funny, some people just don't get it...

Hey mate,

It's harder (if you compare it to the yesteryears),
but not all is lost. The main key's conversions. If
you have a conversion system that covers the
costs of your initial advertisement costs, you're
going to widen profit margins considerably.

Of course, since penny clicks are gone, the margins
might be a little narrower. Most of my buddies are
still doing good with that! You just need more
back-ends to "up-size" the value.

Winston Tian

PS - Thanks Chloe, I liked that analogy

You can have many different kinds of
campaigns, but mostly in the Internet,
the most common "sales campaign"
would be creating a list, yes.

Front-end products are simply the
products that get people to commit to
a sale. This signals to you, the marketer,
that this customer has a strong enough
desire to exchange money for a good
solution.

The list becomes "fresh" - and then most
marketers will start an email campaign on
these customer leads with backend offers
attempting to up-size customer value.

Well, you can technically do what you've
said... Some people choose to create
lists out of only those who buy, because
these lists would be be "fresher" and more
responsive to future back-ends.

Back-end products can be anything that
is relevant to the solution the customer
wants. For example, if he bought a
boxing training video, he might like a
sandbag from Amazon.

Or he might like social gatherings of local
boxing enthusiasts. Stuff like that.

The key is to "supplement" and match
people to their wanted desires.

Winston Tian

PS - some people do it through lead boxes
in the offline world. You can't discount
offline methods, of course.

Winston, I can't question your grasp of basic arithmetic, to tell people "increase your conversion rate just 1%" isn't telling the whole story.

You basically said, "double your conversion rate and double your profit", which doesn't sound quite so easy. Although, to be fair, effective testing doesn't make it all that hard, either.

One thing I don't want people to miss, though. Way too many people get caught up in trying to drive every single person on the net to their money site. They obsess over traffic when they should be fine-tuning their conversions first.

Looks like one of those chicken-and-egg things, doesn't it? How do I test without traffic first?

The key is to get some traffic flowing, get your conversions up to the optimum level, then pour on the coals. Notice I said 'get your conversions up to the optimum level', not the maximum? At some point, the return on continued conversion testing will be less than the return on spending your time, effort, attention and money elsewhere. That's the point where you say 'this is good enough' and start working on increasing visitors.

When I started studying direct marketing, one of the old-time direct mail guys wrote that they looked for 8x to 10x mark-ups. In other words, if you paid $1 for an item to sell, it had to actually sell for $8-$10 if you wanted a chance to make money.

Ideally, your 'postage and handling' covered that and the actual cost of the item. You could then spend 80% to 90% of the retail price to acquire a customer and still make a profit.

Of course, in those days, you had creative, list rental, printing, and postage to pay for just to present your offer...

Well, there really are many niches out there
to begin with.

Pets, children/parenting, hobbies, fashion,
technology, management... (many more)

The trick is to "zone in" to a market gap,
find out what this core market group wants,
then offer them the solution.

Recently, I've been dabbling with green
energy/renewable energy market, seems like
a pretty fun niche to be in.

Lol

DR marketers (myself included) sell things for
"free", and say stuff like...

"You only need to pay the shipping+handling
fee."

...Which actually includes the cost of
producing the product. So I guess that's a
great example of conversions.

Winston Tian

That's right.

I took reference to an existing list built
without a paid product. If the front-end is
used to build a list, and not a "free gift",
then your example would be valid.

The discrepancy of the customer value is
usually why I prefer to stack lists with
"freebie leads" which are still targeted.

But to each his own...



Winston Tian

Hi karlmay,

I answered this partially in an above post in
this thread...

The probabilities are separate, and should not
be multiplied if you built the list without a
front-end product.

For example... Let's say you have a compelling
"free gift" in exchange for getting a subscription,
and you build up to 100 subscribers.

Every time you send 1 offer, it's going to be a
probability of 1/100, since conv rate is at 1%.

So when you send your front-end at a low
price-point, it's 1/100.

When you send your back-end offer, it's 1/100.

You can't multiply 1/100 * 1/100 because that
will mean that these two events are consecutive.

If you mean to lump the total sum of subscribers
in the "free gift" lead generation method, you're
going to get up to 40% to 60%+ opt-in rates.

That is approximately 50%, which is a 1/2
probability.

So if we have 10,000 impressions for an example,
firstly, we process the op-tin rates:

50% * 10,000 visitors = 5,000 leads

Now that we have 5,000 leads, we then build
value on them as such:

1% * 5,000 leads ≈ 50 buyers

This will be 50 buyers for the first offer. And then
we send them another offer...

1% * 5,000 leads ≈ 50 buyers

This will be another 50 buyers for the second
offer. As you can see, each 1% does not intersect
with each other and are mutually exclusive. Hence,
multiplying it in this case is not the model.

Of course, I removed some elements to illustrate
the point of changing conversions. There are other
factors such as "open rate" and "CTRs".

For example...

1% * 5,000 leads * 50% (open-to-clickthrough) ≈ 25 buyers

And there are factors like the previous sale influencing
the future sale because it supplements, compliments
or people trust your solutions.

The main thing to note here is that conversions can
heavily influence your end-results.

If you use the front-end sale as a lead generation
method, you're going to be thinking in terms of
VISITORS instead of leads... It's going to be
fundamentally different in terms of thinking about
your number of visitors.

In the front-end lead gen case, it'll be a versatile
number of visitors that is not fixed as a control.

In my case, it'll be 10,000 visitors as fixed.

If it's fixed, I can then accurately approximate
the max Cost-per-visitor bids:

[(25 buyers x front-end-price) + (25 buyers x back-end price)] / 10000 ≈ Max Cost-per-visitor bid

Example if i fill in numbers:

[(25 x $37) + (25 x $67)] / 10000 = $2600/10000 = $0.26

That'll be 26 cents per visitor for a sample size
of 10000 impressions!

Now that's some tight stuff... What happens if
we raise the conversions from 1% to 2%?

[(50 x $37) + (50 x $67)] / 10000 = $0.52

It almost doubles! And if you can't do that,
well, simply increase the number of backends:

[(50 x $37) + (50 x $67) + (50 x $127) ] / 10000 = $1.16

Or... Set up a monthly continuity... so in 12
months, ceteris paribus:

[(50 x $37) + (50 x $67) + (50 x $47 x 12) ] / 10000 = $3.34

The max bid can change if you do the right stuff
to conversions, that's for sure.

Winston Tian