Marketing Channels Archives

Working out if you’re building a business with a chance at profitability

Posted on January 5, 2025 | by Peter

I’m currently working on launching an iOS app and am ready to start promoting it. Like any new project, my ultimate goal is to build a profitable business. But instead of diving headfirst into spending, I want to ensure that the numbers work in my favor before scaling up. This post is a breakdown of my thought process, early experiments, and what I’ve learned so far about setting targets for a sustainable app business.

Why PPC Is My Starting Point

When it comes to marketing a new app, there are plenty of options: social media, influencer collaborations, SEO, and more. However, I’ve decided to focus on Pay-Per-Click (PPC) advertising as my starting point. Why?

Control: With PPC, I can tightly control who sees my ads, how much I spend, and how I scale campaigns.
Immediate Feedback: PPC delivers quick results. I can start gathering data right away to see what’s working and what isn’t.
Scalability: If the ads are profitable, I can reinvest and scale up.

But to make PPC work, I need to fully understand the metrics that will make or break this business.

Baseline PPC Numbers From My First Test

I’ve already run a small test campaign to establish some baseline numbers. While I’m still optimizing the ads, targeting, and messaging, here’s what I’ve learned:

Cost-Per-Click (CPC): The CPC on my first ads ranged between £0.22 and £0.45, depending on the audience segment.
Conversion Rate: I don’t have reliable conversion data yet because the app is still pending approval on the App Store. However, I’m assuming a 5% conversion rate as a starting point for analysis. (This is optimistic but achievable with good ad creatives and landing page optimization.)

What Metrics Should I Be Targeting?

To make this business work, I need to focus on a few key variables:

Price Per Sale
CPC
Conversion Rate
Apple’s Cut: Apple takes 30% of every app sale, which significantly impacts profitability.

Profitability Analysis: Can This Work?

Cost Per Acquisition (CPA):

CPA = CPC / Conversion Rate

For example, if CPC = £0.30 and the conversion rate = 5%:

CPA = £0.30 / 0.05 = £6

Net Revenue After Apple’s Cut:

Apple takes 30% of the app sale price. For example:

At £9: £9 × 0.7 = £6.30
At £12: £12 × 0.7 = £8.40
At £15: £15 × 0.7 = £10.50

Profit Per Sale:

Profit Per Sale = Net Revenue - CPA

If CPA = £6 and the app price is £9:

Profit Per Sale = £6.30 - £6 = £0.30

Sales and Traffic Requirements for £100,000 Profit:

Sales Required = Profit Goal / Profit Per Sale

Traffic Required = Sales / Conversion Rate

At a £15 price point with a 5% conversion rate:

Profit per sale = £10.50 – £6 = £4.50
Sales required for £100,000 profit = 100,000 / 4.50 = 22,223
Traffic required = 22,223 / 0.05 = 444,460

Key Insights From My Analysis

It seems like I need to get a £12 price point with a conversion rate of 4% or more and a CPC of below £0.30 to really make this business work. Which will be hard but, not impossible. Here are a few tables I played about with that got me here…

Conversion Rate Is Critical: If the conversion rate falls below 3%, this business is unlikely to be profitable. Even at a 5% conversion rate, I need to ensure my CPC stays below £0.30 to make the numbers work.
Higher Price Points Are Better: A price of £15 allows me to reduce the sales volume and traffic requirements compared to £9 or £12 pricing. However, this requires positioning the app as high-value to justify the cost.
Apple’s Cut Hurts Margins: The 30% fee significantly impacts profitability. Factoring this in early has been eye-opening, as it increases the importance of keeping acquisition costs low.
PPC Alone Isn’t Enough: While PPC is a great starting point, I’ll also need organic traffic from platforms like TikTok, Instagram Reels, and YouTube Shorts to reduce dependency on paid ads.

Next Steps

Here’s what I plan to do next:

Optimize Ads and Targeting: Refine ad creatives and audience targeting to lower my CPC.
Prepare for App Store Approval: Ensure the app’s landing page and App Store listing are fully optimized for conversions.
Scale Carefully: Start with a small budget, measure ROI, and reinvest profits to scale.
Test Price Points: Run A/B tests to see how different price points affect conversion rates and overall profitability.

Why This Analysis Matters

This type of detailed profitability analysis has been invaluable in helping me set realistic expectations and targets for my app. It’s easy to get caught up in the excitement of launching and scaling, but without clear metrics, it’s just as easy to spend money without seeing a return.

If you’re building a product or service, I highly recommend taking the time to run the numbers. Even basic models like these can provide clarity and confidence in your decisions.

