Podcast: The maths behind scaling
When talking about sales, lead generation, and exciting things like scaling your business, few people want to think about maths.
However, those with an understanding of how their business is mathematically linked have far more control over how to grow it and run into far less surprises and roadblocks along the way.
In this short video I give you the equation to scaling your business and how having a better understanding of your numbers can help you grow your business substantially.
So what this really means at its core is not just how do you make more money, but how do you make more money at a higher rate? That’s what it really comes down to because making a million dollars over 50 years is not that exciting. Making $50 in you know, five minutes, obviously, same amount of money, but completely different things. One is far more scalable and one is less. So when we’re talking about scaling, ultimately what we wanna try and do is make our time more valuable. So let’s start by saying, we need to look at our time and consider it as all right, what are we trying to improve on?
We’re trying to improve our rate of earning, all right, so that means we’ve got two things. We’ve got money and we got time. So what your hourly rate or the amount of value you can get out of any particular unit of time or your day, really comes down to is your customer, let’s just talk in averages, customer lifetime value divided by, minus costs. Sorry. All right, we’ll start all the way over here, let me get messy. Customer lifetime value. So how much on average your customer’s worth to you over a period of time, minus cost divided by, how much time it takes to serve your client, plus the time to acquire your client.
Now, a lot of you are probably thinking, who cares? I hate Maths, shut up. Not interesting, stick with me. It is good to know this kind of stuff, all right. So customer lifetime value minus the cost divided by the total amount of time. So the time to actually acquire them through your marketing and sales efforts, and then the time to actually serve that client. So the time that it takes to provide value and provide a service. This is your actual potential rate to scale, your potential earning rate. Too many people only look at customer lifetime value.
Sometimes minus the cost of the client, the work they do with the client themselves divided by the time to serve. And they completely forget this time to acquire and this cost to serve and more so the cost to the cost to acquire. So if we break it out even further, we can say, our average customer lifetime value minus our cost to acquire. So marketing plus sales cost per acquisition, plus cost to serve whatever costs that you inherit as part of your service. Obviously we’re talking in averages here, divided by once again, your time on marketing and sales plus time to serve.
All right, that’s a big, long-winded equation, and you’re probably thinking, what’s the point of all this? Now, if you’re a big nerd like me and you track your time, which I highly recommend you do because you get a lot of information about how you can optimize your day and how you can actually scale your business. So the point of all this is if you are capable of tracking your day, which I recommend because not only do you get more information, it does force you to be more efficient with your day. It kind of gamifies it. Because you start to get all this valuable information about how valuable your time is, and you start to wanna be more efficient because you wanna increase these values.
And then you can start to see where you, when you put all your time in, it doesn’t just mean you have to charge more to make more or sell more, to make more. You now have all these different levers because it’s a mathematical equation. You say, if I can just spend more, allowed, get more time in the day to, on marketing and sales, then I can increase this value. So you start getting, if you know these figures and you measure all this information and you have all this data in your business, you can start really understanding where you can add the most value in your business because it’s a mathematical equation and you can really start to optimize your costs, you can do some really interesting things.
You can even charge less for your service if it means that you spend less time to sell it on sales calls. So just some food for thought when it comes to scaling, it is pure Maths, and if you can get, the more information you can get around your customer, average customer lifetime value, what it takes to acquire a client, each of your different platforms and where, what the different cost per acquisition is for everything, then you can really start to understand, well, hey, if I cut this out and put something back, then I’m gonna get better results.
So something to think about, some fun numbers, some equations to play around with, and some more incentive to start getting more data around where you’re putting your time in your day, your most valuable resource and how to maximize your time and really scale your business properly. Anyway, that’s it for today, hope you got some value out of this. I know I get a lot more excited about Maths than most people, but it is really useful and really powerful stuff.
So that’s it. I’ve been Ryan Caswell from B2B Leads.com, if you wanna learn more, just head to B2B Leads.com. Have a great day, cheers.
Ready to take your LinkedIn lead generation to the next level?
Book a call with our team, learn more about what makes us different and whether or not our strategies would be a good fit for your business.