One Surprising But Effective Formula for More Income

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In business, sometimes it feels like you’re throwing spaghetti at the wall and hoping it will stick. But today I’m going to share with you what I call “The Rule of Fifths” to give you some context through which to measure your success.

It is easy to get frustrated and discouraged. You may put on a workshop and only get one inquiry into your business. Or you put out a Facebook post to crickets. Finding marketing that works is a challenge for any entrepreneur; it often takes patience as you test and tweak.

I often see business owners have a high expectation for results. You may be hopeful that in putting out one flier, this automatically guarantees a flood of response (it doesn’t, especially if you only put it out once).

In comes the Rule of Fifths. Using this simple formula, you can reverse engineer your marketing strategy from your income goals.

How does the Rule of Fifths work?

So how does it work? Just some simple 3rd grade math as follows. I’m a big advocate for building your business offline, so I’ll use this example:

You offer a workshop. Thirty people show up. We want 1/5 of those to inquire about our services and request a consultation = Six people

You get on the phone with those 6 prospects. You want 1/5 of those prospects to become a client = 1 new client.

If you follow my system of using high-ticket packages, that one client could be worth a $4K Day for you.

If you are undermining your value or only charging by the hour, all this work may not produce a lot of income from one client. In that case, you would need to either increase your marketing or increase your pricing model (the latter is recommended).

An Example

Let’s take this a bit further. Many of you may have been excited about the possibility of online marketing and using FB ads to attract clients and sell your products on a webinar.

But let’s check out that math first. If you use webinars, you need to use this formula to consider how many people need to see your online marketing and thus your ad spend.

Say you create a FB ad. For every 500 clicks, you want 100 to sign up for your free webinar. Of the 100 who signed up, it is a good conversion if 20 people show up.

Of those 20 people, you want 4 people to buy the product you sell on the webinar or better yet, to get on the phone with you (this is recommended over selling a product).

Those 100 sign ups could cost you up to $1,000 in FB ad spending — more if you don’t know what you’re doing. If you sell anything for less than $250, you lose money. Sigh.

Striving for more income

I don’t recommend this online model at first because PLEASE take it from me — it takes a lot of skill, time and money to up level to the point that you can be this effective.

That is the thing about this rule: it is a rule to STRIVE for, but generally not where most entrepreneurs start. It is your goal to convert using the Rule of Fifths, and this requires having a strong foundation for your business and excellent sales skills.

Let’s consider you do have that strong foundation and you are a rock star seller, then this simple formula is a great way for you understand what it takes to meet your income goals.

If you sell a $4K package as a service-based entrepreneur or consultant, but you want to make $12K a month, you need 3 clients a month. Which means you need to do 3 workshops a month, assuming 30 people attend each. Or you need to have 90 people on your one webinar.

Or perhaps you are networking. You need to strive for 15 phone consults a month to obtain 3 clients. So how many networking events would you need to attend then?

Setting realistic expectations

It is important to use this formula to set realistic expectations. I remember being discouraged when only one person out of five phone calls became a client.

It helped me to understand that this was actually a good conversion rate. I was focusing on the four people who had said “NO” and thought something was wrong with me. No, sometimes it just is simple math.

If you aren’t hitting these numbers yet, then here are some things to ask yourself to determine where to focus:

1. Do I know my ideal client and am I targeting them? (If you are barking up the wrong tree in your marketing, this formula won’t matter.)
2. Am I clear on what I offer and is my messaging compelling?
3. Am I taking enough action? You may need to increase your social media, make more phone calls, or network more.
4. Am I effective in my sales conversations?

When you fix the missing links and this conversion of fifths becomes the RULE for you, not the exception, you don’t need to stop there.

That is when you can start to further up level your marketing and sales skills. I now have almost a 50% conversion rate when someone gets on the phone with me because I chose to uplevel my skills in sales through mentorship and training. This way I don’t need to rely on spending a lot of money brining in a ton of leads.

I hope this simple formula will give you some more guidance on how to look at your business strategy. If it overwhelms you, then be sure to get support (you know where to find me -wink)!