Closing Thoughts

Launching a business is exciting, but it’s also a numbers game. By starting with PPC and diving into profitability analysis, I’ve gained a much clearer picture of what it will take to make my app a success. Whether or not this exact strategy works, the lessons from this process will guide me in every project I tackle moving forward.

The Problem with “Proven” Email Sequences: Why They Don’t Always Convert

Posted on November 1, 2024 | by Peter

Recently, I had a conversation with my friend Alex (not his real name), a consultant who’s finally ready to launch his first course. Alex has been using social media and content to try and drive more sales for his business, and I’ve been encouraging him to try a course for a while now. So, it’s exciting to see him dive in! But I wasn’t thrilled with his chosen launch method: an email sequence.

There’s a ton of advice out there saying you need an email sequence to launch a course. And sure, if you have tens of thousands of subscribers, it might make sense—the volume can make up for the lower conversion rates. But if you’re like Alex, with a more modest audience, relying solely on email could leave you feeling frustrated with the results. Here’s why I think a more personal, hands-on approach is the way to go, especially if you’re just starting out.

The Reality of Email Sequences: Low Conversion Rates

The stats on email conversion rates might surprise you. Here’s a look at the average numbers:

• Average email open rate: Around 20-25%

• Average click-through rate (CTR): Roughly 2-3%

• Conversion rate after clicking: Typically around 1-2%

Let’s break that down with some real numbers. If you send an email to a list of 1,000 people:

• 200-250 will open it

• 20-30 will click through to your sales page

• Only 1-2 people might actually convert and purchase your course

Even with great copy, it’s clear that email alone doesn’t provide strong odds for someone like Alex, who doesn’t have tens of thousands of subscribers. That’s why I suggested a different approach.

Why you should go with a personal touch

When your audience is smaller, personal outreach can be incredibly effective. Rather than relying on automated email sequences, reaching out one-on-one through email, DMs, or even calls allows you to create genuine connections that are far harder to ignore.

Here’s what I suggested to Alex:

• Skip automation for now: Instead, directly engage with people who’ve shown interest in his content. Reach out, ask if they’d like to try the course, and invite honest feedback.

• Leverage one-on-one connections: His advantage at this stage is that he can build personal relationships, unlike big-name creators who are often just another email in a flooded inbox.

• Use a CRM to stay organized: When managing multiple personal outreaches, organization is key. This is where a CRM like lnks.to can help, letting you track contacts, follow-ups, and engagement in one place.

Comparing the Numbers: Email Sequence vs. Direct Outreach

To illustrate this, let’s look at how a typical email sequence funnel compares to a direct outreach approach:

Email Sequence Funnel:

• Social post views: 5,000 people see a post promoting the course

• Email list signups: 100 people sign up (2% of views)

• Open rate: 25% (25 opens)

• Click-through rate: 3% (3 people click to the landing page)

• Landing page conversion rate: 10% (0.3 people convert – not even 1 full sale)

With numbers like these, Alex could invest time into a sequence and see minimal returns, simply because his audience size isn’t large enough to offset low conversion rates.

Personal Outreach Funnel:

• Outreach (email/DM): Reach out personally to 100 warm leads

• Response rate: 40% (40 people respond positively to the initial contact)

• Discovery call booked: 25% of those who respond (10 calls booked)

• Sales call conversions: 30% of calls convert to a purchase (3 course sales)

By reaching out personally, Alex could see much higher engagement and conversion rates, translating to more sales. The personal approach allows him to showcase the course’s value directly, answer questions, and guide leads through the decision-making process. Not to mention, each interaction builds a stronger relationship, making future sales easier.

Why Scaling Comes Later

The big names in online courses often promote email automation because it works at their scale. When you have hundreds of thousands of subscribers, even a 1% click-through rate can yield thousands of clicks. But for someone like Alex, whose list is modest, the one-on-one approach is far more effective at building trust and converting leads.

I advised Alex to focus on validating his course through personal outreach first, making those initial sales, and refining his pitch based on real feedback. Once he’s confirmed there’s demand, he can consider scaling up with email automation. But right now? His edge is in those personal connections.

Using lnks.to’s CRM to Simplify the Process

One of the reasons I built a CRM into lnks.to is for scenarios exactly like this. When you’re launching a product or course with a smaller audience, every personal interaction counts. The CRM lets you keep track of each person you’ve reached out to, organize responses, and follow up as needed.

Rather than losing potential leads in an email inbox, a CRM keeps everything streamlined so you can stay on top of your outreach. It’s a simple but powerful tool that helps you focus on conversions, not just contacts.

To make it a little clearer, here is a video that shows you how to manage the whole process…

A Final Thought on Launching Courses

If you’re thinking about launching a course and your audience isn’t huge yet, consider trying the personal approach. Don’t get caught up in the automation hype before you’re ready. You might be surprised by how much traction you can get by reaching out directly to people who already know and value your work.

