Transcription
Hey everyone, Pat here.
So, the other day I was on a call with a founder who was shifting from basically acquiring customers using mostly referrals over to wanting to launch a cold email strategy to acquire customers. And one of the things that I've just noticed over time is that people shifting away from, you know, referrals and accidental client acquisition kind of struggle to calculate the true cost to generating customers with their effort. And a lot of times they have this feeling that, you know, cold email is super cheap. And and while it's it's a lower cost to acquire customers than say something like a Facebook ads, you know, met ads, Google ads, that kind of stuff, there's still a cost associated to it.
So, there's hard costs, there's learning costs, there's soft costs, there's downtime costs, there's all these costs that go into really anything, whether it's cold email, whether it is learning, you know, ads, whether it's, you know, LinkedIn, cold calling, there's costs to acquiring customers. So, I thought it'd be valuable to set the record straight on cold email costs and opportunity costs and actually do the math and give you a resource. This document I'm sharing here is a resource you can use to calculate the cost of things. So, I want to go through this with you and show you what people typically experience and then I'll show you a a better way to acquire and save, you know, time, save money, all that kind of stuff.
So, typically like the the old way when people think about it is that, well, first of all, they don't value their time. So, what you need to do is you really need to think about the value of your time in terms of effort that it's going to take to calculate what it's going to cost to acquire a customer, right? A lot of a lot of you are sitting there thinking like, well, you know, this cold email tool is a hundred bucks a month and so it's only going to cost me a hundred or $200 to acquire customers. In reality, it does cost you much more, not just on tools, but but on on the time value.
So, let's just say you value your time at a $100 an hour. Okay? So, you know, if you worked, you know, 2,000 hours in a year or something like that, you you know, you'd value your time at a couple hundred thousand a year. Now, it's going to cost you time and money to book meetings in order to close deals. So, let's say that you want to book 20 meetings per month. And let's say you can book those meetings and you can close at 15%. This is assuming like we don't have any no-shows. These are how many people would like show up to a meeting. Okay. Your actual cost to book a meeting, especially if you're newer to cold email or you haven't succeeded with cold email in the past despite maybe some efforts, is going to take probably somewhere close to 5 hours, maybe even more, 5 to 10 hours, I want to be conservative here.
What goes into that? You've got costs like domain and inbox setup. And while you might think, hey, I just got to set up, you know, five email accounts or 10 email accounts. Once I set them up, I'm done. That's not true, actually. So, yes, you do have to set up email accounts from the beginning, but you probably need to set up way more than you think to get this desired outcome. I've got a different calculator for that, but it's actually going to take you time ongoingly to set up new domains, new inboxes, reauthenticate them, you know, a whole bunch of stuff. So, the cost per meeting is closer to like two hours by the time you have to set up multiple domains, multiple inboxes, and just do this on a repeating schedule. Okay?
Then there's costs for list building. You know, it might take you an hour to build a list for every meeting that you generate. You might spend an hour crafting and launching a campaign and then another hour to manage the inbox, your reply, all of that kind of stuff. Okay? So, once you total all of this stuff up and you've got, you know, 20 meetings times five hours, that's a 100 hours to generate 20 meetings. And if you're valuing your time at anything reasonable, let's say it's the $100 I entered here, the time value of that is $10,000. So, it's it's not zero dollars. All right. This is time that you could be spending on, you know, something else. Could be spend, you know, in your business, taking care of customers. There is a cost associated to running this. And cold email is no different than anything else. It would cost you the same time if you're running Facebook ads for instance. Like you got to learn the ad platform. You've got to spend money on ads themselves. And then you've got other third-party tools and things like that. And these, you know, Facebook ads specifically can take you years, months at least, and days to launch, months to fiddle around with, and years to really master. Okay? And cold email is really no different. Okay?
And then you've got things like learning curve and downtime. Okay? So, you might be able to, you know, get five, you know, spend five hours and generate a meeting, but it's going to take you time to learn it, right? You might be researching YouTube videos. You might be launching and spraying and praying campaigns, getting zero results whatsoever, figuring out how to fail basically. I mean, that's that's how we learn a lot of times. There is a better way, of course. So, you you've got learning curve and downtime and and that's around three hours per meeting initially to get things set up. Then you've got tools and data. So, you've got not you know your sequencer. Again, it might be cheap. You know, it might be a hundred bucks for a sequencer, but there's your inbox costs, there's your data costs, there's other third-party tool costs, there's a number of costs that that go into it, domain costs, all that kind of stuff, right? So, this stuff actually costs money and a lot of times people waste money on costs they don't really need, like for instance, too many leads, targeting the wrong leads, right? The lead data might seem cheap in the beginning, but in the long run, when you start having to just crank up volume because you're not getting the results, you got to spend more and more money on things. So, it seems cheap to get started, but by the time you fiddle around with things and you fail over and over again and then maybe even quit there, there is significant costs here.
