Dave: Hey everybody, welcome to FunnelHacker Radio. Today you have the opportunity of having one of my favorite friends on, a guy who has been a huge advocate and supporter of ClickFunnels from the very beginning. Welcome, Todd Brown.

Todd: Thanks so much for having me, man.

Dave: Glad to have you. You actually were our very first affiliate to win a car so thank you once again. You've been with us from the very, very beginning of ClickFunnels and you've known Russell I know for almost the beginning of time, it seems like. We appreciate your friendship and all that you do for us.

Todd: Yeah, well I only support the best of the best, man and so it's well deserved.

Dave: That's awesome. Today I want to jump right into things. For those of you guys who don't know Todd, Todd is ... Okay, he's been around the industry forever but one of the things I love most about Todd is he has the ability to take things that are super, super complex and dumb them down to almost a kindergarten, second grade level, which is where I like to play. Because of that, the topic I really want to spend a lot of time on today is one of the things we're starting to get asked about from most of the people who have funnels going and that is what metrics do I need to measure, what things do I have to look at?

In fact Todd, it's kind of funny. I was with Russell yesterday, we were filming with Marcus Lemonis. Russell basically said, "Which metrics are you guys using?" The producer, I was in the other room, the producer turned to me, said, "What? What are metrics?" With that, we'll use that as our segue, what are metrics?

Todd: Yeah, metrics are ... That's a great question. I love the idea of me breaking stuff down to a first grade or kindergarten level and that's because I think that's the level that my mind operates on best, man. Metrics are really just the objective, not subjective, the objective measurement of really how well a funnel is working. There are very big picture metrics, or objective measurements of what's going on with your funnel and then there are very narrowed, very specific metrics that tell you how each different piece, element, page, step, traffic channel, ad, is operating. What metrics do is they just eliminate all the guess work. They eliminate opinion, they eliminate assumptions, they eliminate what you or I think about what's going on and they tell you objectively with none of that guesswork, exactly what's happening.

Dave: (2:51) That’s awesome and again, I want to make sure everyone understands. As we go through this stuff today, this is the stuff you actually are going to want to take notes on. It's funny, we ... I know Todd you're familiar with a lot of Russell's stuff but the book that separated us from everyone else was a hundred eight split test. It was one of those things where, and the only reason I bring it up, it's exactly what you just talked about and that is it doesn't matter what your opinion is until you actually measure where people are actually ... What are they doing? Where are they putting their money? To me that's what matters most is I don't care what colors you use, I don't care what picture you use, as long as it converts and more importantly, that

you make money off this deal.

It's funny, I was talking with Russell literally just last night about it as we were doing this interview with Marcus. They were saying, "Tell us about this whole ... What is a split test?" All these weird, big things that are pretty common in our industry but for them they were like, "What in the world are you guys talking about?" It was fun just talking about what ... Russell will create a website or at least a page and think okay, I've got this thing nailed, this is exactly what he wants, and then he would turn it over to his co-founder, Todd Dickerson, and Todd would change one or two words. Actually the conversation we had yesterday was literally, by changing two words on the order form, we had a two hundred twelve percent increase. It was just crazy.

Todd: Yeah.

Dave: (4:15) Crazy stuff. Let's keep diving into this so when you're ... From a person who's just getting going as far as ClickFunnels, what would you say are two or three of the most important things they need to focus on? What do they need to look at first?

Todd: Before we even get to some base level metrics, a couple things that I think are really important for everybody to understand. First and foremost, we are in the arithmetic or math business. At the root of direct response marketing, which is the type of marketing that we do, typically very copy intensive, long form copy, at the foundation of direct response marketing is numbers, is the fact that we are in the numbers business. Direct response is all about communication, psychology, and simple math. It's very different from brand institutional advertising, right? Which is so much more reliant on creativity if you will, right? It's why as small business owners and operators, why we use direct response marketing. Not only because it's more effective, not only because it produces results, but because every aspect of it is quantifiable, is measurable, is trackable. We can invest a dollar and we can see how much does that dollar bring back, how quickly does it bring back a dollar fifty, two dollars, six dollars, whatever that is.

(5:44) It allows us to operate without the guesswork. It allows us to operate without assumptions and instead it allows us to operate with numbers that don't lie. It allows you to see did the first headline work better or did the second headline work better, right? There is no ... Even in that phrase, "Work better", right? It's a better headline. Without numbers, what does that mean, right? What does that mean? What is that based on? Is it based on somebody's opinion on your team? Is it based on your own [inaudible 00:06:19]? Is it based on what your wife thinks or your husband thinks? Right? The beauty is that it's based on objective numbers, objective data that doesn't lie.

