How to help customers see a budget from YOUR perspective (real customer transcript)

Originally the title for this post was “how I magically created a 99000% ROI ($2.5 million) from a $2500 spend.

That title is absolutely clickbait and was supposed to be a clever response to a particular customer I was thinking about.

This instead, is a transcript (edited) of a conversation I had with a customer who wanted to generate $2.5 million from their business.

Some of you might have read this post, about a woman who wanted a 99 900% return on her investment. £250 000 from £250.

Incredibly, this is ANOTHER story about a different person.  A customer who had far higher goals.

I suppose it’s a good sign that after almost 2 years, people expect $2.5 million rather than $250 000.

Still, the ability to provide a $1000 return on every $1 spend would LITERALLY make me the richest person in the world. As I am also literally writing this myself, you know that can’t possibly be true.

So when customers come to you with an unrealistic budget expectation AND they want to argue the point with you, remember this conversation I had with my customer.

By the start of the conversation, I already knew their budget. I also knew a bit about their business and what they sold. When they told me the budget, I told them it was too low. WAY too low. Even for the bare minimum of their project, I couldn’t deliver it.

How much do you want to make?

Me: OK, so how much does your business need to make? You’ve told me your budget and I want to see what I can do for that budget size of $25000.

Customer: Our revenue goal is $2.5 million

*Audible silence from me*

Me: You want to generate two and a half million dollars? US dollars? Surely not from your $2500 budget?

Customer: The $2500 is our budget for the initial funnel design and implementation. We’ll be providing the content and traffic. We also need a CRM and autoresponder system. We’re happy to pay per month for that.

Me: OK, so just to be clear. Your business is expected to generate $2.5 million in revenue this year. And the $2500 is going to build a simple funnel to help with that?

Customer: Yes

Me: I need to be crystal clear. How much of that $2.5m is my $2500 expected to generate?

Customer: What do you mean?

Me: Well, of the $2.5m in revenue, how much of that will be a result of your $2500 spend?

Customer: Errr…*silence* all of it? I don’t understand what you mean? We need you to generate $2.5m for our business. We’re paying you. We’ve got a budget.

How many units is that?

Me: OK. So you want to bring in $2.5m in sales from spending $2500?

(By this point, I was already losing interest. I knew the project wasn’t going anywhere. But their next comment made me want to explain that their goals we’re fucking mental impossible).

Customer: I’ve been told that our budget is perfectly acceptable. You shouldn’t have taken the project on if you aren’t capable of handling our goals.

Me: How many units is $2.5m in sales?

Customer: We have over 100 products. It’s impossible to say.

Me: Average customer transaction then? I need to know if this is one $2.5m sale of 2.5m $1 sales.

Customer: I suppose the average customer buy is around $10 000.

Me: So around 250 sales? That means for every $10 I spend of my budget, you want a sale?

Customer: Yes. But as we’ve mentioned before, we’re spending on traffic and content. We just need the system to manage the sales and automate the payments.

(At this point, it sounds like a simple project. One sales page? Obviously not. They think they have over 100 products and they aren’t even focusing on one customer or one product. If we estimate with the 80/20 rule, I estimate that they sell 20 products regularly. Which would mean 20 sales pages @ $125 per page. It just isn’t going to happen).

How large is a $2.5 million revenue increase for your business?

Me: How big is the impact of $2.5m on your business? What would that be as a percentage of your total revenue?

Customer: Last year we made $2 million in revenue. This year we’re expected to do $2.5 million.

Me: OK, so is the $2.5m that you’re referring to in my project? Surely if you’re close to doing it, what you’re really looking for is a $500 000 increase?

Customer: No, that estimate is exclusive of our project with you.

Me: You want to double your business size? You want to double your revenue, for $2500? You want a 100% increase in business income from spending $2500?

(By this point, they started to get it. I honestly could not believe that someone would be this naive. I say someone, this was a 14 person business. They had media coverage, interviews, customers, nice office. However, the next question put EVERYTHING into perspective).

How much did you spend to get to $2 million last year?

Me: So, this is beginning to sound less and less likely that I can help. I just don’t know how I can do this for $2500. What have you spent to get to $2 million?

Customer: You mean our customer costs and previous marketing costs?

Me: Yeah. What are those and what have you spent?

Customer: Well, the initial investment rounds were expensive. We had to meet investors. But last year the investment cost much less.

Me: What do you mean investors? Like pre-sales? I meant how much have you spent on marketing to generate the $2 million in revenue?

To cut a long convoluted story short, this customer had NO revenue. What they had was investor backing reaching almost $6 million. They were relying on VC funding and investment to keep the business going. They CONFUSED investment capital with revenue.

I swear this is real. I could not believe this conversation was happening.

 

How many prospects and customers do we have to work with?

After hearing that their “revenue” was $2 million, I asked how many sales they’ve made. I couldn’t believe it took me this long to ask this question,

None. None sales.

They didn’t have a single customer. Not one.

No one had bought a single product from them since they started. They were running ENTIRELY on VC and investment funding.

Me: So how large is your list? Your list of leads?

Customer: We have an audience of around 3 000 000

Me: Wow! Why aren’t you emailing them?

Customer: We don’t have their email address, we just know they’ve seen our adverts and media.

Again – cutting it short. They had been spending money on print media, advertising, online ads, ppc and PR. But none of that had resulted in a sale.

Despite all that spending, they had NOTHING to show for it. Also, they had spent ALL their money. All their investment was gone. Hence a tiny minuscule budget.

So you want me to return $1000 on every $1?

I decided to wrap this up. I was pretty tired of talking them through the finer points of not spending money.

Me: So just to wrap up. You want me to return $1000 on every $1 spent?

Customer: Well, we need to recoup our losses and start to generate more income, otherwise our investors will back out.

Me: Great. I can’t help you.

If you didn’t work with them, why do you call them a customer?

In the past, they had bought some funnel strategy from me and some marketing consulting. Needless to say, I had no idea what was really going on in their business.

Eventually, I had two members of the team reach out and ask if I was still interested. I wasn’t.

I wish them all the luck in the world (it was last year, their UNSURPRISINGLY shut down since and split into different companies), but there are some projects which CANNOT be done.

Simple as that. I’d love to have helped them for $2500. But their expectations were INSANELY high.

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Mike Killen

Mike is the world's #1 sales coach for marketing funnel builders. He helps funnel builders sell marketing funnels to their customers. He is the author of From Single To Scale; How single-person, small and micro-businesses can scale their business to profit. You can find him on Twitter @mike_killen.