The Magic Ratio contest winners revealed…plus other posts…and key points about “The Magic Ratio” — Do you know YOURS?
The Magic Ratio contest winners revealed…plus other posts…
and key points about “The Magic Ratio” — Do you know YOURS?
I've reviewed all the blog posts and I'm going to print some of
All these posts and many others are at:
First of all, to those of you who posted and said you're getting
8X, 10X or 15X for every dollar you spend on advertising or
marketing, post to the blog and tell us:
1. Is your front-end scalable or do you have an extremely small
places you can advertise and get these returns?
2. What kind of front-end advertising are you doing to get those
returns? Affiliate marketing? PPC? Banners?
3. What are you doing on the back end in terms of number of
purchases and price points to get a 10X or 15X or even 8X return
on ad dollars?
I'll SUMMARIZE or reprint the best posts in a daily email like this
one to my list.
Now, we have TWO winners. Steve Reduke and Robert McCallum. Guys,
go to getyoursupport.com and give Tim your URL and tell him to
pass it to me so I can get your URL's in an email as I promised.
Steve Reduke got it right first but kinda in a round about way:
“It's a little too simplistic to say there's only one ratio. If I
had a system that handled all the details and reinvested money that
came in immediately from the front end, a ratio as low as 1.1:1
would be a money gusher eventually, if the market was large enough
to handle a long rampup. On the other hand, if I'm handling details
at all, I want at least a 4:1 and ideally something closer to that
luscious 10:1. Ten baggers are a dream.”
Then Robert McCallum just nailed it. He simply wrote;
$400 for every $100 4/1
Now, we had TONS of other awesome comments. Check some of these
I only have the experience of one marketing campaign to work from.
But it surprised the hell out of me just how much can be made.
I'm not talking big numbers, but I'll run through it.
Affiliate sale campaign using a JV to someone else's list.
My costs were in time only and I estimate 8 hours over the campaign.
That includes writing the email copy and then answering support
emails from buyers and prospects.
I split the frontend revenue 50/50 with the list owner and I kept
the backend recurring income.
So this is how I work out the magic number. Not a minimum, but a
great starting out point.
Revenue on sales $12000
Backend recurring $870/mnth
Time costs at $100/hr = $800
Therefore I take the revenue on sales and divide by 2 (my 50% share)
Add on the 870 recurring = $6870 and that is my income for one month
from this campaign.
6870/800 = 8.58
Therefore my magic number is 8.58 for a single campaign.
But if I add in the recurring income for a whole year instead of one
month then it changes like this.
6000 + (870 X 12) 10440 = 16440
16440/800 = 20.55
So that is my magic number from one campaign with the income from
12 months factored in.
Just shows the value of backend recurring income.
PS Marlon's emails are one of the very few that I always read
because he constantly gives value. A trick we all need to learn.
Struggling to get your Internet marketing going? My original
Marketing Dashboard STILL rocks!
Then here's what David Newby says:
Great way to initiate discussion. As brother DK likes to say, you
gotta know your #s. What you didn't mention is what someone's total
overhead is. If ad cost is $100 and total office overhead is $100
per client, then I'd say ratio should be 4:1 for a net 50% profit
margin factoring in all costs.
As an author and fellow info-marketer I shoot for a net 50% profit
margin, so I look to keep product cost at 10% to 20% of my gross
and other costs (supplies, staff salary, systems cost) at 30% to
40% max for a net ratio of 2:1. So with that target net profit
margin, if you TOTAL overhead was $100/client generated then I'd
say 2:1. Doesn't matter how great your revenue/ad cost ratio is if
your other expenses are out of control.
With a 10.66/1 ratio I'm thinking your client has got to be earning
a decent net after his other expenses. Take care, amigo!
Here's another GREAT post from Tian Yan
This is Tian Yan from Malaysia.
If the answer you are looking for is the MINIMUM magic ratio for my
marketing campaign… then it should be 1:1.
I only need to break even on this campaign to acquire new customers
like crazy to sell them on the back-end.
But if the answer you're looking for is how much do I need to get
back over the period of A YEAR in customer purchases, then the Magic
Ratio should be at least 100:1 and above.
Over a period of a year, there is so many back-end opportunities and
if I'm not working hard to sell my acquired customers what they
want, then I'm not serious.
A high-ticket coaching program alone is enough to get that kind of
And I love this post from Steve:
We don't muck around down here in AUSSIE mate.
If I can't have 10
;1 then i”m not playin
Kay hits the nail on the head:
1 buck in – 4 bucks out
good to go!
Here's a good post:
I'm looking for a 15:1 ratio. The ByReferralOnly training I studied
for the past four years recommends that ratio.
In your example, I did gave the question of whether you were
spending that $100 each month? But regardless if that's a monthly
cost….I'm sticking with the 15:1 ratio.
Thanks for the ideas.
My magic ratio answer is…
I'm shooting to get $3 in revenue for every $1 invested.
The Affiliate Mechanic
My magic ratio is 10:1 minimum and I would actually hope to do
better than that.
Wishing you Good Health
There are many other good posts on the blog. I won't reprint them
What is the magic ratio?
4:1 is my answer.
And many of the posts above are right and all bring up good points.
Let me point out the following:
1. We are talking about the return INCLUDING lifetime value of
the customer for a 12-month period of time.
Some people calculate roi based on returns for 3 months. My
question was based on a year value.
So the answers that said you just needed to break even on the ad
are TRUE but not what I asked.
The question is, if you have a business marketing machine. And
you put a buck in, how much do you need to get out over a year
MINIMUM to have a solid money machine going?
I say the figure is 4 bucks.
If you put a buck in, you need 4 bucks out INCLUDING the back end
purchases over one year. The reason is you have business expenses
you have to pay. And most of us have limited scalability.
2. The issue of scalability
Now, people brought up the issue of scalability. If you only
make .50 or a buck and you scale it a million times, it's worth
I suppose you might be able to do just that if you market through
cpa networks or have a really broad offer like weight loss that
you run banner campaigns on.
In general, most of us don't have infinitely scalable, broad-market
topics. Most of us have limits.
We're talking MINIMUM return, not maximum.
Now, for the minimum return, I say it's 4:1. Now, this isn't hard
and fast as many people pointed out.
And if you ARE getting 10:1, post and tell us how as I asked at
the beginning of this email.
So in Ben Harts outstanding book on fundraising, he points out that
they're doing good if they get back 75% of the cost of a mailing
on first-time donations for 10 bucks.
Then, they mail donors monthly, and in six months, they've broken
even. Over the next 3-5 years they get their positive returns.
You could break even the first year and be in the chips every year
after that. But most of us don't have the pockets for that.
5. LCV varies by source
Your Lifetime Customer Value varies by source. Do you KNOW your
Lifetime Customer Value by source?
If you DO, then post what you know on my ezine! Let the rest of
us in on your brilliance:
I might just feature your comments in a blast to my list.
The fact is, you will have a different LCV for customers who come
from affiliates vs. ppc vs. banner ad sources.
You gotta track the SOURCE of your customers and pass the ad source
THROUGH to your autoresponder service.
PS: Struggling to write a sales letter? My original Push Button
Letters software spawned a whole category of software. But the
original is STILL the best:
1. You have permission to reprint this on blog
2. PLEASE reprint it on your blog, Facebook, or link to it in
3. Stick it on your Myspace blog. What the heck.
4. You can add your AFFILIATE url in the 2 places where I promote
a product. To sign up go to: http://www.getyourprofits.com