I just cannot stress that enough, that the big difference between the most successful direct response marketers that I know, the biggest players, the A players, the ones that really make direct response marketing look so easy. The big difference between those folks and the typical, average, new certainly, marketer is that for the A player, their decisions are driven by those numbers, right? They're not forced to come up with these new, whiz, bang creative ideas. It's not that they ... The A players have honed their creative chops so much more necessarily than the new

marketer. It's that they're able to see the data and they're able to make the quick decisions from that data that ultimately lead to results. Sometimes they're able to make decisions based on that data that don't necessarily lead to quick results but they're able to make those split tests, they're able to do split testing and they're able to use the data to ultimately find the winning variation. That's the very first thing. We are in the numbers business and so you have to have your numbers in order to be able to make decisions.

(7:53) I don't mean to go on this crazy tangent but I just want to drill this in so much to everybody that the thing that I despise the most, the thing that drives me craziest when I am involved in a new venture, let's say. When we launch a new company, we have a new team or whatever it may be, and we don't have numbers and then I'm being called in to make decisions, marketing decisions, in the dark. I say, "I can't tell you what traffic source we should use or how much we should spend on a particular traffic source, or what traffic sources we need to weed out, or what traffic sources we can spend a dollar per click on versus two dollars per click or three dollars per click. I can't tell you which funnel is performing better or which funnel we should ultimately use with YouTube, and which funnel we should use with Facebook ads and so on without those numbers. Because without the numbers, I'm simply throwing a dart at the wall and hoping that the decision that I make is the right one." Does that make sense?

Dave: It makes complete sense and I really appreciate you spending the time going through that because we get those kind of questions all of the time.

Todd: Yeah.

Dave: What page converts best? Which page should I use? Which template should I use? I'm like, "Until you put some money out there, or until you test something and you can get some results and get some numbers, everything else is just a crap shot. You're just rolling a dice." I love that.

Todd: Absolutely. The first thing that I would really recommend for your listeners is that when they're working on a new funnel, right? ClickFunnels has made it just so insanely simple to get a funnel up. One of the things that I recommend is that once they've got that funnel set up, I actually recommend what I refer to as a minimum viable funnel to get going. What that means ... A minimum viable funnel is really just the minimum number of steps that you need in a funnel to be able to test the premise or the idea of the funnel, the hook of the funnel if you will, and the offer, right?

(10:03) Before you work on creating six different up sell offers, before you work on creating what is your back end sequence or your back end process after you get a buyer, before you even put together any of those other elements, you want to test the minimum viable funnel so that you can make sure that the premise that you've designed the funnel around and the offer that you designed is effective. Because if the premise is weak, meaning the idea is weak, meaning that it's not really creating the engagement or attention that you need, it's causing mental opt out, people are hitting the page and bailing because it's nothing new, or the offer just isn't sweet enough, strong enough, it's not irresistible enough. Then it doesn't matter how many up sells you have, doesn't matter your back end strategy, nobody is going to

see it. The goal is to get to minimum viable funnel and then test that minimum viable funnel as quickly as you can.

What is the goal or the objective of testing the funnel? It is to get those base level metrics, to begin to collect metrics on your funnel so that we've got the numbers, the data, that we can then use to begin making decisions. See the thing that you don't want to do, it's almost like this. Part of the process that we teach our coaching clients is this idea that when it comes to setting up and launching a funnel, you want to separate the engineering stage from the optimizing stage, right? Optimizing is about improving your results. The engineering is about the set up of the funnel. The reason why you want to separate the engineering stage from the optimizing stage is because you can't optimize without data, right? You can't optimize without ... If you're optimizing or attempting to optimize without data, you're simply hoping that you're making the right decisions, right? You're taking a shot in the dark and hoping that it works. We engineer, we test, we get the data, and then we use the data to optimize. We have to have base level metrics. Does that make sense?

Dave: (12:15) It makes great sense. I love that idea as far as minimum viable funnel and then really focusing on making sure that you have a big difference between engineering and optimization. My gosh, that's great, great advice, thank you.

Todd: You got it, man. The very first thing that I look at and this is ... Right? Keeping it totally first grade, kindergarten level, because this is really ... I'm sharing exactly what I do. The very first thing that I look at and the number that I personally concentrate on with our funnels, certainly when we're running any kind of cold traffic, paid traffic. Let me just say this for one second. That for the first, I don't even know how many years, X number of years that I was online, I had this misunderstanding of investing in paid traffic, investing in media. I thought that the whole game, the whole goal was to keep my marketing budget as low as possible. In my mind, right? If you think about it, right, it makes total logical sense.

It makes total sense, common sense would tell you well, if we've got a monthly marketing budget of whatever, of ten thousand dollars let's say, that the goal is to spend the least amount of that ten thousand dollars as possible because if we only spend a thousand dollars out of that ten thousand, well then that's nine thousand dollars that we save. That's nine thousand dollars that you could reasonably say drops to your bottom line. The reality is that that's really the antithesis of the way the biggest, most successful direct response marketers work. It wasn't until I had a conversation with my buddy Rick Schefren where he really opened my eyes to the fact that until you can afford to invest in the acquisition of customers, you don't have a business, you have a promotion. If you're relying-

Dave: Oh that's great.

