EPISODE 38

The second day was devoted to examining business plans.  Sasha really came out of the gate fast that day, challenging Bosco on virtually every point he made.  This was precisely what Bosco wanted.  He knew that if he could win over the most vocal skeptic in the class, the rest would follow.  It was a risky proposition though.  I had seen a couple of guys seated together during the first day who had kept the their arms folded in front of them, occasionally whispering to one another and shaking their heads.  They weren’t buying into it then and on the second morning they looked dubiously at Bosco as he ran down a table of figures associated with the cost of a single sale.

“Bosco, this is bullshit!” Sasha exclaimed angrily.  “You’re saying that our cost per television lead should be $100.  My own tracking shows that it’s more like $300, sometimes $400.  This may be a cheap game to play in Vermont and New Hampshire, but in the rest of this country, advertising costs real money!”

“She’s right!” another member of the class piped up.  “I’m paying about $250 a lead and most of them aren’t worth a damn anyway.”  This guy had been silent throughout the entire first day, but now he was riled.  Bosco looked at him.  His name was Herb Vance and Bosco had known him for a dozen years or so.  Herb was from Charleston, South Carolina.  He was bright, analytical, and completely oblivious as to how he’d set himself up as the straight man for Bosco’s presentation that morning.  He looked down at the notes he had been taking and started to read from them.  He began with a sheet that Bosco had handed out that ranked the top DesignatedMarket Areas in the country.  These DMAs showed the markets where television viewers and radio listeners could get similar broadcast content.  This also applied to newspaper coverage.  Your DMA was your whole world when it came to planning your advertising budget.

“You say that we should budget based on the cost per thousand people.  Well there are 320,000 people in my DMA, which isn’t all that much compared to some of the other people here.  But, it’s still a hell of a lot bigger than the size of your DMA in Vermont, Bosco.  How can these numbers make any sense when we’re all competing in such different markets?  It doesn’t make any sense!”

“Herb, I know you pretty well by now, right?  And you’re no dummy.  What surprises me though is why you and Sasha are so concerned about the cost of a lead.  It might cost $100 in one market, $25 in another, or $1000 in another and none of that makes any difference at all.”

He paused for a few seconds.  Everyone in the room was watching him, half of them convinced that Bosco had finally lost his mind and that they were each out a pile of cash for coming to this clearly useless seminar.  You could almost hear their minds grinding away on how they were going to get back at Bosco for wasting their time and money.  But Bosco knew when to be silent and he also knew when to speak.  He smiled, looked at Sasha and then at Herb.

“What you should really be thinking about is: What is the cost of a sale?”

“It’s the same thing!” Herb objected.

“Oh yes?” Bosco said, rolling his eyes and grinning.  He looked cartoonish when he did this and it cracked up about half the people in the room.

“Now how do you figure that, Herb?  You’re not taking into account all sorts of other items like the cost of the product, the labor, all of your regular overhead!  By comparison, the lousy cost of the lead isn’t that big of a deal.”

Sasha couldn’t take it anymore and she blurted out, “But a $100 lead is cheaper than a $500 lead!”

“Sure!” Bosco exclaimed.  He was really warmed up now.  “But if your $100 leads don’t close, they’re worthless.  Shit, I’d take a half dozen $500 leads that closed over thirty $100 leads that didn’t.  Wouldn’t you?”

The room was silent.  Bosco started to pace around the front of the room, alternately fixing his gaze on different people in the room.  He wasn’t speaking just to Sasha and Herb anymore.  He had made the two of them act as the spokespeople for the group, so as to ferret out the objections that they all held in common.  He knew that they’d all bitched and moaned about him the night before as they had shared dinner and drinks together.  It was all a matter of surfacing what really irked them and getting it out into the open.  Once he was able to beat that back, he would own them.

“The important things to remember are that your goals are to make the sale and then to retain the client.  If you can keep him for 5 years, what does it matter what the lead cost you?  A $500 lead brings you a sale.  But that’s not the total cost of the sale.  You have to pay for the product, the labor, the utilities, your insurance, all of that crap.  Once you add all that up, you might well have wiped out your gross for the year!  So what the hell do you care about the cost per lead?  The deal is retaining that client.

“An average client will spend about $2500 a year with you.  If you can keep him for 5 years, you’ll end up grossing almost 13 grand!  Any time you can make an advertising investment that brings you a rate of return like that; I figure it’s a pretty good bet.  Of course, a $100 lead that pans out does look better on paper, but in reality, it doesn’t put all that much extra into your pocket.

“Now some of you have met Michael.  He works for me making calls to my prospects and he books at an almost two appointment per hour rate.  He burns through a lot of leads too.  He doesn’t give a damn either.  As far as he’s concerned, the leads are worthless until he makes them worth something and he’s right.  If I’ve got $500 leads or $300 leads or $25 leads, it doesn’t matter.  He treats them all the same.

“Of course,” Bosco chuckled, “Michael doesn’t pay the bills for the media buys that make my phone ring, but that’s really the whole point.  A lead is a lead, no matter what it costs.  It isn’t worth shit though unless you know what to do with it.  So stop focusing on that.  Ask yourself what you’re doing with those leads once they come in.”

The next episode of SlipNot will be published on May 27th.

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