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.

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