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

27 replies
• |
If you're not making money, then this
post is perfect for you. If you're already

Seeing is believing, and if I said it,
most will be looking for the magic button
anyway...

*assuming list is built from free gift*

So let's take two scenarios:

Scenario A
Conv. Rate ..................... 1%
No. of Sales per 100imp..... 1
Total Sale per 100imp........ \$50
Avg Value for 1 customer... \$0.50

Scenario B
Conv. Rate...................... 2%
No. of Sales per 100imp..... 2
Total Sale per 100imp........ \$100
Avg Value for 1 customer... \$1.00

When conversion rates increased by 1%,
the avg value for 1 customer doubled.

Let's check out the backend as well:

Scenario C
Conv. Rate ..................... 1%
No. of Sales per 100imp..... 1
Total Sale per 100imp........ \$50

Conv. Rate per 100imp....... 1%
No. of Sales per 100imp..... 1
Total Sale per 100imp........ \$100

Avg Value for 1 customer... \$1.50

Scenario D
Conv. Rate ..................... 2%
No. of Sales per 100imp..... 2
Total Sale per 100imp........ \$100

Conv. Rate per 100imp....... 2%
No. of Sales per 100imp..... 2
Total Sale per 100imp........ \$200

Avg Value for 1 customer... \$3.00

Again, it doubles because of the increase
in the back-end conversion rate as well.

I'm pretty sure you can see the trend
where the avg single customer value
increases every time conversion rate is
improved.

generation. Chances are, if you send
relevant traffic via (for example) PPC,
you can even bid on HIGHER ad prices.

That's how people afford \$7 clicks on
competitive, hard-core keywords!

This can easily apply to any kind of
traffic generation method out there.

and you're buying by clicks... then go for
the customer value.

If you're getting banner ads... go for the
customer value.

If you're going for SEO... go for the
customer value.

investment margins for traffic.

Just sharing for those who have no idea.

Don't just throw money blindly, have a
feel of where the money is going to go.

How many times would you expect your
investment back?

Sincerely,
Winston Tian

PS - It's not the "good ol' days" where
there are penny clicks or easy-to-rank
broad keywords in SEO anymore... It's
not easy to find easy barriers because of
inflation of ad prices from competition.

The key's really raising your funnel's own
customer value, then making a good
decision for a budget from there...

Hope that helps.
• Its hard days for all of us. But have to overcome all the odds. What do you suggest we should do!?
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•  Originally Posted by Tear Stalker Its hard days for all of us. But have to overcome all the odds. What do you suggest we should do!?
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
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
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Cheers,
Winston
The Beginner's Doctor

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• This is just epic. Excellent post!
I mean, it's like conversion is really the gas fueling the stove. Without it, you can't light the flame, much less cook anything.

-Chloe
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Signed, Chloe C Kimberley
copywriter,designer,marketer

"If you're making good money with SEO/PPC/product creation, I'll be willing to offer copywriting assistance to you so that I can learn from you."

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• Yes I'm also working with my conversion system. But am not having that luck recently. But thanks for the reply.
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• You talk about front end products and back end also. Do you mean getting them to sign up to your list and offer them a product for \$50 and then offer them another for \$100? I don't quite get that part. Are you offering free gifts and then offer them a product first?

This is the best info I've read on here for a while

Thank you
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•  Originally Posted by wannabeaim You talk about front end products and back end also. Do you mean getting them to sign up to your list and offer them a product for \$50 and then offer them another for \$100? I don't quite get that part. Are you offering free gifts and then offer them a product first? This is the best info I've read on here for a while Thank you
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.
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Cheers,
Winston
The Beginner's Doctor

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• 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.
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• This is a dazzling post and great comments...thanks to Winston and all other Warriors.

And yes, watch your profit versus overall costs.

I am an offline salesmanager since + 25 years and these days with staggering overhead charges and decreasing sales you should try to increase your net margin... In my case I buy a product 10\$ and..if I can't triple it I DON'T buy it...

If you are convinced however that you will move loads of the product THEN you might consider selling a little cheaper.

Good luck to all.
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•  Originally Posted by JohnMcCabe 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.
John,

You're right, but that's why I did the
maths. That's exactly why I'm leaving
the traffic part out.

And I admit, conversions is a process.
It's not a one-off thing, and neither is
it easy.

But people have a push-button
mentality... They avoid conversions like
the plague.

Some marketers aren't getting their
priorities right - they should be focusing
on optimizing their funnels for higher
conversions, instead of trying to drive
floods of traffic from all corners of the
earth, and wondering why nothing
converts.

A 1% conversion rate isn't a very
optimistic rate in my opinion, if the right
kind of traffic is driven to a decent page.

Conversions has somewhat a scientific
discipline behind it. For example, there
should be a right match of targeted
traffic to the offer page...

There should be a clear offer and a
to-the-point call to action...

There should be a matching of the
conversation in the prospect's head with
whatever you're telling them...

Well, that's copywriting and conversions.

You're right of course. You need to try
out with traffic. Bid low, take a slice of
the targeted traffic, and test out for a
sample size.

You could use statistical maths, but an
instinct can give a rough idea to its
conversions as well.

Once there, increase bids and test to
see what gives the optimal ROI.

Sometimes, even in PPC, being the top
isn't the best.

Best,
Winston Tian
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Cheers,
Winston
The Beginner's Doctor

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• And if everything else stays the same and you double your profit margin, you also double your bottom line.

And if everything else stays the same and you double your traffic, you also double your bottom line.

