In a recent past article, I showed you the top 10 strategies you can use to drive traffic to your site--without spending a dime. If you've read it, you may be thinking you now know all the essentials about driving as many qualified visitors to your site as possible.
Wrong! Sure, those 10 strategies will get you a long way toward your goal, but if you're really serious about driving huge numbers of visitors to your site, you should also look into traffic-generation techniques that cost a bit of money--but are well worth the cost.
So we're going to take a look at some paid traffic-generation tactics that have proven to be extremely successful when used correctly. If your business is new, or if you haven't been able to attract many visitors to your site yet, these cost-effective strategies are the fastest way to boost your visitor count--and your sales.
Before you can begin experimenting with these strategies, however, you need to know how much you can afford to spend on each new visitor to your site. And that means you need to understand the value of your visitors by learning how to calculate the value of a visitor to your site. Once you know how to do that, you'll be able to figure out how much you can afford to spend on advertising without draining your wallet
There are a few simple calculations you'll need to make in order to determine the value of your visitors. To make these calculations, you'll need to know your total number of sales, gross revenues, total expenses and total number of unique visitors for a set period of time, let's say a month. Once you have these figures at your disposal, you're ready to do some math.
Step 1. Calculate the conversion rate of your site. You can calculate your conversion rate by dividing the total number of unique visitors to your site by the total number of sales you made in a given time period. Here's the equation:
Unique Visitors divided by Total Number of Sales = Conversion Rate
For example, if your site got 5,000 unique visitors last month and you made 40 sales, then your equation would be 5,000 visitors divided by 40 sales, which equals a conversion rate of 125 unique visitors per sale.
If you don't know how many unique visitors your site gets, contact your Web server and ask to see your server logs. Your logs contain a lot of data about your traffic and are a goldmine of information.
Step 2. Calculate the net profits for every sale you make. To determine the true value of a visitor to your site, you'll need to know what your "take home" profits are for each sale after all your expenses have been subtracted. Here's the equation:
[Gross Revenue - Total Expenses] divided by Total Number of Sales = Net Profit per Sale
Let's say you sold 40 items for $79.95 each last month. You'd then calculate 40 sales multiplied by $79.95 per item, which equals $3,198 in gross revenues.
From your total gross revenues, you'd then subtract your monthly expenses. If your total expenses came to $1,566, your net profit would be $3,198 in gross revenues minus $1,566 in expenses for a total net profit of $1,632.
Next, you'll need to divide your total net profit by your total number of sales to calculate your net profit per sale. For example, if you made 40 sales, you'd divide $1,632 in net profits by 40 sales to get $40.80 in net profits per sale. Now you've realized that for every $79.95 item you sell, $40.80 goes straight into your pocket as pure profit!
Step 3. Calculate your visitor worth by dividing your net profit per sale by your conversion rate. Now that you've calculated your sales conversion rate and net profit, here's how you calculate the value of a visitor:
Net Profit per Sale divided by Conversion Rate = Visitor Worth
If your net profit per sale is $40.80 and your conversion rate is 1 in 125, then your equation will look like this: $40.80 net profit per sale divided by a 125 conversion rate, which equals $0.32 visitor value.
This means you can afford to spend up to $0.32 to attract a single visitor to your site. So if you invest $50 in testing an advertising technique, it should bring you at least 156 visitors to break even--and one of those visitors needs to make a purchase. If you receive fewer visitors than this and no one makes a purchase, then your test has failed, and you'll need to move on to the next test.
Corey Rudl, president and founder of the Internet Marketing Center is the author of the best-selling course Insider Secrets to Marketing Your Business on the Internet. An internationally sought-after Internet business consultant and speaker, Corey focuses his energy on the research and development of practical, cost-effective Internet marketing strategies and software for the small and homebased business owner.