The Business Formula Expanded
The Original Online Business Formula has always been:
Traffic + Conversions = Profit. (Ken McCarthy - The System Seminar)
I just had a very interesting conversation with Richard East, who is the creator of the Keyword Companion tool. During that conversation, he added another piece to that formula that expanded it a bit. His expanded formula is:
Product + Traffic + Conversions = Profit
So the question then becomes "what is the most important part of the business formula and where do you get the most leverage?" Let’s take it apart.
Product: You can buy product and resell it. You can create product. Finding a product to sell is easy. The affiliate marketing model proves this.
Traffic: You can buy traffic via pay per click. You can buy advertising online or offline to get people to your website. You can send postcards, run commercials or send emails. But there is a limit to the amount of traffic that you can get and buy. Also, list building is a form of future traffic generation. The question then becomes "is the traffic targeted to your message?" So getting traffic is not a hard task. Getting the right profitable traffic is the goal.
Conversions: This is where you have the most control. This is where you match the message to the market. The only way to do this well is by monitoring and testing your conversions, which is really seeing if what you are saying is working on the traffic that you are sending. This is the only way you will know what is working to get transactions.
For some reason I find that people are working really hard on product and traffic, and are “solving” the conversion problem by sending more traffic.
But what would happen if you really tighten up the conversion piece of the equation?
You could actually send less traffic and achieve the same or better results.
Hmm… Think about that one.
Let’s face it. Most of us do not have access to limitless amounts of traffic. Our products or services do not lend themselves to that situation. Our best direction is to improve conversions.
So here is the super-expanded formula:
Product (Product or Service)
+ Traffic Generation (Advertising, Media, Lists, Marketing)
+ Conversions (Monitoring and Testing)
----------------------------------------------------
= Profit (Gross Revenue – Costs)
All this to say…
Once you get your product or service offering in order and it is solid, find a way to get eyeballs to your website. Then, start to really work on your conversions. That is what will separate you from the rest of the pack.
Best regards,
David Bullock
I just had a very interesting conversation with Richard East, who is the creator of the Keyword Companion tool. During that conversation, he added another piece to that formula that expanded it a bit. His expanded formula is:
Product + Traffic + Conversions = Profit
So the question then becomes "what is the most important part of the business formula and where do you get the most leverage?" Let’s take it apart.
Product: You can buy product and resell it. You can create product. Finding a product to sell is easy. The affiliate marketing model proves this.
Traffic: You can buy traffic via pay per click. You can buy advertising online or offline to get people to your website. You can send postcards, run commercials or send emails. But there is a limit to the amount of traffic that you can get and buy. Also, list building is a form of future traffic generation. The question then becomes "is the traffic targeted to your message?" So getting traffic is not a hard task. Getting the right profitable traffic is the goal.
Conversions: This is where you have the most control. This is where you match the message to the market. The only way to do this well is by monitoring and testing your conversions, which is really seeing if what you are saying is working on the traffic that you are sending. This is the only way you will know what is working to get transactions.
For some reason I find that people are working really hard on product and traffic, and are “solving” the conversion problem by sending more traffic.
But what would happen if you really tighten up the conversion piece of the equation?
You could actually send less traffic and achieve the same or better results.
Hmm… Think about that one.
Let’s face it. Most of us do not have access to limitless amounts of traffic. Our products or services do not lend themselves to that situation. Our best direction is to improve conversions.
So here is the super-expanded formula:
Product (Product or Service)
+ Traffic Generation (Advertising, Media, Lists, Marketing)
+ Conversions (Monitoring and Testing)
----------------------------------------------------
= Profit (Gross Revenue – Costs)
All this to say…
Once you get your product or service offering in order and it is solid, find a way to get eyeballs to your website. Then, start to really work on your conversions. That is what will separate you from the rest of the pack.
Best regards,
David Bullock
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