"Why Am I Holding Back Ads That Already Work?" — Transcript

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1. 0:00I own a dance school, and then I built a
2. 0:02gym launch style coaching program and
3. 0:04sold that two and a half years ago to a
4. 0:06consolidator that I currently work for
5. 0:08as an equity partner.
6. 0:09>> Okay.
7. 0:09>> I'm curious about going back into my
8. 0:12dance school and really seeing how I can
9. 0:14optimize it and pouring over those
10. 0:15lessons into my [clears throat] role now
11. 0:17as an equity partner.
12. 0:18>> Like a test kitchen?
13. 0:19>> Mhm.
14. 0:20>> Okay.
15. 0:20>> Absolutely. And what I'd like to do is
16. 0:22to move that business from 2 million to
17. 0:244 million dollars in revenue, something
18. 0:25that has not done been done in a single
19. 0:27unit brick and mortar service space of
20. 0:30what I do.
21. 0:31>> Okay.
22. 0:32>> We're currently at 800 students.
23. 0:34>> Okay. Do you have the Can your four
24. 0:36walls take it?
25. 0:37>> We can.
26. 0:37>> Okay. So, and how big is the physical
27. 0:40like the How many people are in your
28. 0:42actual market?
29. 0:43>> Uh county 100,000.
30. 0:45>> Okay.
31. 0:46All right. What's revenue retention for
32. 0:48or like what percentage of people stay?
33. 0:50>> 72%.
34. 0:51>> Annually?
35. 0:52>> Annually.
36. 0:53>> Okay.
37. 0:53>> [clears throat]
38. 0:53>> School year basis program.
39. 0:54>> Yeah. So, you have four years roughly
40. 0:56out of every person. Okay. So, for you
41. 1:00to So, what's sales velocity right now?
42. 1:03>> In in terms of putting on new students?
43. 1:05>> Yeah.
44. 1:06>> On a month-to-month It follows the
45. 1:08school year, so we'll pick up about 50%
46. 1:11of the kids from last year right away at
47. 1:13the renewal time. We'll pick up the
48. 1:15other 20 22% by the time we hit school
49. 1:18year, and then we'll fill the rest
50. 1:20before Christmas.
51. 1:24>> Tell me what months those are.
52. 1:25>> Um
53. 1:26So, our annual cycle is the school year
54. 1:28and it ends in May.
55. 1:29>> So, it ends in May. Okay.
56. 1:31>> Big show, everybody's done. Immediately
57. 1:3350% sign back up. We'll pick up the
58. 1:35other 22% before school starts.
59. 1:37>> So, September.
60. 1:38>> In September, and then we'll fill up by
61. 1:39Christmas.
62. 1:41>> Got it. Okay. And then everybody does
63. 1:42the show at the end.
64. 1:43>> That's right.
65. 1:44>> So, they're finished. Okay.
66. 1:46Um
67. 1:46>> Jazz hands.
68. 1:46>> Yeah, I saw them. Okay.
69. 1:48Um
70. 1:48okay.
71. 1:49So, I mean, the nice thing is is that
72. 1:51you do have pretty good revenue
73. 1:52retention if you're 72%. Um if you have
74. 1:55the physical ability to do it, then it's
75. 1:57purely an advertising thing. So, how
76. 2:00many how many schools are you kind of in
77. 2:02I'm guessing you like kind of go to
78. 2:04schools and like embed and infiltrate or
79. 2:05what's your process around Facebook ads
80. 2:07or what do you do?
81. 2:07>> Yeah, so we have evergreen Google ads
82. 2:09right now. I'm [clears throat] just
83. 2:10saying, you know, of course if you're
84. 2:11looking for dance lessons you're coming
85. 2:12here and then we're doing incentive
86. 2:14based or promotional meta ads that
87. 2:17tend to be a little bit more seasonal.
88. 2:19>> Got it.
89. 2:19>> Sign up now, soccer's over, get your
90. 2:21free ballet shoes.
91. 2:22>> Yeah, uh how much you spend uh per month
92. 2:24on those?
93. 2:25>> Mhm, 1,500.
94. 2:27>> Okay, probably go up there a bit. Um
95. 2:28what about Google ads?
96. 2:30>> Inclusive, Google and meta.
97. 2:31>> Oh.
98. 2:33>> It's just under a
99. 2:34>> Okay. So, what percentage are coming
100. 2:36from ads versus word of mouth?
101. 2:39>> We just started our Google and meta ads
102. 2:41up again for the season.
103. 2:43Um
104. 2:44I can't answer that question yet.
105. 2:47>> Shoot from the hip.
