Why Collecting Email Leads Could Be Hurting Your Funnel

Transcript

In today’s video you’re going to learn why collecting email leads could be hurting your funnel. Now I know this sounds like a clip bay or controversial headline, but I promise you this will be a true case study with real numbers. We’re going to go through this together to see what makes sense. We’re going to be comparing collecting an email lead, using an opt-in or a squeeze page, versus going direct to your sales letter, your VSLs, or your webinar. Just going direct to your sales message and not collecting that lead first.

Now, if you don’t know who I am, my name is Brandon Shelton. I’m the founder of Mechanical Marketing. We are a digital publishing and also a software company. It’s funny, because this whole thing came about I was actually listening to a podcast by Justin Brooke. If you don’t know who he is, he is a brilliant traffic guy, and he was discussing how he was getting really low cost per impressions on YouTube ads. What he was doing he was taking webinars and he was using the full webinar as the actual YouTube ad. So that actually got my hamster wheel going and made me start thinking well, if just going direct to your webinar in the YouTube ad was giving you low cost per impressions how would that play out if I just took regular ads, whether they were on Facebook, YouTube, or Google, and I went from ad direct to my sales message? So I’m basically just going direct to my sales letter, my VSLs, my webinars, and not having that landing page or front where I’m collecting leads.

So, that’s what I ended up thinking about. Instead of me just going out, testing it first, I wanted to prove it in an analytical way. So that’s what we’re going to be going over now, and I promise you there’s going to be some really valuable stuff. As soon as we get through this I’m definitely going to be testing this myself. After seeing results it’s extremely shocking. All right, now let’s get into it.

The spreadsheet you see here, this actually is we have two different… You see here in row two and row three. Row two represents collecting email leads and row three represents going direct to your sales message. So what I did is I used some baseline metrics here. So I use a landing page conversion of 30%, which for cold traffic, we’re talking cold traffic here, that is a pretty good conversion rate. It’s actually, I mean, if you’re getting 30% you’re doing well if your landing page is converting at that when it comes to collecting leads. Now, as far as sales page conversion, I chose 1%. That’s kind of the standard. I mean, obviously this really depends on what your actual product price is, because the higher the price the lower the conversion. I completely get that, but we needed a baseline to go with. So I used 1% because that’s a standard number.

Now, if you look at the CPC number, I put $2 here. Now, the reason why I put $2 for the cost per click is because I actually looked at WordStream. They always publish what the standard pricing is for different PPC networks, so I looked at 2020 and I looked at their cost per click numbers. Their B2B was actually $2,52, I believe. In a lot of the consumer markets it was less than that, like $1.70, $1.90, and all that stuff. I don’t know what industry you’re in so to make this more universal, to apply for more industries, I just chose the $2 number because that was close to what the average was out of all the different industries.

Now, this number here is going to be the average order value of the cart. Now the average order, the reason why I didn’t break this up with front end upsells, downsells and lots of stuff, because that’s irrelevant. It’s really irrelevant for this type of scenario. In this type of scenario we just more care what is the average purchase price. So we’ll play with all these different numbers so you can see how things affect the different numbers, but I just want to give you that quick overview before we jump in so we can re evaluate everything.

Now, for this first scenario here you can see there’s 10,000 visitors. So with 10,000 visitors going into both funnels, since there is a $2 cost per click in both scenarios, collecting the lead or not collecting the lead, it’s going to cost $20,000. Now, if you’re collecting leads you’re going to get 3,000 leads because there’s a 30% conversion rate, so that’s 3,000 leads. And out of those 3,000 leads there’s a 1% sales page conversion rate, so 30 sales. Now with those 30 sales you’re going to make $9,000. That’s because we chose a $300 average order value price, so that is what you will make for sales revenue. And because you spent $20,000 in ad costs you lose $11,000.

Now, if we go for people who are going direct to the sales message in that same scenario, same numbers, 10,000 visitors, but because you’re not collecting a lead more people actually see your sales page. So with that same 1% sales conversion, you can see here, you make a hundred sales instead of just only making 30. Now this case you make $30,000, you profit $10,000. So just on the surface of this you can see going direct to the sales message so far it’s looking more profitable. But I’m sure you’re wondering yeah, but now I have leads and I can advertise to those leads. I can follow up with them with emails for free without spending more additional money on traffic using retargeting, things like that. That is a great idea and a great thing to be thinking about. That’s exactly what I thought about as well, so I expanded this even further.

