I don't remember how many ebooks and tutorials I have read to increase traffic to any website or blog. In today's world, from a small internet marketer to a huge online entrepreneur, everybody is talking about ways to get more and more traffic to their sales page so as to make more and huge profits.
It was only when I saw a website in the Flippa listings being sold which had an Alexa Traffic rank in four figures but a net profit of only two digits in a month!!! This thing caught my eye and I ultimately shoot an email to the owner. And to my fortune, he was kind enough to respond with some explanations. I decided to write this post as a summary of what I concluded after a conversation with him.
If you are keen on making decent profits from your website (by decent you know how much I mean), there are three things which you will need :
- Lots and lots of targeted traffic. Pay a little more attention on “targeted” here. A person looking for an iPhone has got nothing to do on a website which promotes weight loss products. Even a slight difference between what the visitor is looking for and what you are selling on your website can result in that visitor bouncing away from your website. The quality of traffic matters more than its quantity.
- Again a good percentage of the traffic you receive should get converted into customers and sales. Or what we can easily term as conversion rate. This conversion rate will decide a lot in the net profit you are going to make. I guess this was the factor responsible for the failure of the website I mentioned above.
- And in the end, you must learn to retain those customers as your valuable clients. This is important if you want to make a fortune with your online business.
Is Free Traffic Actually Free ?
Until you spend some money on advertising your website like PPC advertising to get some traffic to your website, you consider all other means of traffic generation to be free. You might consider Search Engine Optimization (SEO) and Social Media Marketing (SMM) as two sources of free traffic but I do no take them as free. The reason for this being that these two take a lot of time and a bit of hard work to implement which is of course worth some cost.
But if you consider your time and work to be totally invaluable, you can consider them free.
Relation Between Traffic and Conversion Rate
Now what is more crucial to make money from your website? Let us consider two simple scenarios to understand this.
Scenario 1 :
Lets say you have a website with following stats:
- Traffic :- 1000 visitors/ day
- Price of the Product :- $50
- Conversion Rate :- 1%
- Cost of Advertising (Pay Per Click) :- $0.50 Per Click
Now the total sales made from your website are :- 1% of 1000 x $50 = $500.
Wow, $500 a day is a real good earning. But wait, you paid some cost to get visitors to your website. Let's calculate that.
$0.50 Per Click x 1000 Visitors = $500.
So the net profit now becomes = $500-$500 = 0 !!
Though your sales were $500 at the end of the day, you actually made nothing. Now consider another scenario. Let us consider that you worked a few things better and your conversion rate increased to 2%. Now the stats become :
- Traffic :- 1000 visitors/day
- Price of the Product :- $50
- Conversion Rate :- 2%
- Cost of Advertising (Pay Per Click) :- $0.50 Per Click
Now the cost of advertising and the traffic is still the same. Only the conversion rate has improved. Now calculate your total sales and net profit for the day.
Total Sales = 2% of 1000 x $50 = $1000
Net Profit = $1000-$500 = $500.
Now this is a net profit of $500 which you have actually earned at the end of the day. Just by improving your conversion rate, you were able to make almost $500 bucks extra from the same amount of traffic and the same cost of advertising. So there is definitely a much greater need to improve the conversion rate. Imagine your earnings for a conversion rate of 10% (Quite Possible) . A few simple things like changing the headlines, better positioning of the ads and improved content writing can really make big differences to your earnings without the need to bring more and more traffic to your website.
I may be wrong on not giving much important to traffic here. But I would like to hear what you folks have to say on this.