Your Lead Cost Doesn’t Matter. Here's Why...

Estimated read time: 2 minutes 35 seconds.

Dear Fitpreneurs,

Our Facebook ads bombed last week.

In 7 days, we spent close to £300 and only have 12 leads to show for it.

But while most rookie studio owners would panic and shut everything down, we’re spending more.

Why? Because vanity metrics like “cost per lead” or “return on ad spend” don’t actually matter.

Let me explain:

Know Your Key Metrics

If your lead cost doesn’t matter, what should you pay attention to?

Before I dive into that, let’s take another look at our funnel:

Our challenge costs £299. So when it comes to generating leads, we need to attract prospects who are ready to buy.

That’s why we obsess over these metrics:

• Cost Per Event (The cost of someone scheduling an appointment)

• Cost Per Acquisition (The cost of signing up a new customer)

• LTV (Average revenue someone generates throughout their lifespan as a customer)

If we can spend max £99 on acquiring a new 6 Week Challenger...

We have enough spare to finance the next customer and add profit to the business.

And once they become a monthly member, everything we make is profit.

Our current LTV is over £1300, with clients still with us from the start.

So as long as the CPA and retention rate remains stable, we couldn’t care less what our lead cost is.

It’s All About Blended Attribution

Another factor to consider is what’s called “Blended Attribution”.

Here’s a real life example of this:

• We’ve spent £300 so far this week on ads.

• In that time, we’ve only generated 12 new leads

• But we’ve had 20 appointments scheduled.

How can this be?

Well… despite the higher lead cost, we’ve had loads of website enquiries and appointments scheduled from our email list.

Most of them said they’d seen our ads but wanted to ask a few more questions first.

Out of 10 appointments already taken, 7 have signed up… totalling £2,093 in new revenue.

Proof that even if someone doesn’t take direct action on your ads, it doesn’t mean your ads aren’t working.

It’s about all your marketing efforts combined.

How Long Is Your Conversion Window?

We once worked with a studio owner who became addicted to FB Ads Manager.

When he didn’t see a lead come through, he’d panic and switch things on/off.

This became an unhealthy habit and meant his CPA went up.

He didn’t appreciate the length of time it takes someone to decide to sign up.

When he switched focus from “lead cost” to “cost per acquisition”, it meant he could stop day-trading ads all day.

In the time he saved, he focused on improving his email automations and organic content.

After a while, he realised people who opted in months ago were now beginning to sign up.

All because he stopped relying on Facebook to sign up clients for him.

Final Words…

At the end of the day, you need to ask yourself this question:

“What is a new gym member worth to me as a business?”

Once you know that figure, you can work backwards.

For example, here are our total numbers since we launched in October:

These numbers reveal that for every 10 leads we generate, we sign up 2 challengers (totalling £600).

So even if we spend £50 per lead, we’re still profitable.

This also excludes the LTV that comes from retaining members.

All this to say, stop paying attention to the lead cost and the return on ad spend.

And start paying attention to the numbers that run deeper in your gym.

Once you do this, you’ll find it easy acquiring members.

That’s it from us. Reply any time…

Cardy Brothers

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