When you get right down to it, once your get your product and presence squared away, eBusiness really boils down to 2 things: traffic generation and traffic conversion. You just have to figure out how you are going to get people to your site and how you are going to get them to purchase what you have to offer, so you will make a profit by selling it.

If you can figure out solid answers to these two questions, you have your Web business future licked. You are virtually assured of success! 

In the last sequence of tutorials we focused primarily on ways to drive visitors to your site. In this sequence, we are going to focus on how you are going to convert those visitors into buyers; specifically, on how you will use your biggest online asset - your website - as a scientific selling tool. (And don't let the word "scientific" scare you, I just use it because online it is possible to actually calculate every aspect of the ROI or return on investment of your marketing efforts.)

We are also going to focus on how you can... and should... test and track all your advertising so you'll know... right from the get go... whether a particular campaign is going to be a success or a flop, and you'll be able to respond accordingly.

We've got a lot of important ground to cover so let's take this one step at a time, beginning with... 

1. Target your Audience & Focus Your Efforts

Don't try to be everything to everybody! Everyone is not going to want your product. (If you believe they do you haven't done your research.) If you gear your marketing toward attracting big numbers, the likelihood is that you will close fewer sales than if you focus your campaign on a select group of highly targeted potential customers.

2. Don't Sell Your Customers, Help Them

Focus on providing benefits and solutions rather than touting features. Emphasize how your product or service will benefit your customers by solving their problems.

3. Think Outside the Box

It's critical that you examine alternative solutions and ideas when developing your products and campaign strategies. You'll be surprised at how often the unusual idea or answer turns out to be the one that works best! Examine your product, web design, sales copy, marketing campaign from all angles. By doing so you might discover a new approach or unique concept that could totally re-vitalize your efforts and explode your sales and profits.

5. Keep an Open Mind

Be willing to try new techniques and strategies but be skeptical of advice and tips you receive from others. Just because a particular advertising/sales technique didn't work well for someone else doesn't mean that it won't work for you.

4. Test, Test & then Test Some More

Test everything all the time - price, lay out, headlines, sales copy, ordering process. Don't be afraid to fail. Don't be afraid to improve on your success. No matter how well your business is doing, you can always do better!

* IMPORTANT* Before you actually begin promoting your business you'll need an effective web site traffic analysis system in place, otherwise you'll just be spinning your wheels. You'll have no idea which tactics and strategies are actually working and which are not. Not doing this is one of the most costly mistakes that online marketers make, and it's a shame because it costs them valuable time and money - and it's so easy to do. 

Website Metrics - The Foundation of Your Business

Think about this for a moment...

What would you do if you knew that (1) it was going to cost you $100 to drive 500 targeted, unique visitors to your website, (2) that your website would convert 1 out of every 100 visitors into paying customers, and (3) that on every sale made, you generated $50 in net profit?

Would you pay for the traffic? Or would you look for a cheaper alternative? 

If you know the metrics of your website and you've done the math, the answer is obvious!

You convert 1 out of every 100 visitors into paying customers. This means that, out of the 500 visitors you've bought, you will close 5 sales. (500 divided by 100 = 5).

For each sale you close, you earn $50 profit, so you've just made $250 on 5 sales! (5 sales x $50 profit = $250).

So basically, you paid $100 to earn $250, a net gain of $150! ($250 minus $100 = $150 pure profit!)

So do you buy the traffic or not? Of course you do!

Do you think I'm over-simplifying this? Well, I'm not! These are very simple statistics to figure out. And I'll now do my best to explain, in plain English, the easiest way to calculate the metrics you need if you want to guarantee the success of any promotion you run.

Click-Through Ratio

The "click-through ratio" is a calculation of how many visitors clicked-through an ad or promotion to your website versus how many people actually viewed the advertisement. (The number of times your ad is simply viewed is referred to as "impressions.")

For example, if you are running a banner campaign and your banner is displayed to 1,000 unique visitors (1 CPM), and out of those 1,000 unique visitors, 100 of them "clicked through" the banner (i.e. clicked on the banner), to your website, this means that your "click-through ratio is 1/10 or 10%.

Of course, this is an extremely high conversion ratio for banner advertising - the industry standard is actually about 0.5% or 1/200.

It is important to establish your click-through ratios with:

• Banner ads
• Pop-ups or Pop-Unders
• Classified ads
• Ezine advertisements
• Direct e-mail promotions
• Pay-Per-Clicks

Basically, you'll want to know the click-through ratio for any advertisement that presents a potential visitor with a headline, article or advertisement and then asks them to click on a link to visit your website.

When calculating your click-through ratio, depending on the type of advertisement you are running, here are some baseline click-through ratios that you should be striving for:

• Banner/Pop-Up Ad (Targeted Network): 2% - 5%
• Banner/Pop-Under Ad (General Network): 0.5% - 2%
• Ezine Advertisement: 5% - 15%
• Direct e-mail promotions: 15% - 30%

Keep in mind that these are baseline numbers and will vary depending on how targeted the audience is and how receptive they are to the advertisement. 

Customer Conversion (Sales-to-Visitors) Ratio, a.k.a. Sell Through Rate

The most important metric any site owner must know is their customer conversion ratio or CR. The average percentage of people who purchase from your web page. 

Before you go hog wild on advertising, it is essential that you spend some time assessing what percentage of the visitors to your site actually go ahead and buy from you. As this ratio lets you know how much you have to spend on advertising in order to turn your customers into buyers, you cannot run a business successfully without keeping tabs on it.

If it goes up - you're doing a bang up job! If it goes down - you'd better go back to the drawing board and figure out a way of improving it.

At the end of this tutorial, you'll learn a fast and easy way to calculate your site's CR, but basically it involves tallying up the number of sales you've made over a period of time and dividing that number by the number of visitors you've had to your site over the same period of time. 

