Day 172: January Funnel Results Review and Profit Gap Analysis

Today’s focus is stepping back and looking at the bigger picture.

Daily numbers are useful, but they can easily mislead you because funnels, traffic, and ad performance all fluctuate.

What really matters is the longer trend. Weekly and monthly numbers reveal the real story much more clearly than any individual day.

Before diving into the monthly review though, here’s a quick snapshot of yesterday’s performance.

A Weak Day, But Still Profitable

Yesterday finished at 610 dollars in sales. Ad spend came in at around 408 pounds, which worked out at roughly 554 dollars, leaving a very small profit of 56 dollars.

Barely a profit, but still technically positive. Today is looking a little more promising though.

At around 4pm we were already sitting at 771 dollars in sales. If momentum holds, that could push closer to the 900 dollar mark.

But again, the daily results aren’t the real focus. The monthly perspective is what matters most.

Five Months Into the Journey

At the end of January we reached the five-month point in this twelve-month journey. The overall target remains 240,000 dollars in sales and 120,000 dollars in profit.

Looking at the numbers after five months, total sales so far are 123,725 dollars. The target sales at this point should be roughly 100,000, so on the sales side things are actually ahead of schedule.

However, profit tells a slightly different story. Total profit so far is 44,570 dollars whereas the target profit at this stage should be 50,000.

That leaves a gap of 5,430 dollars. In percentage terms that’s roughly 10 percent behind where the profit target should be, which means the focus moving forward has to be on improving margins rather than simply increasing sales.

Understanding the Sales vs Profit Gap

When looking at the chart over time, one thing becomes obvious. Sales and profit should ideally track together.

When those lines begin separating, it means costs are rising faster than revenue. That’s exactly what happened during January.

Sales increased, but ad spend increased even more. The result was higher revenue without a matching increase in profit, which is why profitability optimisation matters just as much as growth.

Monthly Performance Snapshot

Looking month by month, sales have been fairly stable overall. January was slightly stronger in revenue compared to previous months.

However, ad spend also increased during that period, which meant profit didn’t rise in proportion to sales. When converted into margin percentages, the trend becomes clearer.

The first month produced the strongest margin. After that the percentage margins declined before recovering slightly again.

To hit the annual targets comfortably, the margin needs to sit closer to 40 percent or higher. Ideally it would move even closer to 50 percent.

The Three Numbers That Matter Most

When analysing funnel performance, three metrics always get priority. These are Cost Per Acquisition, Average Order Value, and Lifetime Value.

Everything ultimately comes back to these three numbers. They are the levers that determine whether the funnel becomes more profitable or more expensive to run.

Cost Per Acquisition (CPA)

CPA increased during January and that can happen for several reasons. Ad costs fluctuate constantly on platforms like Facebook as competition and audience behaviour change.

The main tools for managing CPA are improving ad creatives, improving targeting, and improving landing page conversion rates. Each of these improvements helps lower the cost of acquiring a customer.

Average Order Value (AOV)

Average order value has been harder to move. The core offer sits at 27 dollars which is intentionally positioned as an impulse purchase price.

The order bump performs fairly consistently at around 17 dollars. The real opportunity lies in the upsell, which currently converts lower than ideal.

If that improves, AOV will increase quickly and that has a direct impact on overall profit margins.

Lifetime Value (LTV)

Lifetime value measures the total value of a customer over time. In this case it is measured over roughly 60 days.

During January this figure improved slightly, moving from around 58 dollars to approximately 63 dollars. That’s progress, but the real goal is pushing that closer to 70 dollars or beyond.

That means introducing more backend offers, increasing engagement, and strengthening the follow-up sequences that bring customers back for additional purchases.

Why Split Testing Has a Cost

One important mindset shift when running funnels is understanding that testing costs money. Every split test temporarily weakens performance because half the traffic goes to a variation that might lose.

When a test fails, that budget wasn’t wasted. It was invested in discovering what doesn’t work and identifying what performs better long term.

Without testing, optimisation stalls. Without optimisation, scaling becomes almost impossible.

Where Things Stand Right Now

Overall position after five months is fairly clear. Sales are ahead of target, but profit is slightly behind target.

The solution isn’t panic. The solution is optimisation.

The focus areas going forward are clear: improve CPA through better creatives, increase AOV through stronger upsells, and expand LTV through backend offers and automation.

Each small improvement compounds across the funnel and gradually pushes profitability in the right direction.

Looking Ahead to Month Six

We are now approaching the halfway point of the year. Month six marks the midpoint of this entire journey.

That makes the next few weeks particularly important.

February has been challenging partly because travel reduced the amount of optimisation work happening. Now that I’m back, the focus returns to testing.

That means closing some split tests, launching new ones, and gradually pushing those margins upward because ultimately that’s what determines whether this journey reaches its target.