More Traffic Equals More Sales? The Traffic Myth Debunked
By Marj Galangco | Published: 27 June, 2011 Page viewed 4660 times
If you really want to make your website work as hard as it could and help you make money 24/7, there are three things you need to optimize:
1. Getting enough targeted, qualified traffic
2. The percentage of your traffic that converts into paying customers
3. Your customer retention rate, and the number of customers who turn into your evangelists.
Interestingly, many online entrepreneurs these days are still only working on getting more traffic, traffic, traffic. Lots of courses and ebooks are being sold about increasing traffic. A lot of hype is built around traffic, but very little is mentioned about conversion optimization.
I find this weird, because actually for smaller businesses (who have more limited resources compared to bigger businesses), working on increasing their sales conversion has more advantages (and could yield more ROI) compared to trying to get more traffic.
(Don’t make the mistake of saying SEO or Social Media Marketing (SMM) is “free traffic” because SEO and SMM take a lot of time – plus constant, continuous implementation. Unless you have slaves working for you for free or you consider your time to be worth $0 per hour then yes you can say doing SEO and SMM are “free”)
Think about it:
Suppose you’re selling a product worth $100, and you’re getting at least 200 visitors per day to that product page. Let’s suppose that you currently have 0.5% conversion rate (for every 200 visitors, 1 person buys).
Now let’s pretend that instead of trying to get more visitors per day, you focus your efforts on increasing your conversion rate instead.
Product price $100/unit
Traffic 200 visitors/day
Conversion 0.5% (1 purchase per 200 unique visitors)
= $100 gross revenue / day
What if you are paying about $1.00 per click? That means you are actually spending $200 to get 200 daily visitors. So effectively you are making a loss of $100 if your conversion is 0.5%! To illustrate :
Traffic Cost 200 visitors/day x $1 per click = $200 per day
Conversion 0.5% (1 purchase per 200 unique visitors)
= $100 gross daily revenue MINUS $200
equals – $100 loss per day
If you are using exclusively PPC or other paid means to drive traffic to your site, it’s even more VITAL for you to actively optimize your conversion rate. Otherwise you’ll be constantly in the red.
Now what if you made a change to your website and it resulted to a new conversion rate of 2%? That means going from making 1 sale a day to making 4 sales a day. In terms of dollars, that’s going from $100 to $400 daily gross revenue.
Product price $100/unit
Traffic 200 visitors/day
Conversion 2.0% (4 purchases per 200 unique visitors)
= $400 gross revenue / day
MINUS $200 (traffic cost)
= $200 per day
So just by getting from 0.5% to 2% conversion rate, now you are making a net profit of $200 as opposed to a $100 loss - from the same amount of traffic!
Conversion Rate Optimization (CRO) is that powerful. It can literally make or break your business.
Simple Changes, Big Gains
Now what if all you did was actually change the headline of the copy?
Or change the graphics at the top of the page?
Or you renamed the product from a vague name to something more benefit-oriented?
Yes, simple, little changes like these could actually result to big increases in conversions. Sometimes changing the headline or header banner of your sales page could dramatically change your results. Sometimes, restructuring the order of how certain elements appear on your sales page could be the difference between breaking even and making a profit.
(Caveat: not all changes you make will result to higher conversions. That’s why conversion testing is done, to establish which versions generate the most desired responses)
So now I hope you understand exactly why more traffic doesn’t necessarily mean more sales. You could end up spending lots and lots of time and money trying to generate traffic, but if your conversion sucks, you could end up at a loss.
We’re not saying “don’t try to increase your traffic” – NOT at all. What we’re advocating is that if you want to get the most out of the existing traffic you have, you must start optimizing your conversion.
If you don’t, you could end up joining others who are earning the money they’re earning now, completely ignorant to the possibility of doubling, tripling or even quadrupling their monthly revenues!
Want to improve your website’s conversion? Sign up to our newsletter or subscribe to this blog’s feed via RSS to receive more free tips that you can apply to your business right away!
