Our founder, Joshua Hanosh, recently had lunch with one of our clients who is a gym in the Roseville, CA area. They are now in their second year of business and are killing it. However, they have reached a bit of a plateau in membership growth which is why their founder had lunch with Josh. We have been running ads on Facebook and Instagram for them with a budget of $50 per month total for both platforms combined. Not much in terms of ad dollars, but something is way better than nothing!
They were talking about strategies for the new year especially since the first quarter of every year can make or break a gym, and Josh suggested spending more money on social media ads. The owner gave Josh a sideways glance and basically said he hasn't seen much from the $50 a month he is spending already. Josh asked how many new members the gym had gotten directly from social media. The owner said four in a very unenthused sort of way. Then Josh asked how much added revenue does that equal for the gym per month. The owner said $480 per month. The Josh said, "So basically you're spending $50 a month to get $480 per month. That's incredible! In fact, we could stop the ads right now and that would mean you spent $150 (over the past three months) to gain $5,760 this year ($480 x 12 months). That's incredible!" The owner looked at Josh and said he had never thought of it that way and then said to triple the ad budget!
The dollar amount you spend on ads and the number of new clients or customers you gain from those ads should always be put in perspective both in terms of revenue gained and in relation to competitors. Always look at the dollar amounts your ads are generating in terms of revenue versus how much you spent. Don't look at the number of people you've acquired. Yes, thinking that three months of ads at $50 each only earned you four new members can seem depressing until you look at the return on the investment. There are a TON of companies out there that spend thousands of dollars just to acquire one new client because that one new client is worth tens or hundreds of times what they spent on ads.
This is exactly why we take the mindset that advertising, if done properly, should be looked at as an investment. You should be able to see a healthy return from your investment in advertising. For businesses that rely on high volumes to make a profit we build ad funnels that get seen by lots of people, so that the cost is low per new customer (because there are more of them). For business like the gym where customers spend more, we build ad funnels that target a select audience more specifically. These are more expensive per customer, but that is because we are trying to get people to commit to a more expensive item or service. The point being..? There is an ad strategy for everyone as long you have the patience and the expertise (or hired expertise) to see your advertising through.
If you like to learn more about ad strategy you can check out another blog we wrote here about how your ad strategy is similar to washing your car. If you like to schedule a free phone call or in-person informational meeting with us please email Josh at email@example.com.