How to Know if You Have a Profitable Sales Funnel
We’re going to do a little math and figure out the Average Cart Value of someone in your sales funnel to determine if the entire funnel is profitable.
To begin, you want at least 100 people (1000 or more would be better!) to go through your sales funnel, so you have some data to work with. It’s tough upfront to spend money for testing, but it’s necessary to get the data you need in the long run.
Watch this week’s episode to analyze your numbers, figure out if your sales funnel is profitable, and get tips to raise the lifetime value of the entire process.
If you find your funnel isn’t as profitable as you’d like, check out what to do if your sales funnel is broken.
Hi, Julie here, today I want to talk about how to make the numbers work in your sales funnel.
We’re gonna do a little math today and we’re going to look at how you can figure out if your sales funnel is going to be profitable.
All right so don’t be scared. We’re going to do a little math and what we’re going to do is we’re going to figure out the average cart value of your funnel. So in order to do this, you’re going to need to have a little bit of traffic first. So you have to mentally prepare for spending some money even without the, the funnel being optimized. So prepare for that.
So we want to send a hundred people through your funnel and get some statistics. It would
be better if you could send a thousand but not everybody has the budget to get a thousand people through a funnel.
So let’s pretend that you are selling a $15 ebook on the Thank You page then you have an order bump for an additional $7 and that’s like some extra resources and meal plans… Let’s say we’re in the health industry.
And then on the one-time offer upsell you have a $47 course that’s fifteen plus seven plus forty-seven which means if somebody buys everything in your funnel they’re going to spend $69.
Now if they just buy the book and the course and they don’t take that little extra order bump, they’re gonna spend $62.
And some people might not buy the order bump or the OTO. They’re just going to buy the book and that would be $15.
So you have three different options.
So what you do is you send a hundred people through your funnel and then you take how many purchases there are. You add them up and create an average. So for this purpose of this example let’s say that out of a hundred people who went through your funnel you had five buyers two of them spent the full 69 two of them just spent fifteen and one person spent sixty-two so that equals two hundred and thirty dollars. That’s how much you made off of a hundred people.
If we divide that by the five purchasers your average cart value is forty-six dollars.
This means that the most you could possibly spend to acquire a customer on this funnel would be forty-six dollars and then you would break even.
Now if you’re looking at me and saying “that’s the only funnel I have” then you’re gonna have to spend actually quite a bit less to acquire a customer in order to make money on just one funnel.
This is why funnel stacking is so important because you can get people to buy again and again and on different funnels. The idea is, is if you use one funnel to get your leads for free, then you can make money on them in all the other funnels.
So if you have a funnel and your average cart value is forty-six and it’s costing you forty-six dollars to get the customer this just means that you have to create a better lifetime value process.
Create more funnels. Get them to buy more, to consume more, to pay more.
Then you’re making money and you’re getting your leads for free. But if this is your only funnel and this is all you’ve got, then what you need to do is you need to make sure that you’re getting traffic and leads for less than forty-six dollars so that you can scale.
The best conversations happen after the camera stops rolling so if this was helpful or you have any questions about how to figure out how much money you can spend in your funnel, leave a comment below and for more videos like this you can go to Juliechenell.com.