Q: Can you help explain how to use the LERN percentages for promotion and production?
A: Paul, Thank you for clarifying your question. What this means is that if your income goal is $75,000, 100% of your income would be $75,000. With seminars, if you spend 70% of that income on promotion (20-30%) and production (40-50%), your net (operating margin) would be 30% of $75,000 or $22,500.
If you want your net income to be $75,000, then your gross income target would need to be around $107,000 ($75,000 divided by 70%). This would give you a net of around $32,000 to $34,000.
The strategy is this:
In order to generate an adequate operating margin, your direct costs, the money you spend on promotion and production, need to meet the benchmarks identified by LERN as best practice. With seminars, the benchmark for operating margin is 30% to 35%. Thus, direct costs should not be more than 65% to 70% of the income from seminars. Production costs, primarily the cost of paying the presenter, travel to the seminar location, and cost of space rental is 40% to 50% of income, leaving 20% to 30% to be invested in promotion. Obviously, the more targeted your promotion, the better your ROI on that, so spending as little as possible to generate the response you need should be your goal.