So we look at these numbers. Now we’re going to add in what you’ll actually make off the leads. So this block here represents collecting the email opt-in before they actually go to your sales page. Now in this scenario, since you collected 3,000 leads, only 2,970 of them are prospects because 30 of them bought. So you have 30 customers, and then 2,970 actual prospects. Now, what I did was I looked at how much the average is what you make per lead. Now the industry standard, what people say, is a dollar per lead. I understand it’s dramatically different depending on the quality of the leads and your lists, stuff like that, but dollar per lead is that standard that everyone uses so that’s what I used here. So this dollar per lead is going to apply to the prospects.

Now for customers you always make more money for every customer lead. So we normally see anywhere between $5 and $15. Some people make even up to $20, $30 per customer. So in this case I used $10, because that’s a good number. Making 10 X per customer more than what your actual just prospect leads are. So you look at that. We multiplied basically a dollar by this 2,970 so we could see how much money we make off these prospect leads per month. Then we took the $10, multiply that by the 30 customers to see how much money we make off our customers per month by just emailing them additional offers or any backend stuff that you have. Now that comes out to $3,270 per month that you’re adding to your income because you collected leads.

Now I understand that over time you’re not going to have all of these leads. The more you email, people unsubscribe, people stop opening emails. So there’s a lot of other email metrics that come into this. So I figured if we just multiply this number out by six months that’s a fair assessment of just a short term case study that we’re looking at here. So this basically is six months of what you would make off your list, and that adds another $19,620. So that adds that to this number here, which you initially lost 11,000, but now over a six month period, now you’re getting some ground.

So, if you look at the same scenario with people who are going direct to the sales message, so if you’re going direct to your webinar, direct to your video sales message, direct to just the sales page, sales copy, you also are still collecting leads. You’re just not collecting prospects. So you have here a hundred customers because you have actually more customers. Those customers are worth the same $10 that I use for people who are actually collecting leads. You’ll make an additional $1,000 per month. And then you multiply that, so $6,000. So you can see here because you get a lot more leads you’ll actually make a lot more money over these six months from the back end by collecting the lead. So now, if we look at the total profit over the six month span, anyone who is collecting leads makes $8,620. Then if you’re going direct to the sales page you actually still end up making almost double that amount of money by $16,000. So, I mean, just at this baseline metrics it looks like it makes more sense to go direct to your sales message.

Now I’m talking about in short term. So this makes more sense short term because if you go direct to your sales message now you’re able to test your sales message faster because more people actually see your sales message since you’re not filtering them through a landing page. That’s the reason why you end up having more sales because those 10,000 visitors, in this scenario, all of them get to see your sales message. So you really truly know exactly how well your offer and your sales message is converting. You put that landing page in front of it, only the amount of people that actually opted in see your sales message. So when it comes to testing, and it comes to short term revenue, it’s looking like it makes a lot more sense to just go direct to your sales message.

Now, obviously longterm, we only calculated this out to six months, as you go on throughout time the better you are with actually providing value and just building a relationship with your emailing lists, then building an email list longterm is definitely going to end up better for you.

So let’s go into a couple of more different scenarios. So now we have these baseline metrics. What happens if we actually change some of these numbers? Instead of using a cart average order value of $300 let’s use $1,997, so a higher price product. So we’ll leave all the base numbers the same. If you see here look at this difference now. Now the difference is even bigger. Now you’re making $59,530 over the six months versus $185,700. So it’s looking like the higher the value of your cart it’s making even more sense using these same baseline numbers to just go direct to the sales message, at least for the short term.

