Last week I outlined how improving your conversion rate is the easiest way to double your income. I discussed how most of the time it's far easier to double your conversion rate than it is to double your traffic.
This week, I want to take it a step further and discuss this principle beyond conversion rates.
If you want to make a lot of money online you need to get a good understanding of the elements that work together in synergy to make the big profits possible. You need to understand the individual pieces of the puzzle that can turn what might appear to be a loser into something very profitable.
I have to admit that it took me far longer than it should have to fully appreciate the power and the potential of this information. This information now shapes almost every profit generating exercise I do online.
What I've discovered over the years is that small incremental changes to 5 critical components can have dramatic, profitable outcomes.
The 5 key components are:
Cost Per Visitor
Lifetime Value of the Customer
These critical areas have a compounding effect on each other. If you can get them working together in synergy, you can make a lot of money.
Let me give you a simple yet powerful example to highlight this. Example 1 is probably what most of you experience. Example 2 demonstrates how small improvements in all the right places have profitable outcomes.
Let's say you find a good affiliate offer that you decide to promote via pay per click (PPC). You buy 200 clicks a day at 50 cents a click. The affiliate merchant pays $45 in commission and the conversion rate is 1%.
1) Buy 200 clicks for 50 cents each.
2) Send it directly to an affiliate offer that pays $45.
3) The affiliate merchant converts that traffic at 1%.
The profit and loss would look something like this.
200 clicks x $.50 = -$100
200 clicks x 1% = 2 conversions
2 conversions x $45 = $90
Daily Loss = -$10
Monthly Loss = -$300
Yearly Loss = -$3650
Not so good. Most people will run this advertising campaign for a while, realize it's not making any money, give up and move on to something else.
However, someone who understands the power of the numbers will figure out that a few tweaks in all the right places can turn this into something big. They just need to work to make small improvements in the 5 critical areas.
Now let's have a look at this same affiliate offer, but make small improvements to each of the 5 critical components and see if we can get some of these exponential improvements I'm talking about.
Traffic Volume and Cost Per Visitor
The interesting thing about PPC is that the ads that feature in higher positions get much more traffic than ones down the page. However, as we saw in example 1, we simply can't pay any more or we'll be losing more money.
No so I say!
We could use a product like SpeedPPC (shameless plug) to improve the campaign structure and improve the click through rate on the ads. As you probably know, position is determined by the price you're willing to pay per click multiplied by the click-through rate (CTR).
So all we need to do is write more targeted ads to improve our CTR. If we can improve our CTR we can pay the same amount per click for a much higher position on the page. This higher position means higher exposure so instead of getting 200 clicks we now get 400 clicks. We're still paying 50 cents a click, but are getting more people clicking.
While we're doing this, we can improve the click quality by adding a whole bunch of negative keywords to better qualify who's actually seeing our ads. Of course because our ads are being clicked on by more targeted visitors, we'll give our conversion rate a boost.
As an affiliate we don't have much control over how well a merchant sells on their website. However, we can send the visitors via our own bridge page that pre-sells the visitor. We can also offer a bonus on the sale to help increase the conversion rate.
The net effect of the negative keywords, the presell and the bonus increases the conversion rate by just 1% which doesn't seem like much but we'll take it anyway.
Lifetime Value of the Customer
As we're now sending the user through a bridge page, we have the opportunity to capture the prospect's email address. In the same way, we are also able to build a buyers list based on the people who coming back to claim the free bonus.
We can then plug them into an autoresponder series that continues to market to them complementary products for years to come. This adds another $30 to the lifetime visitor value over the next year as they buy other products through our affiliate links.
Here are the little improvements we made.
Increased the number of clicks we're getting by tweaking the ads.
Kept the cost per click at 50 cents.
Added negative keywords, offered a bonus and pre-sold the visitor for a 1% bump in conversions.
Plugged the visitors into an autoresponder series that sold to them over time to add an extra $30 in commissions.
1) Buy 400 clicks for 50 cents each.
2) Send via a bridge page to make the lifetime visitor value $75 ($45 + $30).
3) Converts at 2%.
The new profit and loss would look something like this:
400 clicks x $.50 = -$200
400 clicks x 2% = 8 conversions
8 conversions x $75 = $600
Daily Profit = $400
Monthly Profit = $12,000
Yearly Profit = $146,000
Can you see the power of exponential changes here?
The changes for each part were not dramatic, but when combined together turned what most would consider to be a loser into day job quitting profits. Also remember, you're not just creating cash flow, but also establishing the foundations of a major asset with the email list you're building.
I believe this is one of the defining differences between people who make a lot of money online and those who struggle. Highly successful affiliates are mastering the art of improving each of these 5 critical areas to experience exponential profits. Are you?
If you're interested in learning the art of using PPC to promote affiliate products like this, check out SpeedPPC now.