Todd: (14:13) Right? If you're reliant on affiliates, if you're reliant on launches, I'm not saying there's anything wrong with affiliates, I'm not saying that there's anything wrong with launches. If you are reliant on those because you cannot make paid media work, you cannot make cold traffic work, you cannot make Facebook ads

work, YouTube ads, Google AdWords, email solo ads work, you don't have a business, you have a promotion. When other people promote that, then you do well. Really, the name of the game is to be able to invest the most amount of money that you possibly can.

Look, if every dollar you put into media brings you back even just a dollar, if every dollar you put out brings you back a dollar in the form of new customers, in the form of new customers and leads, you are building your customer base. You're building your list for free, you're acquiring customers for free. That's if you're just breaking even, that's if you're just putting out a dollar and getting a dollar back. We're not even talking about if you put out a dollar and you get back a dollar fifty, or two fifty, or three fifty, and we're not even talking about the back end. I'm just talking about your front end, customer acquisition funnel.

That's the reason why I talk often to my clients about the need to transition to paid media. With the whole game changes and will change for your listeners, when they're able to invest a dollar into cold traffic and get back at least a dollar with customers, with leads. With that being said, when I test a new funnel ... There are really three different ways that you can test a new funnel and there are different schools of thought here. I'm going to quickly give you both and then tell you the first basic number that I look at when I test a funnel.

(16:06) The first school of thought is that if you have a list of customers, you want to test an offer to your list of customers. There's a lot of validity and value in doing that. The biggest value is that you're not risking any capital, right? You're not investing, right? You're not risking any capital and you are seeing if your hottest prospects if you will, quote unquote, right these are your customers. These are are the people that have the most amount of trust in you, they have the relationship with you, they've seen that you've delivered the goods, right? The other valuable reason to test to your customers is that if they don't respond in droves, you're never going to make that offer work with cold traffic. The best your offer will ever perform is with your customer base so that's the first thing that you can do.

The second thing that you can do is if you have a list of prospects, you can test with prospects and not customers. That's a great thing to do if you're testing a low priced offer. If you're using, let's say one of Russell's free plus shipping offers, it's a great thing to do. I wouldn't necessarily test a free plus shipping offer with existing customers because a free plus shipping offer is a customer acquisition offer, right? It's an offer to go to, right, for prospects to convert them into customers. Again, no capital outlay there and a great way to get the pulse on response rate. If the people on your list who may be on your list for a month, two months, three months, they don't convert on that offer again, the likelihood of you making that offer work on cold traffic is slim to none.

(18:02) The third way is when you've got the capital, when you're willing to invest the capital, you go right to cold traffic. I tend to go right to cold traffic because my ultimate goal with every front end funnel is ultimately to be able to go to cold traffic. That's the whole reason why we're designing the majority of our customer acquisition funnels. When we go to cold traffic with a minimum viable funnel the very first number that I look at is return on investment, right? Meaning I want to see

how much did we put out and how much did we make back. The healthiest position to take for your listeners and what I have all of our new coaching clients take, is you're simply looking for break even on the front. You're not looking for profit, you're not looking to spend a dollar and get back two dollars, or three dollars, or four dollars. I know that that sounds crazy but for direct response marketers, for the savviest direct response marketers, they divide their marketing into two categories, front end and back end.

Front end is all the marketing that you do with prospects, with the goal of acquiring the maximum number of new customers. That is front end, you're not looking to generate profit, you're looking for maximum new customer acquisition on the front end. The back end, the second transaction, the third transaction, the fourth transaction, that's where all the money, the profit I should say, is made in a direct response business. That is the business. The back end is the business, the front end is the vehicle to acquire new customers. Where the typical mom and pop, the typical small business owner, operator out there with the typical brick and mortar business where the majority, they are trying to generate a profit on every transaction, right? They're not separating their marketing between front end and back end. They don't view transactions differently regardless of whether it's with a long time customer or a brand new customer. They're just trying to generate a profit on every transaction.

(19:43) We, as direct response marketers, understand that that's not the way this business thrives. That's not the way you'll thrive. The way you'll thrive is by looking at customer acquisition front end just as customer acquisition. The way to start, the safest way to start before you have metrics and before you have significant cash flow, is just at break even. You lay out a hundred bucks, your goal is to make back a hundred. You lay out a thousand, your goal is to make back a thousand. You lay out ten thousand, your goal is just to make back ten thousand on your customer acquisition marketing funnels. Before I go any further, totally cool? Does that make sense?

