In poker there’s a concept called “pots odds”. The technical definition is: “the ratio of the current size of the pot to the cost of a contemplated call.” To make the concept easy, think of it this way. There is $100 in the middle of the table, in the pot. Someone bets $20 and it’s your turn to act. Do you fold? Do you call? Do you raise?
Recreational players can be read like a book; they fold their cards if they’re weak, call the $20 if they assume they’re better than 50/50 to win and raise if they have a strong hand. But pot odds say something different.
Let’s say in the same $20 bet-to-you situation, you assume your opponent probably has you beat. Yet in your mind, there’s a 10% chance they’re bluffing and a 25% chance (1 in 4) that your cards are better. So overall, there’s a 35% chance you win, 65% chance you lose. And remember…the total pot in front of you is $100, where you only need $20 to flip over cards and see who’s best! You only need to bet 20%, but have a 35% chance to win; what do you do?
Pot odds say you’re calling that $20 bet every time. Poker strategy states if you use this reasoning every time you’re in the situation you’ll win long-term. It’s the value of the outcome compared to the chance(s) it will happen. But, if you don’t act the same way every time (i.e get irrational and play on “feel” instead of odds) or don’t know your percentage of success, then you’re in deep trouble.
How are those pot odds any different for your business?
Do you know the percentages of success (i.e. Return on Investment) for your marketing activities? For every $1 you spend on seminars, what do you make back – long term? Not the last seminar. Not the workshop where you acquired several new clients. Not the seminar you failed to convert a single soul. Not the great or horrible poker hands! But long term, what is your workshop return on investment? Then part two is frequency. If your long-term seminar ROI is 300% (3:1), then it mentally weighs out the peaks and valleys of all your events. The highs aren’t as high, the lows aren’t as low. Effectively, you know your seminar or marketing “pot odds” and want to keep playing as much as possible.
- What about radio ROI/pot odds?
- What about client event ROI/pot odds?
- If you diverted money from one marketing activity to another, could you increase ROI/pot odds?
- If you plowed more marketing money into your top ROI/pot odds activity, would it increase your bottom line?
The way I see it there are three types of producers:
- Those that don’t understand marketing “pot odds” & fail to track their numbers. (What other legitimate business doesn’t know their profit margin?!?)
- Those that understand marketing, but fail to act & maximize their returns. (This slot machine keeps making me money. But I don’t want to play it too much.) And
- Those who dominate.
Which are you?