106. 2:48Just guess.
107. 2:49>> Half.
108. 2:50>> Oh, really?
109. 2:52Geez. Okay, so how many how many
110. 2:53customers do you have? You said 800? And
111. 2:55they all renew every year?
112. 2:58They Yes. So, they all have to kind of
113. 2:59sign up every Okay.
114. 3:00>> Annual contract.
115. 3:01>> So, you're selling 800 people a year
116. 3:05um
117. 3:06and
118. 3:08200-ish of them are like net new.
119. 3:12Okay, so you're acquiring 200 customers
120. 3:13a year and you're spending 20,000 a year
121. 3:15to acquire those 200 customers, roughly.
122. 3:18>> Correct.
123. 3:19>> Okay.
124. 3:20So, it costs you $100 per customer to
125. 3:24get them in the door.
126. 3:25>> That's right.
127. 3:26>> Okay, that's
128. 3:27super cheap. Amazing. So, what is LTV of
129. 3:31What's What's What's the annual price?
130. 3:34>> Average 1,600 a year.
131. 3:36>> 1,600?
132. 3:37>> Mhm.
133. 3:37>> Okay.
134. 3:39Wow. [snorts]
135. 3:40So, okay, so fundamentally you have a
136. 3:44it's not even 16 to one. You're 16 to
137. 3:46one year one.
138. 3:48>> That's right.
139. 3:48And then
140. 3:49>> you have three more years. Right. So,
141. 3:52you're like smoking it. You're at 64 to
142. 3:541.
143. 3:55Let's do
144. 4:00I mean, for real. You I mean, cuz right
145. 4:02now in a market of your size, 100,000,
146. 4:05you could probably be running
147. 4:08I would say like at peak where you start
148. 4:10losing efficiency, somewhere in the
149. 4:127,500 to 10,000 on meta alone.
150. 4:15Um and you can probably get with Google
151. 4:18Ads The nice thing with AdWords is that
152. 4:20you'll know when you've maxed out the
153. 4:21keywords. Right? Like you you win all
154. 4:23the keywords that are, you know,
155. 4:25existing there. But if you're spending
156. 4:26$750 a month, assuming it's a 50/50
157. 4:29split, you're not even close, for sure.
158. 4:31Especially in a 100,000 person market.
159. 4:33So, I Again, my guess to me would be
160. 4:34that it gets to closer like 10 to 10 or
161. 4:367,500 to 7,500, somewhere in there,
162. 4:38which would be a true 10x in
163. 4:40advertising. Even if you lose your
164. 4:41efficiency and you go from 16 to 1 to 2
165. 4:45to 1 or 3 to 1,
166. 4:47who cares?
167. 4:48Cuz you're also collecting everything up
168. 4:49front anyways.
169. 4:51Amazing.
170. 4:52So, what stops us from doing that?
171. 4:55>> I think it goes all down to the manpower
172. 4:57and the technical skills.
173. 4:59>> So, we could spend more we And that
174. 5:01means that you don't have enough people
175. 5:03who can work leads.
176. 5:04>> That's right.
177. 5:05>> Okay.
178. 5:06Um what's profit or what's top line of
179. 5:08the 2 million? Top line was 1.1?
180. 5:10>> Uh 500.
181. 5:11>> Okay.
182. 5:12Um
183. 5:13for 60,000 a year you can pay one person
184. 5:15to do this full time.
185. 5:16So, go from 500 to 440 and then go from
186. 5:19440
187. 5:21>> 10.
188. 5:21>> Good. Rock and roll.
189. 5:24>> [applause]
190. 5:28>> Do you make content, too?
191. 5:30Do you make content for like dance
192. 5:31stuff, too?
193. 5:32Yeah. I mean, I would just keep doing
194. 5:34that.
195. 5:35If you're not getting as many leads as
196. 5:36you want and your business is demand
197. 5:38constrained, [music] meaning you could
198. 5:39service more customers than you
199. 5:40currently have, then this is for you.
200. 5:42So, marketing is changing and I think
201. 5:44ACQ tends to be on the bleeding edge of
202. 5:46the stuff. We certainly spend the money
203. 5:48to do it, but we also build [music]
204. 5:49custom software and we pay amazing
205. 5:51vendors and very expensive people to
206. 5:53figure out the system that we have right
207. 5:54now and I want to share it with you kind
208. 5:55of open kimono style. If you're not
209. 5:56getting as many leads as you want,
210. 5:58boy, do I have the thing for you. Click
211. 5:59below, book call and
212. 6:01hopefully I'll see you in Vegas.