Margin Murder

Margin Murder: 5 Ways You Are Lighting Cash on Fire

You do not have a traffic problem. You have a brain injury.

I talk to business owners every day who tell me, "Alex, I just need more traffic! If I could just get more eyes on the site, I’d be rich!"

No, you wouldn't. You would just be broke faster.

If you pour water into a bucket that has more holes than a piece of Swiss cheese, turning on the firehose doesn't fix the bucket. It just makes your feet wet.

You are suffering from Click Bleed. You are suffering from Margin Murder. You are running a charity for Google and Meta, and you don’t even get the tax write-off.

Here are the 5 ways you are currently lighting your capital on fire, and why your accountant probably drinks heavily.

1. The "Fat Finger" Tax (Click Bleed)

You are paying for traffic that isn't real. You are suffering from Click Bleed.

If you are running ads on the "Audience Network," you are paying for your ad to appear on a free flashlight app used by a toddler or a grandma playing Candy Crush.

They didn't click your ad because they want your "SaaS Solution for Enterprise Logistics." They clicked your ad because they were trying to close the little "X" button and their finger slipped.

You are paying $2.50 for a thumb spasm.

You are paying for accidental clicks, bots in a server farm in Siberia, and people who hate you. Stop buying "cheap" traffic. Cheap traffic is like cheap sushi: you will pay for it later, and it will be painful.

2. The Turnstile Business Model (Churn)

If you have to replace 50% of your customers every month just to stay flat, you don't have a business. You have a turnstile.

You need a Churn Cure, not a new ad campaign.

Most of you treat customers like a one-night stand. You wine them, dine them, get the conversion, and then never call them again. Then you wonder why they left you for a competitor who actually sends them a birthday email.

Acquiring a customer and letting them leave after one purchase is financial suicide. It’s like buying a Ferrari, driving it to the grocery store once, and then leaving it in the parking lot with the keys in it.

3. Selling Dollar Bills for 90 Cents (Margin Murder)

I see e-commerce brands celebrating "record revenue" while their bank account is empty.

"We did $100k this month!"

Cool. You spent $40k on ads, $30k on product, $20k on shipping, and $15k on an agency to tell you you're doing a great job.

Congratulations. You lost $5,000.

This is Margin Murder. You are so obsessed with "scaling" that you forgot to check if you were making any money. You are running a non-profit organization, except nobody thanks you and you don't get a gala dinner.

4. The Agency "Ping Pong" Fund (Burned Budget)

If you hand a generic agency a $10,000 budget, they will spend exactly $10,000. Not because that was the optimal amount to spend, but because they need to hit their quota so they can buy a new ping pong table for the break room.

You have a Burned Budget.

Most media buyers are terrified of "underspending" because it makes them look lazy. So, on the last day of the month, they dump your remaining budget into the worst performing campaigns just to "pace" the account.

They are literally throwing your money into a furnace to keep their own metrics warm.

5. The Solution: Raise Your Prices (Average Order Value)

How do you stop the bleeding? You can try to plug the holes, or you can just make the water more expensive.

You need to focus on Average Order Value.

If you can’t fix the bleed, you must raise the AOV.

Stop being a coward. Raise your prices. Create a bundle. If someone buys a toothbrush, force them to buy the toothpaste, the floss, and a travel case.

If your AOV is $40, you are dead. You can’t afford to acquire a customer. If your AOV is $150, you can afford to be stupid. You can afford the accidental clicks. You can afford the churn.

Cash covers a multitude of sins.

The Verdict

Stop trying to "scale" a broken machine. Scaling a losing business just means you lose your house instead of your car.

Fix the bleed. Kill the churn. Raise the price.

Or, keep lighting money on fire. At least it keeps you warm while you go bankrupt.

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