Dave: Totally cool and I absolutely love that. I appreciate you really drilling down on that because a lot of people keep thinking, "I should be making money on my front end." I think if people understand what you just said there, that the difference between front end and back end is huge, that's the whole business.

Todd: The whole business and the biggest difference ... We won't get into the nitty gritty details of these numbers, like abyss math right now, but folks listening can go back and do some calculations afterwards and see exactly what I'm talking about. If I have a hundred bucks to invest, and I'm just using that as a simple number, if I have a hundred bucks to invest and somebody else has a hundred bucks to invest, and the difference is that they want to make a profit and I'm okay not making a profit, that means that I can ultimately acquire more customers than they can, right? Because there's a certain cost to acquiring every customer, right? If you invest a hundred bucks and you acquire ten customers, that means there's an average cost of ten dollars per customer. It cost you ten dollars to acquire a customer. The difference is that when ... If you have to generate a profit, then the amount of customers that you will acquire compared to me, let's say, if I'm willing not to generate a profit, will be less. Remember, the goal, the objective with the front end

is to generate maximum new customers. Maximum new customers. Let me say that again, maximum new customers.

(22:00) Just for reference for everybody because I think that it will help them see the next step, the next step, the next level to front end customer acquisition and I refer to these different levels as acquisition aggression. Acquisition aggression, how aggressive are you being with acquisition. We talked about how the mom and pops make the mistake of trying to generate a profit, right, on the front end. Even though we know its front end, they don't ... Right? They're operating transaction-ally, right? Then the next level or layer of acquisition aggression is what I just said, is break even. Healthiest, safest place for new marketers to start because no money is flowing out of their bank account. It's going out for a day or two and it's coming back. It's going out for a day or two and it's coming back. This way they're able to recycle their budget over, and over, and over, and over again.

The next level, the level that the savviest direct response marketers operate at, the level that produces the quickest growth and the biggest growth in the shortest period of time is what's called going negative. Going negative just means that you're actually spending more money to acquire a customer than what that customer is worth today, what that customer spends with you on their very first transaction. The only way, excuse me, the only way that you're able to do ... The difference here is this, right? The difference is the mom and pop, if the average customer spends fifty bucks, the mom and pop are only going to be willing to spend, let's say, forty bucks to get a customer because they want to have profit, right? If the average customer spends fifty bucks, the mom and pop they're only going to be willing to spend maybe forty bucks. Probably, usually it's much less than that but let's say they're willing to spend forty bucks.

(23:57) At the next level, break even, if the average customer spends fifty bucks, right? I'm willing to spend fifty dollars to get a customer, right? I break even, I make no profit but I acquire a customer. I'm also able to spend ten dollars more than the mom and pops to acquire a customer so there's more expensive media I could use. There's more things I could do, I could send direct mail, right? There's just more that I can do, giving me the ability to acquire customers more effectively. At the next level of going negative I may be willing to invest a hundred dollars to get a fifty dollar customer, to get a new customer that spends fifty bucks. Meaning that every time I get a customer, it costs me a hundred dollars but I recoup fifty dollars of that one hundred dollars so I'm going negative by fifty dollars. Now immediately you tell that strategy, you share that strategy with a mom and pop or somebody who doesn't understand the deeper elements of direct response and they say, "Why the heck would you do that? Why would you lose fifty bucks on every customer?" That's because we understand that the profit, the money in this business, is on the back end.

Once I know what a customer is worth in month two, in month three, over the lifetime of their patronage with my business, and let's say for example I see that every new customer that I get, every new customer who spends fifty dollars with me today will spend another fifty dollars with me next month. Another fifty the month after and another fifty for each month for the next, let's say, twelve months. Meaning that the average customer is worth, excuse me, is worth six hundred

dollars to me, right? The average customer is worth six hundred. Some might be worth more, some might be worth less. The average when I look at my customer base, let's say in this example is worth six hundred, so why would I be willing to invest a hundred bucks today? For obvious reasons because I know that I might go negative today by fifty but next month I make that fifty back so I'm at break even after two months. Then I have another ten months of profit, ultimately meaning that every time I invest a hundred bucks, I make back six hundred bucks. It takes me a year in this example but I'm acquiring assets that are worth more than what it is that I'm paying to acquire them today.

(26:30) That’s one of those lessons that I want everybody to get and I want you to listen carefully to me here. The way I think about customer acquisition is I think like an investor. I am investing in the acquisition of the assets, assets that are worth a certain amount of money today and assets that are worth a certain amount of money to me in the future. The difference between being let's say, a stock investor, is that with stock investing I may know what an asset is worth today, right, but I don't know for sure what what asset is worth in three months, or is going to be worth in six months, or a year. When you have your numbers, when you have your metrics, when you know your numbers, then you know what that asset is worth today. Meaning what's the average front end transaction value and you know what the average customer coming in through a funnel, through a traffic source, is going to be worth to you next month, the month after, the month after, and all the way down to the end of their average lifetime.