Example #1, if you make 1 sale for every 200 visitors to your website, your sell through rate or CR is 1/200 or 0.5%.

Example #2, if 3 out of 100 people who visit your site purchase your product, your sell through rate or CR is 3/100 or 3%.

By simply understanding this particular formula, it is very simple to calculate whether or not a promotion or advertising campaign is going to be profitable. If you know how many targeted visitors a particular promotion is going to drive to your website, and you know the average conversion ratio of the product or service you are promoting, you should be able to estimate how many sales you are going to make - and know whether or not the money you are spending is worth the return (or ROI).

Keep in mind, the sales-to-visitors conversion ratio is going to change depending on the type of visitors you are sending to your site. For example, a highly targeted ad is going to drive more qualified visitors to your website, thus increasing your sales-to-visitors conversion ratio. So make sure you know the specific market you are advertising to before you spend big bucks driving traffic to your website.

Customer Acquisition Cost a.k.a. Visitor Value

This is another crucial figure to determine if you're going to run your business profitably. It is the amount of money an average visitor is worth and it is based on the total cost you spend on a particular advertising campaign divided by the total number of new customers obtained through that spending.

Using the above Example #2, if 3 out of 100 people purchase your product and your profit per sale is $100, each visitor is worth $3, because 100 visitors equals $300 in sales. 

For another example, if you were to spend $200 on ezine advertising and that advertising resulted in 100 new prospects visiting your website and 20% of them go ahead and purchase your product, then your customer acquisition cost (visitor value) would be: $200 / 100 x .20 = $10 per customer. If you are selling a $50 product, and it only costs you $10 to make a sale, then you are netting a profit of $40 per sale!

Although it may cost online merchants a few dollars more to acquire customers than it does off-line merchants, primarily because there is less one on one interaction, the good news is that it costs online merchants a lot less to retain the customers they acquire. Once you have a satisfied online customer and you have his/her e-mail address in your customer database, you have considerable leverage in building repeat business. 

Why is this information so important? Simple.

If you are going to be using any of the pay-per-click services, you had better know how much each visitor is worth to you before you go and bid on your keywords or you might well wind up paying more for your visitors than they're actually worth to you.

Secondary Subscriber Conversion Ratios

Subscriber-to-Visitor Ratio

A subscriber-to-visitor ratio basically measures how many visitors opt-in to your newsletter when they visit your website. This is an important stat to know because when you are paying for visitors to your website, you want to be certain that you're capturing as many e-mail addresses as possible. After all, you only want to pay for that traffic once!

Once visitors have subscribed to your newsletter, it's easy to market to them again and again - at absolutely no cost! In fact, opt-in e-mail is one of the most powerful marketing tools available to any website owner. By knowing your subscriber-to-visitor ratio, you can actually pay for advertising and calculate how many people will join your list. And this brings us to the next formula...

Sales-to-Subscribers Ratio

The sales-to-subscribers ratio is very valuable once you start to build your opt-in list. This will allow you to easily calculate how many of your subscribers will buy your product when you send them an e-mail promotion.

Total Subscribers Mailed / Sales = Subscriber To Sales Ratio

For example, if you have 1,000 people on your subscriber list and you know 1/100 subscribers will buy a product from you when you send them an e-mail, you will be able to accurately predict if the profits you will generate are worth the time spent on the promotions.

This can also be broken down into two different formulas that will tell you:

How many subscribers took action (i.e. clicked-through to your website) when they received your e-mail promotion. 

Total subscribers mailed / Total subscribers who clicked-through = # of subscribers who took action

(This is a good measure of how effective your "notification" or "pre-sales" letter was.) Of those subscribers who took action, how many made a purchase. 

Total # of subscribers who clicked-through / Total number who bought 

(This is a good measure of how effective your sales letter and your offer was.)

Knowing the metrics of your website is critical to knowing how your website acts and what promotions are going to make you money or lose you money. 

Fast & Easy Way To Determine Your Site Metrics

1. Create a list of 20 to 50 keywords that clearly describe your web site or business. Some tools you might use for keyword research include:

- Overture.com keyword suggestion tool
- JimTools

2. Set up Pay-Per-Click accounts with Overture and FindWhat.com. (You can use other pay-per-clicks if you have preferences.) 

3. Bid on your keywords and start purchasing traffic. Don't worry about the initial click through pricing, just get a position high enough to start attracting over 100 visitiors a day. (This is important in order to determine your sales conversion.)

4. Once you are getting 100 visitors a day, you can start calculating your site metrics. The two metrics (or calculations) that matter most are:

• Your Customer Conversion Ration or Sell Through Rate
• Your Customer Acquisition Cost or Visitor Value

If you are getting 100+ visitors a day from your pay-per-click advertising, and nobody is purchasing your product, STOP your advertising! You need to make some changes - either to your offer, your web copy, your price or something.

If you do all this and run another test with pay-per-click traffic and you still get no takers, then it's time to rethink or drop the project altogether. No use flogging a dead horse. You're better off going back to the drawing board before you waste any more time and money on a project that is clearly doomed to disappoint. At least, by doing business online, you have the advantage of knowing in advance which projects are going to be winners and which, losers.

On the other hand, if you are getting good results, you may have hit pay dirt. Time to roll out your product in earnest. And put your advertising campaign into full swing.

As you can see, these "metrics" are more than just numbers - they are crucial benchmarks that you need to keep your business in check as well as to grow it. If you see a problem with an ad or the roll out process itself you can track it and address it immediately, before it can do too much costly damage. And once your business is up and running they allow you to stay squarely on top of things by being able to compare costs and results by campaign rather than having to rely on monthly or quarterly projections.