It’s easy to figure out how much money you can spend on Facebook ads.
It’s a two-step procedure.
THE FIRST STEP IS TO DETERMINE THE COST OF GETTING A NEW CUSTOMER.
It can seem to be extremely straightforward.
However, most company owners have no idea how much it costs to acquire a new client.
You’ll need to start running some Facebook Ads in Singapore to accomplish this.
The best way to find out how much it costs is to run some advertisements.
If you’ve done so, divide the total amount you’ve spent on Facebook ads by the number of customers you’ve attracted (yes, customers, not leads).
This will tell you how much it costs to acquire a new client.
For example, if I spend $10,000 on Facebook advertising and receive 300 leads, with one customer for every three leads generated, I will have 100 customers.
When you divide $10,000 by 100 customers, you get $100.
As a result, attracting a customer costs $100.
DETERMINE HOW MUCH AN AVERAGE CUSTOMER IS WORTH TO YOU IN THE SECOND STEP.
Now, to figure out how much a typical customer is worth to you…
To begin, you must first determine the total benefit. (This is determined by dividing total sales minus cost of goods sold by the number of employees.)
Now that you’ve calculated your overall benefit…
Divide the net benefit by the total number of customers you’ve acquired due to your advertisement budget.
This will offer you an estimate of how much a typical customer is worth.
Let’s pretend I make $1,000 from a customer in the example above.
It would suggest that for every $100 I spend on a customer, I make $1,000.
To put it another way, for every $1 I put in, I get $10 back.
Doesn’t it sound fantastic?
THIRD STEP: DEPENDING ON YOUR CASH FLOW, SPEND AS MUCH AS YOU CAN.
That’s right; once you’ve figured out these two figures, you can start investing as much as possible.
The two numbers listed above should be kept in mind.
You’re pretty secure as long as the cost of attracting a customer is still less than the cost of how much a customer is worth to you.
Of course, saying it is always easier than doing it.
It is your responsibility as a business owner to understand these two numbers to scale your company.