In this day and age it’s pretty common for a business to have a presence on Facebook or Instagram. In fact, some businesses don’t even have a website and rely solely on Facebook. This is a big mistake in our eyes, and you can read more about that here, but that’s not what this post is about.

You can use Facebook and Instagram for your business in an organic way and share posts that inspire and encourage your ideal clients to take action, and/or you could use paid advertising to increase your business growth, reach more people and amplify your sales, much faster than is possible with organic social media and content marketing.

If you’re not already running paid ads and are wondering if it might be a good move for your business, let’s look at what a return on investment could look like for your business.

I want to put a disclaimer here that there’s no such thing as a guaranteed return on investment with Facebook advertising, and anyone who promises you this isn’t being fully transparent.

Facebook itself states in their ad terms that they “do not guarantee the reach or performance that your ads will receive, such as the number of people who will see your ads or the number of clicks your ads will get.”

They also state that they “cannot control how clicks are generated on your ads. We have systems that attempt to detect and filter certain click activity, but we are not responsible for click fraud, technological issues, or other potentially invalid click activity that may affect the cost of running ads.”

So if you come across anyone promising guaranteed results, question their integrity.

As for your business, let’s play with some numbers to see what is possible.

First of all, you’ll want to know what your average conversion rate is, so you need to be across your numbers for the year (ideally a number of years).

To calculate your conversion rate you need to look at the number of enquiries you get vs the amount of those enquiries you turn into paying customers. Depending on your industry, the time from lead to conversion might be quite lengthy, so don’t discard a lead just because they didn’t purchase immediately.

Let’s say you get 10 enquiries and turn 3 of those into paying customers. That’s a 30% conversion rate. Conversion rates vary greatly in each industry and even more so in service based businesses vs online business. A “good” website conversion rate falls between 2% and 5% across all industries for online businesses. Thankfully services generally see a higher conversion rate, but like I mentioned, it depends on the industry.

Knowing your conversion rate will help you calculate how many leads lead to a certain amount of clients and revenue. So if your Facebook ads bring in 40 leads and your conversion rate is 15% they you can expect to get 6 paying clients.

The next step is to know your average order value (AOV).

How much does someone generally spend with your business?

To calculate the average order value you need to look at the total revenue in a specific period and divide it by the number of orders in that same period.

For example, let’s say that in the month of January, your total sales were $25,000 and you had a total of 10 orders. $25,000 divided by 10 = $2500, so January’s monthly AOV was $2500.

Ideally you do this for a few months to see what the overall average order value is, and if your business serves a seasonal market then it would be good to know it per season or even per quarter so that you can plan ahead or know when to expect highs and lows.

When you know your numbers it becomes a bit easier to predict results. For example, if you have a revenue goal of $75,000 for Quarter 1 and you already have 10 jobs booked in at an average of $2,500 you’ll be able to calculate how many more leads you’ll need to attract to meet your revenue goal.

Of course you will need to consider lead time and the variation in order value but a somewhat accurate estimate is better than a blind guess.

Facebook advertising can help you attract more leads as well as help convert them to purchase.

The beauty of Facebook ads is that they can get you in front of an audience that may not have otherwise found you.

With Facebook ads you can show your expertise and start a relationship with your audience to build trust and authority. My clients and I have found it the fastest way to attract new leads and speed up the sales process.

If you’re interested to learn how Facebook ads can help you grow your business, get in touch for a free consultation.

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