Website Return On Investment
Written by Randy
It seems almost too obvious for many that if you double your traffic, you double your sales, and thus your gross profit. However that is an over simplification, and comparing current results with those that may occur by purchasing increased traffic requires that we consider some issues.
"Am I purchasing quality traffic?".
Your site receives 5000 visits a month and converts 2% or 100 visitors into sales. These sales generate $50 in profit for each sale, or $5000/month in net profit.
Buying 5000 visits per month "might" double your revenue IF the visits are properly targeted. However costs for those new visits will eat away at your profit. If 5000 new visitors generate $5000 in profit, it really means that you are making $1.00 per visitor purchased. This means that if you are paying $1.00 for a pay-per-click service, you are at best breaking even on your venture from one month to the next.
The other option: Increase Conversions
There are other possibilities however. Rather than simply purchasing traffic, you could do some analysis of your site and try to figure out what makes the difference between someone who buys and someone who doesn't. Is your site lacking information? Is the purchase process not evident? Do visitors have trouble navigating things? Do you get email requests for more information or complaints about other issues?
Take $5000 spent buying visits at $1.00 each above, and now apply that same money to improving your sales conversions from 2% to 3%. Thats not a huge jump if we really think of it. Doing this, you have now increased your gross profits by $2500.00 per month with no requirement for ongoing investment. In 60 days, your changes have paid for themselves, and over the course of a year, you have increased the gross revenue by $30,000/year and that continues every year. If you managed to increase the conversion rate to 4%, then by the end of year 1, you have had a return on investment of as much as 1100%. And that return continues year after year.
Final Note
As a final note, one should also realize that if conversions are doubled from 2% to 4%, then this increase also extends itself to an additional traffic that might be later purchased. It's always best to start by making certain that your visitors have the best experience possible before you start putting out resources to drag new people in.