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More Traffic Equals More Sales? The Traffic Myth Debunked
Page viewed 4660 times
If you really want to make your website work as hard as it could and help you make money 24/7, there are three things you need to optimize:
1. Getting enough targeted, qualified traffic
2. The percentage of your traffic that converts into paying customers
3. Your customer retention rate, and the number of customers who turn into your evangelists.
Interestingly, many online entrepreneurs these days are still only working on getting more traffic, traffic, traffic. Lots of courses and ebooks are being sold about increasing traffic. A lot of hype is built around traffic, but very little is mentioned about conversion optimization.
I find this weird, because actually for smaller businesses (who have more limited resources compared to bigger businesses), working on increasing their sales conversion has more advantages (and could yield more ROI) compared to trying to get more traffic.
(Don’t make the mistake of saying SEO or Social Media Marketing (SMM) is “free traffic” because SEO and SMM take a lot of time – plus constant, continuous implementation. Unless you have slaves working for you for free or you consider your time to be worth $0 per hour then yes you can say doing SEO and SMM are “free”)
Think about it:
Suppose you’re selling a product worth $100, and you’re getting at least 200 visitors per day to that product page. Let’s suppose that you currently have 0.5% conversion rate (for every 200 visitors, 1 person buys).
Now let’s pretend that instead of trying to get more visitors per day, you focus your efforts on increasing your conversion rate instead.
Product price $100/unit
Traffic 200 visitors/day
Conversion 0.5% (1 purchase per 200 unique visitors)
= $100 gross revenue / day
What if you are paying about $1.00 per click? That means you are actually spending $200 to get 200 daily visitors. So effectively you are making a loss of $100 if your conversion is 0.5%! To illustrate :
Traffic Cost 200 visitors/day x $1 per click = $200 per day
Conversion 0.5% (1 purchase per 200 unique visitors)
= $100 gross daily revenue MINUS $200
equals – $100 loss per day
If you are using exclusively PPC or other paid means to drive traffic to your site, it’s even more VITAL for you to actively optimize your conversion rate. Otherwise you’ll be constantly in the red.
Now what if you made a change to your website and it resulted to a new conversion rate of 2%? That means going from making 1 sale a day to making 4 sales a day. In terms of dollars, that’s going from $100 to $400 daily gross revenue.
Product price $100/unit
Traffic 200 visitors/day
Conversion 2.0% (4 purchases per 200 unique visitors)
= $400 gross revenue / day
MINUS $200 (traffic cost)
= $200 per day
So just by getting from 0.5% to 2% conversion rate, now you are making a net profit of $200 as opposed to a $100 loss - from the same amount of traffic!
Conversion Rate Optimization (CRO) is that powerful. It can literally make or break your business.
Simple Changes, Big Gains
Now what if all you did was actually change the headline of the copy?
Or change the graphics at the top of the page?
Or you renamed the product from a vague name to something more benefit-oriented?
Yes, simple, little changes like these could actually result to big increases in conversions. Sometimes changing the headline or header banner of your sales page could dramatically change your results. Sometimes, restructuring the order of how certain elements appear on your sales page could be the difference between breaking even and making a profit.
(Caveat: not all changes you make will result to higher conversions. That’s why conversion testing is done, to establish which versions generate the most desired responses)
So now I hope you understand exactly why more traffic doesn’t necessarily mean more sales. You could end up spending lots and lots of time and money trying to generate traffic, but if your conversion sucks, you could end up at a loss.
We’re not saying “don’t try to increase your traffic” – NOT at all. What we’re advocating is that if you want to get the most out of the existing traffic you have, you must start optimizing your conversion.
If you don’t, you could end up joining others who are earning the money they’re earning now, completely ignorant to the possibility of doubling, tripling or even quadrupling their monthly revenues!
Want to improve your website’s conversion? Sign up to our newsletter or subscribe to this blog’s feed via RSS to receive more free tips that you can apply to your business right away!
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