The beauty is that as an investor you're able to see what is this asset worth today and what is this asset worth a year from now, six months from now, two months from now, so I know what it is that I'm willing to invest today. I'm investing in the acquisition of assets that are worth a certain amount today that I know what their value is going to be in another month, two months, three months, six months. Does that make sense?

Dave: (27:57) Oh man, Todd that is great content. I think the thing that I hope people understand is this is where you go from having a hobby that's online to actually having a business. When you start thinking as a business owner who thinks as an investor, the sky's the limit, I mean it really is. I remember, I think it was Dan Kinney who maybe mentioned that he who could spend the most acquired customer always wins.

Todd: Yeah, absolutely. That's because, right, think about it ... Look, here's the game, right? If everybody else in your market place can only spend a hundred dollars or is only willing to spend a hundred dollars to acquire a customer because that's ... Maybe every customer spends a hundred and twenty dollars during the first transaction, right? They're willing to spend a hundred bucks, they're willing to lay out a hundred bucks in order to get a new customer. If I'm willing to lay out, if I'm willing and able to lay out five hundred dollars to get a customer, I'm going to crush everybody. I can send a dancing troupe to their house and sing to them, I could send direct mail, FedEx, I could use channels that they can't use, I can do things that they won't be able to do. I could stand out, I could do so much more because I'm able to invest more to acquire a customer.

What allows you to invest more, the easiest way for me to share this with

everybody on here, the easiest way for me to help everybody listening get their head around this, is there are two things, there's really three things. I'm just going to throw this out because these are really the three things that you need to understand in order to do this. First and foremost is what is your average front end transaction amount? Meaning that is ... Sometimes that's referred to as average cart value, that just means what does the average new customer spend with you when they come through a particular funnel, right? Let's say you're running Facebook ads and you're running Facebook ads to one particular funnel, and let's say with that funnel you followed Russell's teaching and you got a couple of up sells on top of your main offer, right? The question then is what does the average new customer spend with you?

(30:18) Some customers are only going to buy the main front end offer, some are going to take advantage of the front end offer and the bump offer, some are going to take advantage of the front end offer and the first up sell, some are going to take advantage of everything, right? The main offer, the bump, the up sell one, up sell two, and so you're going to get an average. You're going to get an average of what does the average new customer coming through that funnel spend with you. The higher that number is, right off the bat, right? The higher that number is, the more you can afford to spend to acquire a new customer, right? If you take your average from a hundred dollars per transaction to a hundred and ten dollars, that means you've got ten more dollars to invest in the acquisition of a new customer. Once you know your numbers and once you have the cash, the cash flow, then you're able to use lifetime customer value. When you're first starting out, you want to use average cart value because that's the safest bet, right? It's money that's coming in immediately but once-

Dave: I know with the Dot Com Secrets book, the one you promoted so heavily for us last year, our average cart value is thirty two dollars and ten cents.

Todd: Yeah that's amazing, right? That's incredible. When you think about it, right, and that's why I remember right, Russell so wisely changed up the offer, sweetened the offer for partners because he knew what the number was and he was therefore able to pay out more to excite partners more and therefore we worked harder for what we were making right, more money and all the while, right, Russell was very wisely like the savvy direct response marketer that he is, he was just acquiring more, and more, and more customers, right? It was just a beautiful thing, a beautiful thing in action but if Russell didn't know his numbers, if Russell didn't know that one number, right? He wouldn't have been able to make that move. He wouldn't have been able to incent the [inaudible 00:32:19] partners more and he wouldn't have been able to generate the tens of thousands of customers the way you guys so beautifully executed.

(32:29) Once you know your lifetime customer value, then the game gets even more exciting because then while you can still work on your average front end transaction value, while you can still work on increasing it and getting it up, you can actually go negative. If I get my front end transaction value up to one twenty instead of one ten and I'm also willing to go fifty dollars negative because I know that the average customer spends another fifty with me a week following their first transaction, well sweet. I'm going to spend more, right? That's just money in the bank because I know I'll spend a hundred ... Now my average front end transaction

value is one twenty, right? I know that in a week they're going to spend fifty bucks on average with me, some more, some less, some nothing. Now I'll happily spend a hundred and seventy bucks and I know that it just takes me a week to get the break even but then after that week every dollar that I generate through that new customer, through our back end, is profit, is profit. Makes sense?

Dave: Yeah.

Todd: (33:43) First thing I look at is I want to know ROI, I want to know, I want to understand where we're at. I spent a dollar, how much did each dollar bring me back? Now to just jump ahead to start to get into a couple of very usable metrics for everybody but also metrics that you really can't run this business without, let's cover actually one more, then I'll go in whatever direction you want. We talked already about average cart value, right? We talked about average transaction value. Let me give you an example, right? Let me paint this for you a little bit. Who uses ... Let's take ConversionFly for one second, right? ConversionFly ... I had a meeting just yesterday. I was talking with our COO, Ty of ConversionFly, and on the call with me was Damian, who happens to be our COO at Marketing Funnel Automation. He's also the guy that does all the traffic for ConversionFly.