So, under this scenario, your cost per meeting is actually closer to $875, which is a drastic comparison between what you might think it should take because you're used to relying on things like referrals and what I call accidental growth. And your cost to acquire a customer might be $5,000, $6,000 really, if you're valuing your time. So, your time is obviously a big piece to that. And under this scenario, you might get three customers. And to acquire those, it might cost you $17,500. And you you you got to stop calculating your time as being worth nothing. Okay? Your time is not worth nothing, right? If if you could have been taking care of customers and you shift focus away from those and you start churning customers, that's going to cost you money. It's opportunity cost. Okay? So, your time is absolutely worth something.
Now, there is a better way to run this. Okay? So, if you ran a better way, what we call the the overdrive method, if we we keep your time value the same, but let's just say we can get you better results just at 50% increase and keep the same closing percentage, your hours per meeting can reduce substantially. First of all, you could get rid of the domain and inbox setup on an ongoing basis. You can save a ton of time on list building. I won't go into how we accomplish this. I'm just giving examples here and what we can actually do. But and then your time to create campaigns goes down, your time to manage your inbox goes down. So now instead of spending five hours per meeting, we can spend closer to an hour per meeting. That's a savings of four total hours. That's significant when you are actually valuing your time. And the time value cost is is only $3,000 instead of $10,000. It's a savings of $7,000.
And your learning curve be if you're using just a proven process, a framework, blueprints, you've got the right guidance, the right coaching, the right person, you know, that is helping you actually achieve these kind of results. You don't have to wander around and figure these things out and come to realize like you failed on your own and then maybe you move on to the next growth channel which you start the whole process over again. You're going to have the same learning curves, the same opportunity costs, soft costs, hard costs, all that kind of stuff. Your hard cost might even be higher, right? But if you actually use a proven process, your learning curve and your downtime can effectively drop to zero. Instead of spending six months or a year struggling to figure something out, you can shorten that down to basically nothing.
Now, in order to get, you know, a little bit more meetings, right, we might be spending a little bit more on tools and data. So, in this case, it might be lower, but our average cost per meeting actually goes down. Our average cost per customer actually goes down. The total number of customers that we can acquire goes up. the total acquisition cost significantly goes down. But either way, under either scenario, it's, you know, it's going to cost you money to acquire customers. All right? But if you sit around and struggle to figure it out and and then just fail over and over again, and you never figure it out, the opportunity costs are substantially higher. Your risk to run this is substantially higher. So, if you if you've got a 5% or 10% odds of being successful under under this model by doing it yourself versus potentially, you know, 3xing, 5xing, maybe 10xing the probability that you are actually successful and at the same time lower your acquisition costs, that's a win-win. Okay?
So, it's it's absolutely worth investing in. Even if it costs a little bit more money upfront to do to learn to have somebody help you implement it the right way, get you past that learning curve, right? Then it's worth the time, effort, and money to do it because your acquisition is going to be much cheaper. Then eventually you can start putting some butts in the seat, okay? And replace your time. But under this scenario, it's much harder. And if you think that hiring just some random person, a VA, you know, so on and so forth, is going to get you get you through it or or a dedicated employee to do it who doesn't actually know what they're doing, they're not an expert, they haven't obsessed about this for years to figure it out, you might actually end up having more costs on top of this, right? If you pay somebody to do that for months and you don't get any results, that is sunk cost versus taking some guidance and some coaching and and using proven processes in a different way. thing is one you increase your probability of actually succeeding meaning the risk that the investment doesn't pay off is much much lower even if it does cost a little bit more money upfront. Okay.
So I want you to start thinking about the true cost of actually acquiring a customer and not thinking of cold email as just this cheap channel that is you know the next best thing after relying on accidental growth with referrals and and things like that. Okay, it does cost money and while it is cheaper than other channels, it's going to cost some money. So, you need to start thinking about your true acquisition costs, the hard cost, the soft costs, right? The opportunity costs. All right?
So, if you want to use this calculator, I know, you know, might seem, you know, pretty basic, but if you're thinking about launching cold email or you have launched cold email, maybe you haven't been as successful as you want to, I want you to start thinking about the true cost to actually acquiring a customer. Because if you run Facebook ads, it's not going to cost you $0 to acquire a customer. You got to spend the time. you got to give Facebook or meta ads, you got to give them a budget every single day and you got to pay that into the coffers every single day, right? It's not a lot different with cold email, although we have some advantages. It is cheaper usually on average and you know there's there's just less propensity that you're going to fail and you're going to be able to directly target the people that you actually want to target whereas you're relying on Facebook for instance to serve your ads. Cold email is absolutely a cheaper method, but it makes a lot of sense to get some help doing it and to start understanding true acquisition costs and opportunity costs. Okay, so use this calculator if you'd like. The link is down below in the description. And our overdrive method can absolutely help you achieve this and see a significant savings in the time it takes you to generate a meeting and over the long run save you a lot of time, a lot of money, a lot of headaches. All right. So, click the link in the description. If it makes sense for you to and you want to reach out, book a call with us and we'd be happy to walk you through and show you our offer and how we can actually help you achieve a reasonable acquisition cost. Hope this was helpful. See you.