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What do you mean by "conversion rate"?

bigarsenalbear
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Joined: 08 May 11
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What do you mean by "conversion rate"?

Hi everyone,

I'd love to know what people actually mean by "conversion rate" as I'm trying to work out how many sales I "should" be making.

As for how conversion rate is defined, I can see two possibilities:

(1) The number of visitors who turn into buyers (i.e. conversion rate is calculated as a percentage of visitors)

OR

(2) The number of clicks that turn into sales (i.e. conversion rate is calculated as a percentage of clicks)

A lot of people say that 1% is the "average conversion rate" - but what do they mean?

Suppose I get 1000 unique visitors to my site per month and 200 of them click on my affiliate link. Now suppose that I get a 1% "conversion rate."

If conversion rate is defined as (1), then I get 10 sales. If it's defined as (2), then I get 2 sales.

That's a pretty big difference!

To be honest, if people are referring to clicks when they say that 1% is average, then I find that discouraging. In order to get just 10 sales, I'd need 1000 clicks on my link. How does anyone make a full-time living from that?!(without getting an enormous number of clicks)

Can somebody with experience shed some light on this?

Kind regards,

Adam
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jmpruitt
Posts: 4723
Joined: 19 Jun 09
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When talking about conversions, I am looking at clicks on my affiliate link converting into sales. However, it can also be misleading in that you have to look at an average over time. For example, I have some sites that might get 1000 clicks with no sales, and then I get 10 sales in the next 50 clicks. It all depends on where people are in the buying cycle and how well targeted your offer is to those customers.

For example, if you are getting 1000 clicks and only 1 or two sales, I would look at your keywords first. are they buyer intent keywords or are they general keywords?

How engaged are people in your content? how much have you built an emotional connection with your readers in your content? People make those buying decisions emotionally, so if you presell them on an emotional level, you stand a higher chance at increasing your conversions.

next, look at your call to action. is it just telling them an order or are you giving them a benefit in the call to action?
Which would convince you more to click a link and make a purchace?

Click here to learn more about the best marriage saving ebook

(which is what I see on A LOT Of the affiliate sites I review....)
or...

Click here to stop your wife from leaving TODAY!

one is kind of general and is all about the product. one is all about the direct benefit the customer will get at the other end of the click, and will increase your conversion rates as well as your click rate but only if you already made an emotional connection in your article.

Also, when looking at conversion rates, you have to look at it on a page by page basis. some pages will convert higher than others. this is part of why you want multiple pages ranking highly. the more pages you have, the better your conversion rate will be. you may make a sale today on one page and 5 sales tomorrow on a different page.

Also, I find that I get a much higher conversion with my list than with cold leads who just find my affiliate reviews and articles through search. This is because you can build a relationship with your list.

You can also maximize your conversions to your list by funneling the buyers into their own list. With a buyers list, you can often convert them at 10% or higher if you do it right.

I recently launched my own product, and the initial promotion to my list (with a really bad sales page that I am in the process of rewriting) actually converted at 5% in the initial stages. If you can do that with a bad sales page, you can do even more with a really good sales page.

I do this as an affiliate by offering a bonus, and making them opt in to a list to download their bonus.

This can be automated for Clickbank products using the Bonus Delivery Plugin, which makes them opt in to a list to get their bonus, and it verifies their purchase through your affiliate link automatically. (premium plugin, but worth every penny!) offering a limited time bonus or a bonus for the first 100 people who buy or something will increase your conversions by adding scarcity to your offer, just don't use it in a false way. Scarcity only works if you stick to your guns and follow through on the limits that you put on an offer. Also, just like the product you are promoting, your bonus MUST deliver on every promise you make in the bonus offer. I find this really effective with your email list.

So, conversions will vary based on how much people trust you, and how well you engage them on an emotional level. Look at it one page at a time, and try to maximize your conversions by only providing the best products that you can find to your readers. Ensure that every single product you recommend delivers on every promise you make. I do this by only recommending products that I have actually reviewed or used myself.
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Your Focus Determines Your Reality
 
bigarsenalbear
Posts: 65
Joined: 08 May 11
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Thanks for your response James.