We're on this call and we're looking at our metrics, right? Now the beauty is, the thing that I want everybody to understand is that I always say to my team or teams, I always say, "You should be able to show me the metrics, not have to give me a whole explanation, and I should understand what's going on. If you have to give me an explanation of something, if there's some extra stuff that you want to weave in there, if there's an issue with the reporting of the metrics. You're not clear on something, you're not giving me something clear, I shouldn't have to hear an explanation." Yesterday we're talking about three different metrics.

The first metric that we're talking about is, we were talking about, is lifetime customer value. Now we look at lifetime customer value for all of our different offers, all of our different funnels, and all of our different traffic sources. I want to know for example, what is the average lifetime customer value for somebody that comes in through a free trial? What is the average lifetime customer value for somebody who comes in through not a free trial, right? Right off the bat I want to understand the difference between those two. Why? What's the value of that? The value of that tells me that, it might tell me for example that wow, the customers that we get that come in through a non free trial, where they're paying upfront, they have double the lifetime customer value. Meaning that they're worth double to us.

Dave: That's awesome.

Todd: (36:32) Right? Let's say I'm just using that as an example. If that's the case, well what's the value for one of your listeners of knowing that? The value is that now, right, if you had the choice of getting twenty new customers for your free trial or fifteen new customers through your main paid offer, right? The answer is you want the fifteen people through the paid offer.

Dave: Absolutely.

Todd: Because they're worth double, right? If you don't know lifetime customer value, you don't know that and so you could be focused on the lower quality customers, therefore losing money in the process. Now who on the team, out of me, Ty, the COO of ConversionFly, and Damian, the traffic dude, who is the lifetime customer value really for? It's really for Damian, the traffic guy, because it tells him what it is that he can legitimately afford to spend to bring a new customer in. It's a number that he's going to utilize versus let's take average transaction value.

(37:42) Average transaction value was the number that was one of the numbers that I was really looking at on the call because what that tells us is how well that funnel is performing. Meaning how well the different pieces of the funnel, the different steps of the funnel, are performing. The marketing person is looking at the average cart value and the marketing person is trying to get that average cart value higher, and higher, and higher. Whereas once you're in the position to go negative, your traffic person is using lifetime customer value because they know that if your lifetime customer value is a thousand dollars and they could get you new customers for five hundred dollars, they're doubling your money. They're doubling your money.

Dave: Yeah, yeah.

Todd: Whereas Ty, right? He was also looking at that number, he was also looking at lifetime customer value because that tells him how well his onboarding is working, how well his customer support is working, how easy the app is to use, and how well is it delivering on the results that people are signing up for, right? Because the better it works, the easier it is to use. The longer people stay and the longer people stay, the higher their lifetime customer value gets. The third number that I want to talk about which is like a mandatory metric for every single person listening to this. You cannot scale your business without this number and there's a lot of different versions or different ways of ... There's a lot of different ways to come to this number but the number that I'm talking about is average visitor value.

Average visitor value is just this. It is what is the average dollar value, what is the average dollar value of a visitor to a particular funnel? The way that you can very easily figure that out is you can calculate that, excuse me, by taking the total amount of money ... Actually what you can do is, let's say you got a thousand visitors to your site. A thousand visitors to your site and let's say that you sold a thousand dollars of product. You got a thousand visitors and you sold a thousand dollars worth of product, right? Out of those thousand visitors let's say, hypothetically whatever, a hundred people bought a ten dollar product or spent on average ten dollars, therefore you generated a thousand dollars. That means that you average visitor value is a dollar. On average, every visitor to that particular funnel is worth one dollar.

(40:30) What’s the value in knowing that? Now I know what I can afford to spend to get a visitor, to generate a click, right? Without knowing that number, you have no way to know what it is that you can afford to spend per click. The thing that you really want to do is you want that number, you really want all of these numbers that we've talked about. Lifetime customer value, average front end transaction value, and average visitor value. You want those for every funnel and for every traffic

source, right? You want to know if you have one funnel for example, and you use three different traffic sources, you want to know what is the average visitor value from Facebook? What's the average visitor value from YouTube? What's the average visitor value from Google AdWords? You don't want to lump them together, you want to know separately and when you know that number separately, right, you know what you can afford to spend.

You might see when you separate them out that you can't afford to spend what it is that Google AdWords is charging because Google AdWords is charging a dollar fifteen per click for your particular keywords but the average visitor value from Google AdWords into that funnel is only eighty six cents. If that's the case, and you're not ready and prepared to go negative, you're losing money every click. Every click you're losing money but you might see that on Facebook the average visitor value is two dollars per visitor and you're able to get clicks for a dollar fifty. Great, that means every click on average you make fifty cents, right? That's the value of having those kind of numbers.

