Profit Per Impression – The Most Important Number in Your Business

Written By Dave Lavinsky
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I’ve spent years starting and growing my own companies and helping thousands of entrepreneurs do the same.

And one thing that’s helped me and others succeed is keeping track of key numbers. We refer to these number as KPIs or key performance indicators. KPIs allow us to better manage our businesses. Since they allow us to clearly see what figures correlate with success, and allow us to focus on improving them month after month.

Recently I was talking with a business owner who asked me a great question. “What is the most important number or KPI in a business?”

And without hesitation I gave him the answer.

And that answer is “Profit Per Impression.”

Let me explain. Profit Per Impression (PPI) is the amount of profit you generate from everyone who hears about your company.

Here’s an example…let’s examine the PPI of one of your competitors (a fictional example of course).

Let’s say they run an ad (radio, TV, print, it doesn’t matter). And let’s say that 1% of people responded to the ad.

Out of the 1% that responded to the ad and called them, they were able to convert 35% into customers.

Your competitor was selling a $500 widget, and the average purchaser bought 1.5 widgets. Your competitor’s profit margin on each widget is 30%.

Your competitor has little customer follow-up, so only 10% of customers will repurchase from them.

Here’s a summary of your competitors KPIs:

  • 1% Response Rate
  • 35% Conversion Rate
  • $500 price per widget
  • 1.5 widgets per buyer
  • 30% profit margin
  • 10% repurchase rate

Assuming the ad reached 10,000 target customers, your competitor’s profit from the ad would have been $8,662.50 (minus the cost of the ad).

Now, let’s assume your company ran a similar ad, but did a 20% better job on each KPI than your competitor. Except, let’s assume that you still charged the same $500 per widget.

So, your KPIs would be:

  • 1.2% Response Rate
  • 42% Conversion Rate
  • $500 price per widget
  • 1.8 widgets per buyer
  • 36% profit margin
  • 12% repurchase rate

With these KPIs, if your ad reached the same 10,000 target customers, your profit would have been $19,596.

That’s 2.3 TIMES greater than your competitor’s profit.

So, what would happen if you generated 2.3 times greater profits per impression than your competitors?

Answer: You would absolutely dominate them!

You would advertise them out of the market. You’d be able to advertise in places where they couldn’t. For example, if that ad space cost $10,000, they couldn’t have purchased it (since they only generated $8,662 in profits from it). But you would pay for that ad all day long.

So, how do you get 20% higher Profit Per Impression KPIs than your competitors and absolutely dominate them?

Let me show you:

Response Rate

The first metric where you beat your competitor was response rate. This was the percentage of people who heard/read/saw your ad and contacted you. How do you improve this rate?

Well, there are a few answers. First, the more you really knew about whom your customers are and their wants and needs, the more you could design advertisements that really appeal to them.

Likewise, the more you know about them, the better you could craft a USP (unique selling proposition) that attracts them.

You could also boost response rates by developing better “offers” that attract customers (such as an offer giving them a 90-day guarantee).

Conversion Rate

The next metric on which you could have beaten your competitor is conversion rates, or the percentage of prospective customers that you converted into actual customers.

You could have done this by having a better process for training your staff and sales team, by providing a better culture and incentives for them to perform better, and/or by developing and testing sales scripts that boost results.

Number of Widgets Per Buyer

The next metric on which you could have outperformed competitors is the amount of their initial purchase. You could have gotten buyers to purchase more widgets. Or, you could have upsold them on related items they needed. In either case, customers would have paid you more money per sale. Like with conversion rates, you could have achieved this through better hiring, training, etc.

Profit Margin

By better systematizing your business, and implementing the right operational processes and procedures, you could generate higher profits per sale than competitors.

Repurchase Rate

The final metric where you beat competitors was “repurchase rate.” This is more commonly referred to as “customer lifetime value.”

By doing a better job of communicating with your clients, and showing them how special they are, you would get them to buy from you over and over again. This would give you a massive competitive advantage.

What I just showed you was a way to dominate your competitors. I mean really dominate them.

The bad news is that this takes real work, as the things I showed you (particularly improving profit margins) require you to go through and improve every aspect of your business.

However, there are seven things you can do very quickly to start dominating competitors. Mainly:

1. Clearly define who your customers are and what their biggest needs are that you can fill.

2. Based on this definition, develop a unique selling proposition (USP) that really appeals to them.

3. Develop an offer that makes prospective customers contact you (e.g., call you, visit your website/store, etc.).

4. Hire and train better so that your sales and other staff boosts conversions, that is, increases the percentage of prospective customers who become actual customers.

5. Develop an upsell strategy so that you increase the transaction price each time customers buy from you.

6. Improve your communications with your customers (e.g., customer newsletter, emails, telephone calls, etc.) so they stay loyal and buy from you more often.

7. Track each of these areas to ensure your performance in each area improves month after month.

You CAN do this; so get started today.

The resource below will walk you through achieving these seven steps so you can dramatically boost revenues and profits and crush your competition.

Suggested Resource: Growthink’s Ultimate Marketing Plan Template allows you to expertly create your marketing plan. Importantly, it allows you to quickly and easily achieve the 7 steps above, and much, much more in order to dominate your market. Click here to learn more.

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