How to increase your revenue from $40K to $100K with the same budget?
If you’ve run ads on Facebook before, you’ll know how hard it is to increase profitability while maintaining the spending. Even harder if you’re trying to do this in the challenge that Q4 brings (the last quarter of the year when retail sales explode due to the holiday period which means that the competition increases to its highest).
However, there is a success formula for this, it’s not magic but a combination of hard work, good strategy, data analysis, and some math. Don’t be intimidated by reading the math and data analysis terms, the formula is easy and in this article, you will learn how you can use it. 🤩
Before jumping to the formula, let’s evaluate its success. Here’s the low-down of what I achieved using this formula in only 30 days;
- Increased the ROAS from 2X to ~6X in 30 days
- Generated $100K revenue for a small size, online e-commerce business
- Maintained ad spend at $17K.
Now, let’s dive deeper into the HOW part and explore this formula. It’s pretty much easy and straight-forward. Here we go; 🔥
1. Your Creative & Message;
You need to control the creative direction for your client/brand and this is possible if you perform a creative analysis. Use these 3-steps Creative Analysis for Optimal Results but let me give you 3 key elements to keep in mind while directing the creatives for your client/brand;
- The What 🔥: you’re selling that awesome person who can do rad shit, not your product. Your product is just a tool for a consumer to be that awesome person.
- The Trend 📈: people spend so much time online, they see and interact with too many things on a daily basis which makes it harder for basic creatives/visuals to stand out. So, your creatives & content should be following a trend, stimulating a feeling, or both if possible.
- Repetition 🔁: You can increase success by using another version of the best performing video, image, or text. Have you ever thought about why MARVEL keeps doing the same thing with a slightly different story every now and then? Well, this is your answer.
2. Account Structure
Your account should be structured as for your funnel which should include 3 main levels;
- Top funnel 🔝: You’re targeting users who don’t know you and didn’t purchase before. So, you need to make your message suitable for this part of the funnel. A tip, avoid discount codes because it doesn’t work and it’s not good for the objective of this higher ROAS strategy.
- Mid-Funnel: You’re targeting users who interacted with your business before and you need a suitable message for this part of the funnel. Usually, this part needs a friendly, funny message with a discount code or can be used for new releases based on your business. 😁
- Bottom funnel: You’re retargeting users, upselling, and cross-selling. Make your message clear and tell your customers what to do. I.e. Did you leave something behind? 👀
3. Budget distribution;
After structuring the account, you need to allocate some budget to each funnel level and each campaign within this funnel level. This becomes an interesting part 😃because allocating too much or too little budget for a certain level or campaign can take you far away from achieving your KPIs or increasing your ROAS.
A higher ROAS is driven by Purchase Value which is a combination of the customer’s purchase power and product price. So, make sure you take a look at this because your strategy can be as easy as opening an upselling or cross-selling campaign but even after having an upselling and cross-selling campaign, you may need to increase your ROAS. Who doesn’t want that? 😉
In this case, your role will be to find Audience Groups with a higher Purchase Power, this will require you rapidly test audiences which will result in more budget allocation to the Top funnel.
On the other hand, the Bottom & mid-funnel levels usually drive higher value because these customers already know you or purchased before but you shouldn’t allocate too much budget to these levels because this won’t increase your results but will increase your frequency and CPP “Cost Per Purchase” which will increase your costs and reduce your ROAS. Surprising, isn’t it? 😄
So, here is a simple formula to follow when allocating budgets throughout your funnel;
60% top-funnel + 25% mid-funnel + 15% bottom-funnel = Total budget
Now, you need to do some basic day to day operation and analyze your data. Based on these analyses, you may need to repeat steps 2 and 3 with some basic math to change things that can enhance your results.
An additional tip here.
I have achieved up to 10X ROAS for other brands so let me get this straight forward, 25X ROAS, 20X ROAS, or 15X ROAS is an unrealistic number to seek unless you’re NIKE, PUMA, ZARA, or any other huge brand out there because this will need huge brand awareness, a huge user base, and/or lots of money. 🤑
When you read such a 25X ROAS, you should ask the following questions;
- How much is the amount spent?
- How much is the revenue?
- What is the time frame or duration until these results are achieved?
- What was the previous period of revenue?
- What is the attribution window?
- When this brand/business was live to consumers?
Enjoy ☺️