(42:14) Remember, there is no guessing. There is no wondering, there is no assuming. There is no, when I ask Damian, "How well is the traffic going?" Right? I don't even ask that question because the answer is, "Let me just see the metrics." Right? Let me see the number, that tells me everything I need to know. This funnel generates X, this funnel costs us X per click, X per visitor, and that funnel extracts out X times two, run it all day, everyday. Then my answer, going back to what I said earlier about the game is how can you invest the most amount, right? Remember, thinking like an investor, right? Recognizing that the game is not to invest the least in the acquisition of customers, the game is to be able to invest the most. Imagine if somebody came to you and said, "Wow, every time we put a dollar in this machine we get a dollar back. How many dollars do you want me to put into that machine?" The answer is, "As many as you can, as fast as you can, every freaking day."

Dave: Love that.

Todd: Right? That's the game but imagine if somebody said to you, "How much money do you want me to put in here per day?" but they don't tell you how much money you get out. Imagine if all they told you was, "You get out two dollars." If every time I put your money in here, I get back two dollars, should I do it? The question is well how much money do I have to put in? You need those numbers, you need cost and you need sales. You need the two sets of metrics on both sides of the coin. The other thing, just because I know there's so much to talk about with this but I just want to share this with everybody, the other thing is opt in ... If you're using an opt in page, right, you're using a squeeze page. Opt-in rate, sales conversion rate, order form completion rate, up sell take rate, those are just optimization metrics. Those are just metrics that you use to optimize a funnel. None of those metrics, opt-in rate, sales conversion rate, order form completion rate, up sell take rate, none of those metrics tell you the viability of a funnel. None of those metrics can be deposited in the bank. None of those metrics are going to grow your business. None of those metrics are going to allow you to scale a business.

(44:37) What’s going to allow you to scale your business are always numbers that

are preceded by a dollar sign, right? Meaning they're not percentages, percentages don't ... Opt in rate doesn't mean anything. You could have a sixty percent, seventy percent opt in rate, like a crazy opt in rate, and be losing money. You could have a crazy opt in rate and a crazy sales conversion rate and be losing money. You could have an extremely low order form abandonment rate and be losing money. Same time, you could be breaking even on a funnel. Meaning acquiring customers for free, building your email list for free, and right? You could have a ten percent opt in rate, you could have a one percent sales conversation rate, you could have a seventy percent order form abandonment rate, and you could still be doing well.

There are times when I have funnels, I look at funnels or client funnels of our coaching students or through our agency and they're like, "We're breaking even but our opt in rate is low and so we stopped running traffic." I'm like, "Are you crazy? Run it, we'll work on opt in rate, right? We'll use those optimization metrics to identify the constraint in the funnel, the weak link in the funnel, the part of the funnel that if we fix, will produce the biggest bump in ROI. If you're at break even, regardless of what those other metrics tell you, run that bad boy. Run it." Does that make sense, man?

Dave: (46:05) It makes complete sense. Todd, one of the things I love ... The whole reason I wanted you to come on our podcast is there are very few people, in fact I think you're the only one I know really well who is as passionate about numbers as you are. I just love it. I know we're getting short on time here because I know you got a lot going on but one of the things I know everyone's going to be asking is, "Dave, I hate running numbers. I don't like doing math," and that's the whole reason I wanted to have you on. I know you've got an opportunity where basically can have it done for them. If you don't mind just taking a few minutes to introduce them to ConversionFly and how it works, and why we've integrated with you guys, and love to see ... If it's something that works for them, fantastic.

Todd: Yeah and so ConversionFly, it came about because of my own need. I don't remember, maybe I would say about almost two years ago now, I became just wildly frustrated having paid for and tried every single tool that I could get my hands on, that I could find for tracking and reporting our numbers. I was desperately hoping to find a tool that did everything that I wanted and needed, knowing that we're in the numbers business and knowing that I have an application that isn't accurate, or doesn't track everything I need, or doesn't track everything properly. What's the use in having flawed metrics? I'm only going to make flawed decisions, right? I'd rather have no metrics then at that point than have flawed metrics, to be honest with you, because I'm going to be doubting everything I'm looking at constantly.

(47:55) I finally decided that I just needed to have an application created and the original intent was just to have it created for me and Marketing Funnel Automation. Fortunately, when I first started many, many moons ago, about fifteen years ago or almost fifteen years ago now, in direct response, the first six years I was in the SAAS business, Software as a Service. I understood and understand what it takes to build a development team and the amount of money and time that it was going to cost me. I had to bite the bullet for myself because I said, "What else am I going to do?" I either do this, right? It's an investment today that I believe is going to come back, I

felt, in droves, in being able to see accurate numbers, make intelligent decisions, and scale up much bigger and much faster. I went through a lot of crazy turmoil that I won't bore your listeners with, having this thing done.