Now that we know what to do, the hard part is figuring out how to do it.
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• Is very easy in calculation but tough to capitalize. Very informative and calculative post, but I am not sure, how can I capitalize!
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check out the Pros and Cons of CPA

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Awesome

What types of niches have you had success with?
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•  Originally Posted by Gijsbertus This is a dazzling post and great comments...thanks to Winston and all other Warriors. And yes, watch your profit versus overall costs. I am an offline salesmanager since + 25 years and these days with staggering overhead charges and decreasing sales you should try to increase your net margin... In my case I buy a product 10\$ and..if I can't triple it I DON'T buy it... If you are convinced however that you will move loads of the product THEN you might consider selling a little cheaper. Good luck to all.
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...
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•  Originally Posted by JEasy Awesome What types of niches have you had success with?
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.

 Originally Posted by JohnMcCabe 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.
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
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Cheers,
Winston
The Beginner's Doctor

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great post.this post will benefit many newbies
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• Thanks for sharing!
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• exactly right winston

this is the main reason how to see how much you can spen on advertising so that you break even or profit

not knowing your average value per customer is a recipe to go broke very quickly

and as you say, this is why some marketers can pay a lot per click because they know there funnel will make this back within so many days, or weeks

paul
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• I LIKE IT!
THANKS
DAVE@
DSLfarms
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• Hey Winston,

Thanks for sharing the important concept of compounding results.

In our case - that is why quality copy is so MONEY to help increase conversions at each interval.

~S
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• Scenario C
Conv. Rate ..................... 1%
No. of Sales per 100imp..... 1
Total Sale per 100imp........ \$50

Conv. Rate per 100imp....... 1%
No. of Sales per 100imp..... 1
Total Sale per 100imp........ \$100

Avg Value for 1 customer... \$1.50

If by "back-end product" you mean something you sell to someone that has already purchased your front-end product, then you need to adjust your calculation because you would need 100 people to see it. In your example, only 1 person (your 1 successful sale) would see the back end offer, not 100.

At 1% conversion you would need 100 X 100 = 10,000 visitors to see your front-end offer in order for 100 views of your back-end offer.

10,000 views of your front end offer = 100 sales @ \$50.00 = \$5,000

100 views of your back-end offer = 1 sale @ \$100.00 = \$100.00

Total sales = \$5,100 divided by 10,000 views = \$0.51 per visitor

The good news is that your back-end offer would probably convert at a much higher rate than 1% to people that have already purchased your front-end product since they're qualified buyers. We don't know what that conversion rate would be but 20% would not be insane.

At 20% conversion for your back-end product you would add 20 sales @ \$100 = \$2,000 so your total take for 10,000 visitors would be \$5,000 + \$2,000 = \$7,000

So your visitor value in this example would be \$7,000 divided by 10,000 views = \$0.70 per visitor.
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•  Originally Posted by DeadRooster If by "back-end product" you mean something you sell to someone that has already purchased your front-end product, then you need to adjust your calculation because you would need 100 people to see it. In your example, only 1 person (your 1 successful sale) would see the back end offer, not 100.
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
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Cheers,
Winston
The Beginner's Doctor

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• WinstonTian thank you for a most excellent post.
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• The calculations don't add up because in the real world only 1 in 100 would see your back end product if your front end converted at 1%, if the back end did the same and converted at 1% then only 1 in 10,000 visitors to your site would buy the back end, but you are right improving conversions is more important than sending traffic, and knowing where conversions are coming from can seriously improve the results you get as you can work on where things are not working to plan.
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•  Originally Posted by karlmay1980 The calculations don't add up because in the real world only 1 in 100 would see your back end product if your front end converted at 1%, if the back end did the same and converted at 1% then only 1 in 10,000 visitors to your site would buy the back end, but you are right improving conversions is more important than sending traffic, and knowing where conversions are coming from can seriously improve the results you get as you can work on where things are not working to plan.
Hi karlmay,

I answered this partially in an above post in

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
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:

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

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...

And there are factors like the previous sale influencing
the future sale because it supplements, compliments

The main thing to note here is that conversions can

If you use the front-end sale as a lead generation
method, you're going to be thinking in terms of
fundamentally different in terms of thinking about

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
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Cheers,
Winston
The Beginner's Doctor

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Yes I know what you are saying but the example never mentioned Free give aways and mentioned front end and back end and that was what I worked off, which means they are multiplied, and the other thing would be that odds are that those that won't buy the first up-sell wouldn't buy a even higher value product so personally I wouldn't send those that offer, maybe your list works in a different way, but that is how I run mine.

I do agree though, I wouldn't capture a lead in the online marketing niche especially through an actual sale, it would be via a free give away then a front end low priced up-sell and funnelled through to back-end high value products and services, but these wouldn't be offered unless they bought a low value product.
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•  Originally Posted by karlmay1980 Yes I know what you are saying but the example never mentioned Free give aways and mentioned front end and back end and that was what I worked off, which means they are multiplied, and the other thing would be that odds are that those that won't buy the first up-sell wouldn't buy a even higher value product so personally I wouldn't send those that offer, maybe your list works in a different way, but that is how I run mine. I do agree though, I wouldn't capture a lead in the online marketing niche especially through an actual sale, it would be via a free give away then a front end low priced up-sell and funnelled through to back-end high value products and services, but these wouldn't be offered unless they bought a low value product.
Thanks for pointing that out!

Fixed it.

Winston Tian
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Cheers,
Winston
The Beginner's Doctor

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• Excellent post!
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