R+R=Profit: The Formula Nobody Taught Me

I learned this formula from a Google Ads course years ago, but it stuck with me because it applies to every business, not just ones running search ads. I believe it originally came from Irish business consultant Blaise Brosnan.

Every successful business I've worked with uses this formula, even if they don't know it.

The Funnel Everyone Knows

If you've ever run a paid search campaign, you've seen some version of this funnel.

The top of a sales funnel: searches, impressions, clicks

Searches at the top, impressions when your ad shows up, clicks when someone actually visits your site. Pretty standard stuff.

But here's where people get tripped up. It's easy to think of "clicks" as a metric. They're not. Clicks are people. You're not buying clicks, you're buying visitors.

Visitors become leads and buyers if the offer is right

If your offer is good enough, some of those visitors become leads. They call you, fill out a form, sign up for your list. Some skip that step entirely and just buy.

Getting that first sale is the hardest part. Most businesses pour all their energy into it. But that first sale isn't the finish line.

The Part Most People Miss

The full funnel: repeat buyers (customers) and referrers sit below the first sale

Think of the first sale as a test. If you deliver, that buyer becomes a customer. And I mean that literally. The word "customer" comes from "custom," as in someone who has a custom of buying from you.

If they're really happy, they become a referrer. They tell their friends. And that's the best marketing you can get because it costs nothing and it's incredibly persuasive.

When a company runs an ad, you know they're trying to sell you something. Your guard is up. But when a friend recommends something, your defenses are down. They have nothing to gain from it.

R + R = Profit

The complete funnel with R+R=Profit highlighted at the bottom

Repeat Business + Referrals = Profit.

Flow diagram showing First Sale leading to Customer Relationship, which drives Repeat Business and Referrals, both feeding into Profit — The R+R=Profit cycle: real profit comes from what happens after the first sale

The front end of your funnel is where most of your costs are. The back end is where most of your revenue comes from. If you provide enough value to your buyers, they'll keep coming back and they'll bring other people with them.

Some businesses break even on the first sale and make all their profit from repeat business. Others take a loss on the first sale knowing they'll make it back. Referrals drive your acquisition costs down because they're essentially free marketing.

But R+R=Profit is more than a math equation. It's a way of thinking about your business. You can only build something profitable when you make people happy enough to come back and recommend you to others.

If your ad campaign isn't profitable on day one, that's fine. The question is whether you're building something people want to come back to.