Then I got to this point, hired a full development team, I went back to the guy that I originally worked with, our lead developer from many moons ago. Then I just had this epiphany that how can I not release this thing to the public when a big part of what we do at Marketing Funnel Automation is coaching and training the strategic side of funnel development and funnel engineering. How could I tell people, "You need to track, you need to know your numbers, you need accurate numbers, and hey go find a solution," knowing that I tried them all? That's when I had the team go back to the drawing board on the user interface and redo the entire user interface to make it really nice and cool looking. Then we ran this paid beta group, I wanted serious marketers to put this thing through its paces which we did for, I don't even know, six months, seven months, something like that. We broke the thing multiple times, we tested it on every platform that we could get our hands on.

(50:00) Fortunately we made it through that process, a lot more money than I was expecting later and a lot less hair on my head than at the start. The application today is just ... There's nothing like it. There's nothing like it because number one, I had this thing built for me. I love direct response numbers because it's our business but I was never good in math, I was a terrible student and all that. Number one, I wanted it to be a one pixel installation. All these other applications that I had tried you had to paste an action code, you had to paste a sales code, every time you set up a page you gotta paste a different piece of code on there. If you had a funnel with five pages, you had to paste five different pieces of code. I didn't want that. I said, "I want one piece of code that you paste on your site once and you never need to paste another piece of code on there again." They did that.

The application ConversionFly, it tracks through a complete funnel from beginning to end. It tracks every traffic source, it tracks every ad, it tracks even organic traffic through your blog and it reports on twenty one plus key direct response marketing metrics. It shows you for every traffic source, it shows you for every funnel lifetime customer value, and cost per click, and revenue per click, and cost per lead, and revenue per lead. It shows you averages that are value, it shows you your time to break even, it shows you, excuse me, all of these things for every funnel, for every traffic source, for every link, you name it.

(51:57) It gives you the ability to compare funnels side by side so you can see which funnel is doing better for which traffic source. It allows you to compare traffic source side by side so you can see which traffic source is doing better for a particular funnel. It tracks across all devices so it's the only tracking ... Now that mobile is continuing to sky rocket in terms of usage, I realize that the other tracking applications out there are all purely cookie based. That just means that they are device, even they're browser specific, right?

Dave: Right.

Todd: That means that if somebody clicks on an ad on their iPhone, and then they opt in

on their iPhone, and then they watch your sales video on their iPad, and then they buy on their iMac, right? They buy on their iMac? Your tracking is a disaster because it's going to show the click, it's going to show the cost for that click, it's going to show the sale, but it's not going to attribute that sale back to the original source. That's what's called attribution and so I said, "It's got to track across all platforms. If it can't track leads across all platforms, then it's not accurate. If it's not accurate, then I'm not going to use it." We had them build in what's called loss-less tracking. It allows you to do ... I'll share one other thing because I don't want to turn this into a ConversionFly Fest but one of the things that I had built in that I think is just insane, is a game changer and I don't use that phrase lightly, is that we built in the ability to run internal split tests on a single funnel based on traffic source.

(53:46) That just means this. That just means, let's say you have a single funnel and you are getting traffic from YouTube and Facebook. You might see that your up sell is doing really well with the traffic from Facebook but you see that the up sell is doing really poorly from YouTube. If that's the case right, for most marketers they don't even see that, right? They're unable to see how well the up sell is doing or the different parts of their funnel is doing from each different traffic source, right? Now imagine if you saw that. With ConversionFly you can now run a split test to find an improved variation for that up sell just for YouTube traffic. Nothing will change in the funnel for the traffic coming from Facebook because we don't want it to because the up sell is doing really well. We can run multiple split tests on the up sell just for the traffic coming from YouTube until we find a winner just for the YouTube traffic. We have the ability to optimize a single funnel per traffic source simultaneously without impacting the value of a sale from every other traffic source. It's crazy.

Dave: That's awesome.

Todd: Yeah.

Dave: That is awesome. I know a lot of people are going to want to get the opportunity of working with you on this so we put together a ... Basically you go to FunnelHackerRadio.com/conversion, we'll have a special offer there that Todd's set up for us. You guys have been great friends with ClickFunnels and Russell for a long time so again, Todd I cannot thank you enough for all of your time, most importantly your wisdom and your friendship. You're a master at understanding this business and I just loved spending the last hour with you so thank you so much, bud.

Todd: Thank you, man. It's truly an honor, man to be on here and I love what you guys are doing. It goes without saying that I'm a big fan and I look forward to continue to support you guys, man.

Dave: (55:51) Sounds awesome, bud. We'll talk soon.

Todd: Thank you, pal.