Increase Conversion by Traffic

Conversion Rate

If you already have significant traffic coming to your site, there are two options that will increase revenue. You could:1.Optimize conversion and get more profit out of existing visitors or 2. Increase ad spend and get more visitors to the site.

Here’s what most online businesses typically do when they want to increase revenue & profit…

They throw more money at traffic generation.Let me show you why this is putting the cart before the horse.

Let’s say you have the following key metrics:10,000 visitors per month 1% conversion to sales @ $100 each (100 sales x $100 = $10,000 in revenue) $5,000 marketing expense per month (.50 per visitor) $10,000 – $5,000 = $5,000 profit ROI = 100%When you simply throw more money at traffic generation without optimizing conversions:14,000 visitors per month (traffic increase due to spending more on marketing) 1% conversion to sales @ $100 each (140 sales x $100 = $14,000 in revenue) $7,000 marketing expense per month (we assume the same .50 per visitor) $14,000 – $7,000 = $7,000 profit ROI = 100% (so you increased your profit by $2,000 per month but ROI is the same)When you optimize conversions BEFORE you spend more on traffic generation:(let’s use the same numbers from above and assume conversion rate lift from 1% to 2%)10,000 visitors per month 2% conversion to sales @ $100 each (200 sales x $100 = $20,000 in revenue) $5,000 marketing expense per month (.50 per visitor) $20,000 – $5,000 = $15,000 profit ROI = 300%You just increased profit by $10,000 per month and tripled your ROI without spending a dime on additional marketing or advertising (and that is only on an increase of conversions from 1% to 2%).Here’s what the numbers look like when you spend more on traffic generation AFTER you’ve optimized for conversions:14,000 visitors per month (traffic increase due to spending more on marketing) 2% conversion to sales @ $100 each (280 sales x $100 = $28,000 in revenue) $7,000 marketing expense per month (we assume the same .50 per visitor) $28,000 – $7,000 = $21,000 profit ROI = 300%Throwing money at more traffic BEFORE optimization: $7,000 profitThrowing the SAME AMOUNT of money at more traffic AFTER optimization: $21,000 profitIn this case study, you are losing $14,000 every month by doing things in the wrong order.

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