3 Reasons Your Ads Are Underperforming (and How to Fix Them)
Let’s paint a picture here:
Your business was booming…
…but now you’re creating countless ads that aren’t performing.
Your launches are getting smaller.
You feel like you’re throwing money at efforts that aren’t paying off.
Lo and behold, you’re putting all of your eggs in the customer acquisition basket – to no end.
The truth of the matter is: Even the best ads in the world won’t save sluggish sales.
If you want to scale your business with ease, only focusing solely on acquisition and neglecting your best assets – namely, your existing customers – won’t help you meet those key business objectives.
Instead, turn your attention to the customers you already have in the fold. The ones you don’t need to spend any additional money to acquire – just your care and attention.
Your customers love you. They want to buy from you. And while only 12% of your customers will become repeat customers, they’ll account for 44% of your total revenue.
In this article, you’ll learn how to scale your business by spending as little money as possible trying to attract new customers.
We’ll also teach you a fundamental "backend" ratio you can use to measure the impact of your retention effort. You’ll learn quickly how it's the defining factor in differentiating flourishing businesses from ones that stagnate.
First, let’s double tap on an issue you’re likely facing: the ad spending trap.
Are you in the Ad Spending Trap?
Is this you?
You set up an ad campaign on a platform like Facebook, targeting potential customers. You’re spending around $1,000 a month, maybe more or less.
The results are fantastic, doubling your investment.
Elated, you scale your campaign, thinking, "If $1,000 brought in $2,000, investing $10,000 will surely bring in $20,000!” Sadly, as many discover, the returns diminish. Instead of making profits, the numbers start to slide in the wrong direction.
Striking the Golden Ratio – LTV:CAC
If you’re seeing your ad campaigns take a turn for the worse, understanding the success of your ad campaigns and business scalability is rooted in understanding and leveraging the LTV:CAC ratio.
This golden ratio shows the relationship between the lifetime value of a customer and the cost to acquire them. A healthy LTV:CAC ratio (ideally 3:1) means you're spending efficiently on advertising while maximizing customer value.
If you’re burning money to acquire customers, and they aren’t sticking around for long, your business won’t be scalable. Point, blank, period.
So here’s the big question: How do you retain more customers and hit this coveted golden ratio?
Boosting Your Lifetime Value: Three Core Principles
If you’re seeing stagnation in your business, it’s likely because you aren’t addressing one or more of these three core areas for opportunity. Creator CEOs of successful businesses have built thriving businesses based on these principles:
1. The 3X Rule
Every day, we see creators fail to address one very, very solvable issue:
You don’t allow your customers to spend more money.
If you have one service, one product, or just one thing for sale, your business can’t scale.
From studying SamCart’s database, we know the most successful businesses and the highest-earning creators tap into the power of Expansion Revenue and allow their best customers to spend 3X more than whatever their initial offering is.
Take, for example, a $200 digital marketing course as a base offering. Expansion Revenue could include:
- Bonus lessons or certifications
- 1:1 time with the course creator
- Access to an members-only community
- Exclusive event invite to meet with digital marketing professionals
The goal here isn't to exploit but to provide genuine added value.
Our data shows that creators who employ this method boost their average order value by an impressive 129%.
2. Whales Dive Deep
Your top-spending customers, or your 'whales', view their money as a tool. They are willing to invest heavily in products or services that they see value in.
Catering to their needs and ensuring they have opportunities to deepen their engagement with your brand can lead to substantial growth for your business.
This could mean offering premium versions of your service or introducing new, exclusive offers that cater specifically to them, which leads us to…
3. Build the VIP Section
Everyone wants to feel like a VIP – and those customers you identify and cherish with an exclusive VIP section within your business ecosystem will pay you back ten-fold.
Go into your dashboard – whether it’s SamCart or any other platform you use – and sort your customers by LTV. Take those who have been with you the longest and spent money with you, and create your VIP section, red carpet and all.
This VIP section could be anything relevant within your business: Early content access, lifetime courses, personalized coaching sessions, a dedicated account manager; anything that adds value and goes the extra mile to enhance their experience.
The end goal? Cultivate an even longer lasting relationship, not just occasional transactional interactions.
The secret to defeating sluggish sales
Doubling down on underperforming ads won’t help you reach more of your ‘whale’ customers. They already exist, because they’ve already bought from you.
Scaling your digital business means understanding and maximizing the lifetime value of each customer, especially your high spenders.
By addressing the three core principles mentioned above – The 3X Rule, Whales Dive Deep, and Building a VIP Section – you can substantially increase your growth potential. Baking these practices into your business practices will ensure you never have to rely on just acquisition alone, and you’ll hit that golden ratio of LTV:CAC with ease.
If you're a creator who’s already making waves in the digital realm, netting thousands per month in your business, consider replacing your existing checkout process with SamCart’s new CheckoutOS.
Our platform offers the fastest checkout on the Internet, coupled with advanced tools to help you optimize customer lifetime value.
Unlock the potential for more customers to spend more, more often.
Visit www.samcart.com/vip to discover how the right tools can transform your digital empire.