Part 2 – Scaling
So how did we get from being pretty geeked out about crossing six-figures in sales to doing this in January 2019??
The answer is that we decided to SCALE!
To get that $255K in sales we needed to spend $103K on ads.
So let’s talk about the mindset shift - because of this an important lesson for e-commerce store owners.
Too many people are focused solely on what I call “Day 1 ROAS”. What that means is that they want to make as big of a return on Day 1 and won’t scale unless they can keep that same level of return - which in most cases is impossible.
When we were spending between $10K-$20K a month we were able to consistently get 300-350% ROAS. When we scaled up to $100K a month in spend now we typically get between 200-225% ROAS. So if you are looking at it strictly from a “Day 1” perspective you may be wondering why anyone would ever want to scale.
When things are working well - scaling is important for lots of different reasons. Let’s talk about some of them.
More Sales Allow You to Put More Money Into Your Business - the difference between when CurlMix® was doing $20K in sales compared to when they were doing $100K and now $250K+ is MASSIVE. With that extra cash flow, they can afford to hire new team members, introduce new product lines, get access to more capital, and get better prices on products. This doesn’t happen if you aren’t open to scaling.
You are Making Your Business More Valuable in the Long Run - Customers are always an asset - especially when you have your backend marketing in place. It will always be cheaper to get an existing customer to buy again than it is to acquire a new customer. Imagine that on big sales such as Black Friday, you know that 15% of your previous buyers will purchase for an average order value (AOV) of $50. A buyers list of 1,000 is worth $7,500 in that scenario while a buyers list of 10,000 is worth $75,000! If you are running numerous sales like this per sale ( and you should)...that equals a boatload of extra sales.
You Begin to Take More of The Market Share - When other advertisers are spending more money than you - that means they are giving themselves more chances to acquire the customers that you want to acquire. If someone buys one of your competitor's products yesterday - chances are slim that they are going to be interested in buying your product today.
You Make It Harder For Smaller Brands to Compete - Being in business isn’t always about being warm and fuzzy. In most cases - your competition doesn’t want to see you succeed - especially if it is at their expense. When you understand the value of scaling...you start to make it tougher for those competing with you. If your brand can afford to pay $50 to acquire a customer because you have things dialed in and your competition can only pay $25 - you have a massive advantage. You have the ability to make it hard for them to reach their customers because they aren’t going to be comfortable with the cost of “playing the game”.
Makes Your Business More Sellable -Think you may be interested in making a seven or eight-figure exit? Good luck if your customer list is five-figures or less and you aren’t adding thousands of new customers a month. That is impossible if you don’t embrace scaling.
How Do You Know When To Scale?
So now that we hopefully all have aspirations to scale bigger and better than ever. The problem most people have even if they want to scale is figuring out how much they should start spending. Knowing your numbers is absolutely critical here. If you scale blindly just because you fall in love with the allure - you are putting your business in a precarious place.
The answer to the question is simple. You should scale as long as your margins allow you to do so. If your Facebook Ads are barely breaking even at $100/day, then you would be foolish to start spending $1,000/day. However, if you are spending $100/day and your ROAS is 1000% then that is a sign that you are leaving lots of money on the table by not scaling.
Want access to the e-commerce scaling calculator that we use to determine if our clients should scale and if so to how much money? Check it out here →.