The MONEY Formula!

Json

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The MONEY Formula:

[Traffic] x [Conversion rate] x [$ per customer] x [# of transactions] = Your Paycheck

I didn't invent the above formula, it is a borrowed one and it is true for all businesses, including offline ones.
I'll give you an example of how this formula is calculated in affiliate marketing terms:
Let's say you own an affiliate website that promotes dog training products.

Traffic = 2000 visitors per day

Conversion rate = 0.37% (ie 1 in every 270 visitors to your website buys something)

$ per customer = $24.37 (ie the average commission you earn is $24.37)

# of transactions = 1.4 (ie customers usually buy 1 product from you, but some people opt into your mailing list and buy more products from you in the long run).

Therefore the amount you make from this website per day =
2000 x 0.37% x 24.37 x 1.4 = $252.47/day

Question: That's pretty obvious, why is that formula so important?

Answer: It may be obvious to some, but not to everyone. Also most people wind up having problems in one or more of those 4 major areas and if you don't pay attention it is easy to have holes in your marketing that you don't even see.
Bottom line is, you need to know your numbers when it comes to each of those 4 areas, particularly traffic and conversion rates.
Also, by keeping this formula in mind at all times in your marketing you can help prevent yourself becoming too heavily focussed on any one of those 4 areas.

Here are a few examples:
Someone might own a website that gets 1000 visitors per day, but makes no sales. The things that I advise are to do with conversion rates:

-Look at where the traffic is coming from... is it relevant? Are you advertising using popups on irrelevant websites? Are you optimizing for search engine keywords that are just not relevant enough for the product you are promoting?
-Look at the pages that are getting the most traffic and how people are getting there. What keywords are they typing in? What are they thinking and are your affiliate links placed in an obvious enough manner? Do they look credible? Is the product you are promoting credible?
 
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