decide where do I want to invest more.

So, lets say you have a Lifetime Customer Value of $150, you can calculate the potential long-term value of all customers.

8 customers from the first campaign × $150 = $1,200 and for the second and third campaign I’d be 6 customers × $150 = $900.

The first campaign is not only the fastest in terms of cash flow but also delivers the highest long-term value.