Understanding traffic, conversions and economics

When people first get started online, they think traffic is the answer. Even in established bigger businesses, many think the answer to sales growth is more traffic.

Perry Marshall wrote the Ultimate Guide to Google AdWords which is all about one of the best traffic sources you can spend money on. Perry also wrote another highly recommended read called 80/20 Sales and Marketing.

The Power Triangle

Inside 80/20 Sales and Marketing, Perry shares a concept called the Power Triangle and says “Everything you do in business is one of these three things.”

  • Traffic
  • Conversion
  • Economics
  • Traffic is all about how you get people to view your offer
  • Conversion is how persuasive you are to get people to take your offer
  • Economics is about the pricing and profit related to your offer.

Synergistic effect of traffic, conversion and economics

These three things have a synergistic effect on the results you get. The way one area performs has a knock on effect with the other two areas.

If you pay to get traffic to your offer and it doesn’t convert, there’s no economics.

If you pay to get traffic and it converts but the economics are low, you can run at a loss.

And it is fairly obvious if you don’t have traffic then there is nothing to convert and get an economic benefit from.

Different traffic converts differently

Not all traffic is created equal, some sources of traffic convert better than others. This has everything to do with the frame of mind a person is in when come across your ad.

There are really only two ways people find things online. They are either actively searching for a solution to a question or problem, or they discover it while doing something else like checking their Facebook newsfeed, watching YouTube videos or reading someone else’s website.

How likely do you think someone is to buy something if they are watching cat videos on YouTube? A good ad can grab their attention but chances are they won’t convert immediately because they weren’t in a buying frame of mind.

On the flip side, if someone has gone to Google to find a solution and they see your ad, they are more likely to convert because they are in a buying frame of mind.

Next time you find yourself not getting the results you expected, have a closer look at your traffic sources, the persuasiveness of your landing or sales pages to convert, and the economics of your offer.

By constantly testing and improving the different elements of the Power Triangle, you will eventually get to the results that you want.

Starting Affiliate Marketing

How to earn an income online, even if you’re new

FREE step-by-step training guide ‘7 Steps To Results’

There are many ways to create an income or build a business online. You could become a freelancer, start an e-commerce store, or publish and sell ebooks.

What is affiliate marketing?

Affiliate marketing is one of the simpler ways you can get started. All you do is help other companies sell their goods or services online by referring potential customers to them. In return, you receive a commission when that customer buys.

Many well-known companies have affiliate programs including Amazon and Ebay, demonstrating this is a very established method of doing business online.

So what are the key things you need to know?

You will want to know about two things.

Traffic is the ability to send people from one place to another online. There are free and paid methods available, each with their own pros and cons. This could be from social media like Facebook or search engines like Google.

Conversion is the ability to influence the preferred action you want a person to take. Usually, but not always, this requires some kind of web page to provide further information to ‘presell’ a potential customer before they visit the main company site.

As concepts, these two things are easy to understand but the devil is in the detail so I’ll expand on things with an example.

Affiliate marketing example

Let’s say you become an affiliate for Amazon and decide you want to promote smart TVs. You can run Facebook ads to get people on Facebook to visit an Amazon product page with smart TVs on it. In this case, you’re using Facebook ads to drive ‘traffic’ to Amazon directly.

This could generate some sales but a better way of improving sales might be creating a comparison review of the top 5 smart TVs on your own website first, outlining the pros and cons of each in more detail. They can then visit Amazon better informed increasing the likelihood of buying.

Now you’re probably asking yourself at this stage, how do I even create Facebook ads or build a website? Understandably, there are a lot more things to learn that can’t be fit into this article.

FREE training guide

If you’re serious about learning affiliate marketing and becoming effective at it then check out the FREE step-by-step training guide ‘7 Steps To Results’.

5-step online business framework for growth

If you’re going to start a business online, or use online to grow your business, you’re going to want to know and develop your 5Ps.

Check out the video to learn more.

The 5P framework goes over the following areas:

  • Proposition – what you stand for and what are you offer
  • People – two main ways to get people visiting your website
  • Persuasion – 6 principles you need to know to influence leads and sales
  • Platforms – ways to connect with prospects and customers
  • Performance – measurement, learning and optimisation