I’m just going to change this back to $300, and what happens if we change the landing page conversion? Let’s change that to 50%. Let’s say you just knock it out the park. So now if you see here, if you have a very, very high converting landing page and you don’t change any of these other numbers, now you see collecting this lead is actually more profitable. Then even if I go back to a $1,997 product now you can see here it’s actually still not more profitable. The lower the price, and the higher the conversion rate on your landing page, you’ll actually make more money short term. Sorry, $300 here. You actually make more money short term by collecting these leads if you have a lower price cart. But if you’re doing high ticket stuff, even with the 50% conversion rate, you’re still making more money going direct to the sales page.

So, I mean, you can just see the numbers here where it’s looking like definitely, like I said before, if you’re going short term, you just want to test an offer, test your sales page. Quickly, get something up, eliminate. Because think about, when you’re actually creating a landing page that’s an extra page, but then you also have to plan out your email sequence, write your emails for the email sequence. There’s other components that go into the time of effort and level of effort it takes to get that funnel up. So if you’re going to be doing direct to sales message you’re eliminating all those steps, allows you to test faster, you’ll make more money short term. Then once you get your core thing proven out you can switch over to collecting leads. And I think, especially from looking at these numbers here, that’s going to be the best way forward for most people, not all people, but for most people.

Now I’m curious to see what it’s going to look like if I put the average order to just $100, so let’s drop it down to that. So like you can see here, we tried $300. You can see here, the lower and lower your average order value is in your cart it’s making more and more sense to actually collect the lead, especially if you have a landing page that’s collecting leads at a super high rate, like 50%. Even if I lower it to 30% you’re still making more money by collecting these leads. So the price that you’re actually charging for the products in your funnel is going to make a big impact on how you decide to go about all this.

Now, the last thing I want to test out, and we’ll go back to the $300 number here, is having a 30% conversion rate and then changing the sales page conversion rate to something higher, like let’s just do 4%. So now we have the same kind of baseline metrics, 30% landing page conversion rate, but we changed the sales page conversion rate to 4%. So now if you look at all this it looks like going direct to sales page is even a bigger discrepancy because since more people are seeing your sales message, and it’s converting at a higher rate, you’re actually making even more money than if you had a lower conversion rate.

So let’s see what that looks like if we go up to a higher number like $1,997 you can see here the disparity is growing even more with the high ticket price. Now I’ll go back down to that the $100, and even with the $100 lower price point, with these numbers, it’s still looking like direct to sales message is actually the more profitable way of going about things.

Now I’m going to go back to $300 and the last different scenario that we’re going to try is I’m going to put this at 50%. So this is a super high converting landing page and a well converting sales message. So now you can see this gap definitely closed. It’s not as big as it was before if I just can scroll so you could see 40,000 up to 80,000. So just by having a higher converting landing page, having a sales page that converts really well, you can see these numbers. I mean, it’s still favorable to direct sales message, but the gap has definitely closed. Now, if we want to change these numbers back to $1,997, which is a popular high ticket number, that gap starts getting wide again.

So I mean, the conclusion based off this is definitely if you have funnels that you want to test, and you’re using high ticket pricing, you definitely want to test directly to your sales message first. This will give you speed of implementation and allow you to test your sales offer and your sales page really fast. Once you get that dialed in then you can move to a model where you’re starting to collect leads, and build that longterm emailing list. Now, if you have lower priced products and your cart value is closer to the $100/$200 range, maybe even $300 range, then it might make more sense to collect that lead upfront. If you have a really high converting landing page, and you’re not sure yet what your sales page conversion rate is off your sales message and offer and stuff, it just isn’t converting that well yet.

Thanks for watching this video. If you have any questions feel free to comment down below. I’d also love for you to give your opinions and thoughts on the content. And if you like the content, we actually have a free newsletter, called Lead Nuggets, where we release this type of content once every two weeks, a hundred percent free. You can join Lead Nuggets by either clicking the link in the ad copy, or there should be a video link after this video that you can actually click, or you can visit GetLeadNuggets.com. All right, thanks again for watching, and see you in the next one.

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About The Author 

Brandon Shelton is the Founder of Mechanical Marketing (a SAAS and digital information publishing company) who loves studying marketing and playing basketball.

He has helped grow ClickMagick to a 7-figure SAAS as a partner and Chief Growth Officer, CMO at Gearbubble (a 8-figure/yr ecommerce SAAS) and is the Founder of LeadShield.

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