I have been working with several companies on conversion ratios and by knowing what theirs are, they are able to effectively advertise to increase their profits.
While doing this I found that some companies were literally throwing money out of the window. In one case they were paying $1500 per month to direct traffic to specific pages and only converting 2 out of 1000. Since their conversion was worth $75, they were paying $1 per click and therefore paying $1000 to make $150. Not Good.
The proper way to advertise is to know EXACTLY what your conversion ratio is and what a conversion is worth to your company.
I used to send out flyers with ValuePak back when I was in the insurance business. We could send out thousands and the return was always a steady ½%. It cost us about $2000 to send out 25,000. With the ½% return we would get back around 125. Out of these we would sell 70% with an average commission of $300. 70% of 125 is 87.5 X $300 = $26,250. A good return for money spent.
We also advertised in the Yellow Pages. We had an ad that was $2500 per month. We received about 8 or 9 phone calls a day from the ad and sold about 40% of them. This made sense until the Internet came along and people quit using the Yellow Pages.
Advertising on the Internet is so much nicer than the Yellow Pages. You can track everything and fine tune it daily if you want. You know how many people are clicking on your ad, how many people buy and how much the ad costs. It’s only simple math to determine whether you are making a profit or not. Once you get the right formula, increase your advertising.
Affiliates look for this golden number constantly. Once they find a program that converts at a profit they advertise up to $50,000 daily.
To find your golden ticket, you need to know 4 things.
- How many clicks you get per day?
- What is your conversion ratio? (how many people buy or contact you)
- How much are you paying to get people to your website?
- How much is a conversion worth to your company?
We have a conversion calculator on our site at: http://supercoolsites.com/seo-calculator/. Experiment with this to determine your golden number.