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How To Improve Your Online Sales

Copyright 2005 By Roger Willcocks


What factors affect your sales

There are a number of factors which affect how many product sales you make. Each of these is discussed below, along with ways to improve each of them. This analysis is based around the following information

 Item    Example 
Visitors Per Week   1000
Cost Per Visitor   $0.20
Cost of your Time ($/hour)   $30.00
Cost of Product   $10.00
Sale Price   $47.00
Conversion Rate   1.0%

Amount of traffic

You can get traffic from many sources, some of which cost money, some which cost time, and some which cost very little of anything once set up.

The 'easiest' form of traffic comes from search engines, and it requires nothing more than to add a new page to your website. You take the time once to add it, and basically never have to do anything with it again. This is the 'best' use of time as it should produce a continual small flow of traffic

Another example of gaining traffic by spending time is to go to forums relating to your product, and posting useful messages, and including a URL in your signature. Useful messages are necessary not only to avoid having messages deleted, but because it improves how people view you. This can produce higher levels of traffic, but needs to be maintained as messages get archived off. There are other advantages, such as gaining recognition, and new product ideas as well.

The third way to gain traffic is to pay for it. E-zine ads, pay-per-click (PPC) advertising, banner ads, affiliate programs. These are all ways to trade money for visitors. The advantage of affiliate programs is that you only pay for a result, not just an attempt.

How appropriate the traffic is

Getting traffic is easy. Do you doubt it? I can get you as much traffic as you want in a few minutes. Just put up an Adwords ad for the latest teen pop sensation offering free posters. Of course, if you're selling software like I am, that won't get you many sales. Just like that example, every source of traffic has a different level of interest in what you are offering. Every e-zine, website banner ad, and keyword search is slightly different. As part of your ongoing work, you need to monitor the performance of different traffic sources and where possible expand on them. Even more importantly, you need to get rid of the ones that are costing you more than you make.

The price of your product

The more expensive your product, the fewer people will buy it. But that is not necessarily a bad thing. Let's look at an example. You get 1000 visitors a week with a conversion rate of 1%. That means 10 sales of a $47 product for $470. Less costs of $100 (for the product) and $200 (to get visitors), for a profit of $170. Let's say that you increase the price from $47 to $67, and your conversion rate drops to 0.7%. You get 7 sales at $67 for $469, a loss of revenue of $1. You still have to pay $200 for the visitors, but the product has only cost you $70, so you now have a profit of $199, even with fewer sales.

The real trick is to maximise your profit, not your revenue. Careful testing is needed to determine this, and there is no easy way to determine it in advance.

How well your sales letter converts

Regardless of everything else, how well your business does ultimately comes down to how well your sales letter persuades visitors that YOU are the person to buy from. Sales copy ultimately determines your profitability. It limits how much you can afford to pay for each visitor, and even small changes can have a large effect on your profitability.

Here is an example of how improving your conversion affects profit. Take our earlier example, 1000 visitors for a $47 product giving $170 profit at 1% conversion. Now, let's say you do some testing, and increase your sales by 10%. That is, from 1.0% to 1.1%. You earn $517, you still pay $200 for the visitors, and you now pay $110 for product. Your profit has increased from $170 to $207, more than 20%.

Early increases from split testing are quite commonly in the region of 20% to 200%, but lets stick with a conservative 10% per month. After 12 months, your conversion rate has lifted from 1%, to 2.85%. Now you have 28 sales per 1000 instead of 10. This is your income now: $1316, you pay $200 in advertising, and $280 for product. Your profit is now $836, a 390% increase.

It doesn't quite stop there though. Your profit is higher, so you can afford to spend more per visitor. So now you spend $0.30 per visitor, and can get 1200 visitors per week (only a 20% increase). You spend $360 on getting visitors instead of $200. In exchange you get 34 sales. That's $1598 in income. You also now have to spend $340 on product, so you spent $700 in total. Your profit is $898. Not as much of an increase in profit, but still useful. Paying that $0.30 per visitor back when you first started would have left you only $84 profit.

Summary

As you can see, even small differences in conversion can make large differences in profit. That's why I concentrate there. So, how do I apply this?

  • Adding new content
    Every few weeks I add articles like this one to my website. I also add new products every now and again.
  • Posting to forums
    I post to marketing forums like Anthony Blake's, and to forums about specific types of software, such as DotNetNuke, Microsoft products, and others I am familiar with. I also submit my software to shareware sites, which provides me with links.
  • Advertising
    I pay for Adwords. Mostly I do this for affiliate programs where I can start with proven materials. But the more expensive of my products are also prompted this way.
  • Split testing
    I split test my sales and product pages. I always start with two radically different versions, then once one has proven (and I mean mathematically proven) superior, I use that version as a base and start testing subtler changes. Wording, colours, the order in which items appear, all these have effects on visitors, and I measure them all.

Useful Information

  • Split Testing for PHP
    This is the most useful PHP based tester that I have found. I haven't used it myself, but the manual is clear and easy to read.
  • Split Testing for ASP.NET
    Conversion Booster.NET is the only split tester for ASP.NET I know of that does not require you to use someone else's server as part of the process.
  • Copy Writing Services
    Upmarket Content are the copy writing service I use to provide one of the two versions I use to start testing with each new product I release. I write the other myself, which gives them the facts they use to start with. So far they're ahead of the game, but then, I write software.

This article is shareware.  Give this article away for free on your site, or include it as part of any paid package as long as the entire article is left intact including this notice.
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Copyright © 2005 L-Space Design.

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