Growth Hacking, the what, why and how…

Posted on December 31, 2019 | by Peter | Leave a Comment

How I Manage The Process

Growth Hacking Example

Selecting a growth channel for your startup

Posted on December 31, 2019 | by Peter | Leave a Comment

Where to focus for your growth strategy

This post is for entrepreneurs or marketers who are trying to work out where to get started when trying to decided the right marketing channel with limited resources.

This is really important as most founders are limited by both time and money so not getting this allocation right can be the difference between life and death for many startups. Select the wrong channel and your company will run out of money before you start driving sales. Selecting the right channels can bring in much needed cash-flow and provide a sustainable and scaleable source of growth.

In this post I am going to break down how I select what channels to pursue for each project when putting together a growth plan. I will show you the calculator I use which makes comparing channels both quick, simple and as objective as possible. By the end of this post you will be able to work on what you should focus on to drive the growth of your startup.

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What we are trying to achieve

Our aim here is to identify multiple channels we should be focusing on if we are going to be building sustainable growth going into the future by taking into account both the opportunity a particular channel provides and the risk associated with it for your business.

To do this, we need to make a clear assessment of what the options are and which ones are worth dedicating our time to.

The overnight success of a random hack are great but, the reality is the hockey stick growth that you are looking for actually comes from mastering several channels which are sustainable. A hack might get you a quick win, but the odds are, it won’t last for long so by having multiple channels that have been selected carefully, you will not only be creating good foundations for growth by maintaining focus and building deep domain expertise, you will also be hedging for risks that come with jumping on random “hacks” you come across.

I have decided to talk about this early on because as I get asked about “where to start?” on a regular basis but, as I get into talking about optimising funnels I want to be sure that people are working on the right opportunities for them, rather than simply following what is cool, right now.

I came up with this process as a result living off of one source of traffic but also to help in minimising the time needed to get up and running. It also helps when explaining a decision making process to a client.

What this is good for

This process is really powerful if you have no idea where to get started and want to be planning for the longer term growth for your business. It can also be useful when you have very little experience of a particular market and need a framework for comparing opportunities.

While this process will simplify things in terms of decision making, like any calculator it’s only as good as the data that you feed it in the beginning. So if you are filling in the cells with random guesses, you might not come be presented with the best conclusions. Having said that, this can’t be an exact science so you will need to go with your gut if you can’t rely on a trusted source of information.

What it does

Like any actionable process, you need to have a list of the options and a clear way to identify which tasks are the priority so you know which ones to action first.

The challenge here is, when analysing different customer acquisition channels, there are lots of options (which seem to be growing daily). In addition to the number of options, we also have to consider that you can compare them against each other in multiple dimensions.

For example; do you want a channel that is quick to setup but can be expensive in the long term like PPC? Or, do you want something that is “free”, but leaves you exposed to the whims of something external like optimising your website to rank higher in Google?

…this is a tricky decision to make when comparing the two but when you have more than 20 channels to explore all of which will need building and optimising over time, you want to be sure that you are making the right decision.

To overcome this challenge when working on new projects of my own or for clients I decided to create a tool that would simplify the process which I refer to as “The channel analysis tab”. I promise you it’s more interesting than it sounds…

This calculator can be used to compare channels and strategies as it boils them down to a few key elements that make them easy to understand at a glance. You are instantly able to see what the potential Return On your Investment might be and it also applies a “Risk Score” to the opportunity.

Estimating the ROI

While there are many reasons to run marketing campaigns from driving brand awareness to repairing a reputation, I am going to assume you are hear for getting a Return On your Investment. So the ability to get a rough idea of how much you could potentially make back is important.

Estimating the Return On Investment is obviously a tricky process when you are starting out. This is why we are not trying to focus on fixed amounts delivered by a particular campaign but but to see how it might compare to another in both a “best” and “worst” case scenario.

To work out the potential ROI we take an educated guess at a few key numbers…

Estimating risk

As difficult as it is to estimate what your ROI might be is being able to understand how risky a particular option might be. Again, this is not an exact science, we are simply trying to clear up a decision making process to compare how one thing might stack up against another.

To get a lear understanding of how the tool works, please watch the video below:

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When to use this calculator

Most people’s instincts will be to use this is soon as possible. This is not always the best thing to do. Ideally you want to use this calculator once you have already created your customer profiles/ Personas. Creating the persona’s first is an important step because you want to ensure that you are looking at channels that are relevant to your ideal customer.

Images here: https://www.notion.so/Selecting-Customer-Acquisition-Channels-3c00ca27cbaf4595928a72c9410c67be