In his book 80/20 Sales and Marketing, marketing and advertising expert Perry Marshall explains how you can transform your sales and marketing results without extraordinary effort. In this edited excerpt, the author describes the Power Triangle and explains how effectively using its parts -- traffic, conversion and economics -- can help improve your marketing efforts.

There are three steps to selling anything. The first step is getting traffic: You gotta get human bodies, eyes, and ears, to sell to. The next step is conversion: You have to convince the person that what you have is going to solve their problem. The final step is economics: You have to give them something that's valuable and get their money.

Traffic, conversion, and economics form a Power Triangle that governs everything that happens in sales and marketing.

The beautiful thing about the Power Triangle is how simple it is. Einstein knew he was onto something big with a simple equation:

e = mc2

Things that are true and correct tend to have that sort of simplicity. Which brings me to the Power Triangle. The Power Triangle always takes you where you need to go. It's a work of genius.

In order to sell something, you have to get traffic; then you have to convert the traffic. Economics means you have to make some money on what you sell. That's why you're in business.

When you make a profit, you can re-invest it in getting more traffic and converting the traffic and further improving your economics. And so it goes, clockwise in a circle. It's a spiral of never-ending traffic, conversion, and economics. That's the essence of marketing.

Let's say you come to me and say, “I've developed this cool new invention, and it's going to make millions of dollars. How do I sell it?” Before we talk about buying clicks or writing emails or infomercials or any other technique, you need to answer four questions:

  1. Who would buy this? (that's traffic)
  2. What can you say to persuade them to buy? (that's conversion)
  3. Can you reach them affordably? (that's economics)
  4. Can they give you money? (that's economics, too)

The thing I want you to know about the Triangle is: You need to go counterclockwise to decide how to sell something. Which means the primary skill you must master in marketing is thinking backward.

To build a sales funnel, you begin with the end in mind. You start from the end, and you work your way to the beginning. Then traffic comes into the funnel at the beginning and goes clockwise to the economic end.

You should know there's a Power Triangle inside each element of the Triangle. Let's say that your traffic is Google ads, your conversion is a website sales page, and your economics is that you sell shoes.

Inside those Google ads is another Triangle. Let's say your visitors land on a page that offers a white paper in exchange for their name, company, and email address. There's a Power Triangle there:

  • Traffic = people who land on your page
  • Conversion = people who opt in and the reasons they did. They want the cheat sheet or price quote; they want to take the quiz, or they want the free software download.
  • Economics = what they get in exchange for their email address and the value of that address to you
Traffic, Conversion, Economics and Genius Sales

The economic value of an email address is huge. Even with social media, blogs, Twitter, and everything else, email is still the center of the marketing universe. The number-one function of your website is to collect an email address from your visitor before he leaves.

Someone clicks on a Google ad (traffic) and lands on your opt-in page (conversion) and gives you their email address (economics). Later you send them an email (traffic), and now they're on your sales page (conversion) and you're asking them to buy something (economics).

Great marketers and sales gurus have said traffic + conversion = profits, and it's true, but it's incomplete. Economics speaks to the importance of value, and as you consider this, you'll see it's really the most important thing of all. Economics drives everything else.

This means the core essence of marketing is how much you're willing to pay to acquire a customer. How well you compete comes down to how much you can afford to pay. That's economics.