Why Paying for Traffic is not such a Big Problem
If you get your metrics right from the start, then paying for your traffic need not be such a big issue for your business model.
We will keep it simple in this example, but I want to show you how you can actually build a very good business on the Internet using paid for traffic.
The reason most people shy away from this is that they think they will lose money. In this example, I will prove to you that getting your metrics right at the start will deliver more good results for you.
Provided you have your business set up in the right way, you can grow a very successful business in a relatively low amount of time.
Let us take industry wide averages in our working example and say that we convert our sales at only 2% on the sales page from PAID traffic. This means that you typically will pre-qualify to a point before they get to your site.
We are using Pay Per Click, like Google Adwords for our sample, but you can use other means if you get the metrics right.
We are going to pay $0.75cents per click to our site. Our front end product sells for just $29.95 and we then have an up-sell for $37. We put our front end buyers into our continuity program at $29.95 per month.
So in our paid for traffic, we want to average 100 sales per month to our front end product. Our cost per click is $0.75, and our conversion on the sales page is 2%. In order to get 100 sales, we need to show that page to 5,000 people. In other words, 5,000 clicks. Our cost would be $3,750 which we pay a couple of weeks in arrears if we use Google Adwords.
We know that this will bring us 100 sales (from our testing). 100 Sales at $29.95 equals $2,995 in income, minus a 5% processing fee, equals net turnover of $2,845.25
In testing, our up-sell converts at only 25% (you would need to test this), but it can be higher than 30% if it is relative to your main product and not too much higher in cost. Do not go for a big ticket sale at this point (this is what your Autoresponder series is for).
25 people are going to purchase our up-sell at $37, this equals $925 or 878.75 net. We now have a combined net sales value of $3,724.00 with our advertising spend at $3,750.00 we make a net loss up to this point of $26.
Remember that our continuity program will sell for $29.95 per month. Even if you had a poor drop- out rate of 50% before 1st month billing, you would still make $1422.63 net from that month’s continuity membership.
Therefore you make a $1,396.63 profit.
Provided they stay more than one month, you make more profit. The average stay in continuity programs is 3-6 months. Can you see how effective this model could become?
Plus, you would be building a qualified list of buyers who you can cross promote other products to including big ticket items.
Even if you only sell a $297 big ticket item, and you convert only 5% of the initial buyers, that would add a further $1410.00 net to your monthly bottom line.
So using paid for traffic, you can build a monthly healthy profit in your business without the need for affiliates or joint venture partners. By bringing in these people as well, you stand to make even larger gains.
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