When trying to grow an online business, many site owners get stuck in what I call the “traffic trap” – focusing exclusively on getting more and more visitors

Why is this a “trap”?

There are two reasons: firstly, when you continue to work on the same aspect of your business, you get diminishing returns – it takes more and more effort to produce smaller and smaller gains. Secondly, by focusing on only one thing, you’re restricting growth.

Let me show you why…

3 Ways & Only 3 Ways

Jay Abraham says there are 3, and only 3, ways to grow a business:

  • Increase the number of clients
  • Increase the average profit per sale
  • Increase the average number of purchases per client per year

And he points out that, if you improve each of these things by just 10%, your net sales will increase by 33.1%.

e.g. from

1,000 clients x £100 per sale x 2 purchases a year = £200,000

to

1,100 clients x £110 per sale x 2.2 purchases a year = £266,200

What becomes even more interesting is that the 33.1% increase in net sales will usually be a far higher percentage increase in profits.

For example, the £200,000pa business above might have non-variable costs of £100,000. In that case, their profit goes from £100,000 to £166,200 – a 66.2% bump.

Yet all they did was improve 3 things by a measly 10%.

(which usually isn’t hard to do)

Pretty good, right?

Well, the same sort of multi-angled approach works online too.

Doing It With Adwords – Even Better

For example, with Adwords, there are a number of factors you can influence:

  • Number of impressions (times your ad is shown)
  • Your clickthrough rate
  • Your cost per click
  • Your website conversion rate
  • Average profit per sale

And, if you were to improve each of these by 10%, here’s an example of what you could get:

Before After (10% Better)
Impressions/month 2,000,000 2,200,000
Clickthrough rate 1.00% 1.10%
Clicks 20,000 24,200
Cost Per Click £0.50 £0.45
Cost £10,000.00 £10,890.00
Website Conversion Rate 1.00% 1.10%
Profit Per Sale £60 £66
Number Of Sales 200 266.2
Sales £12,000 £17,569
Total Profit £2,000.00 £6,679.20

233.96% Increase In Profit!

Again, this is the product of just two things: focusing on every factor and making small improvements.

What you’ll usually find is that you’ll improve some factors by 20% or 30%.

The Virtuous Circle

For example, last week I increased one client’s average order value by 37% (in a split-test) just by adding a single sentence to his web page.

That increase in order value means we can now turn a profit on some keywords that were previously unprofitable. It’s a virtuous circle.

And that’s what you’ll find when you get out of the “traffic trap”: increasing your conversion rate and average order allows you to spend more money to bring in a visitor. This, in turn, leads to more visitors. These visitors can be put through split-tests that will increase your conversion rate… and so on…

And, while all of this is happening, you’re building up your bank account and some of that money can be re-invested in other marketing (like hiring a top-class SEO).

Best wishes,

Steve

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