So for you "conversion rate" = number of sales / number of clicks

If there are 100 clicks on your link and 1 sale, you'd say you have a 1% conversion rate. Is that right?

If so, I think a lot of internet marketers (particularly those selling IM courses to newbies) are being quite misleading.

There are courses out there that teach you to get traffic to your page, and then redirect it straight to Amazon in the hope of making a commission on sales.

Some of these courses claim it's realistic to make a full-time income doing that. But it seems to me know that if conversion rates are as low as 1 sale out of 100 clicks, you'd have to have a LOT of sites (or at least pages) doing this to make a good income.

I can definitely see the value of building a list and getting a higher conversion rate!
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jimcoe
Posts: 398
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@JMPruitt: Thanks for a lot of advice so useful that I'll be using it today. I very much agree with your concepts.

@Adam: As James mentioned, SCR (Sales Conversion Rate) is a statistical measure. And in statistics we have what is called a "Confidence" measure. That is, you have to test enough samples (look at sales long enough) to have a certain amount of confidence in your testing.

A typical Confidence Level calculated for a test might be 90%. It's calculated to tell you exactly how long you must test the number of sales against the number of attempted sales, in order to have a 90% Confidence in your results. Nothing in statistics is about absolutes - it's a pure numbers game, just very, very "educated guessing".

As James said, if you test for too short a time (a common newbie mistake - especially with the low traffic volumes of new sites) the results are actually meaningless (or worse than meaningless, if you act on those false results).

No one would bet their whole campaign on the results on only 1 day of testing, but many people do the same thing by not testing long enough to get the number of samples required to have confidence in the results.

As for what it is you're testing with your SCR - That should be part of the spec of your test result, I think. If you state an SCR, you should include what's being compared. Like, "I had a 2% SCR of PPC ad clicks Vs completed sales without returns". Or some such.

The more thoroughly you spec your test the more useful it can be in maximizing your profit. Or, to put it another way, testing is not just about getting "Sales", it's really about getting "Learnings". You have to be curious and ask and ask and ask - "What does this mean?", "Why is this happening?", "What can I learn here?" It's detective work, and a detective is successful in proportion to their persistence, curiosity and creativity.
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jmpruitt
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There are many programs that are misleading in how "easy" it is to make high commissions. However, these are also averages and depend on a lot of factors. Some products I get a 1-2% conversion rate, while some things get a really high 10-20% conversion rate.

One thing I have heard from my friends doing it ( I haven't done this yet myself) is that webinars with your list can convert as high as 30-40% of the viewers to sales.

thats HUGE. if you can get 500-1000 people into a webinar and 30% convert to sales, you can see where that turns into a huge cash churning machine.

Also, look at the commissions for the products Dollars per sale is one key thing many affiliates don't take into account when looking at how much income they need. But, if you are promoting a $1000 product with a 50% commission, or you are promoting a $100 product with a 50% commission, there is a HUGE difference in how many sales you need to convert in order to make a decent income.

You won't get rich by selling books on Amazon for $2-3 commissions, but you can build a strong business with repeat sales by building a list of proven buyers in a huge "money" niche. Often, people will buy multiple products in a given niche, so repeat sales is always a good way to build your business.

One thing I like to do is teach people step by step how to do something for themselves, then recommend them to tools and services as an affiliate that does the work for them, saving them time and money in the long run.
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Your Focus Determines Your Reality
 
bigarsenalbear
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Hey guys,

Thanks for your input.

The more I think about it the more I think you really do need to "build a list" and build a relationship with your prospects in order to feel confident about making a full-time living online.

The misleading courses I'm talking about advocate this model:

(1) Rank at the top of Google for "buyer keywords" (around physical product)
(2) Collect traffic (made up of so-called "targeted" visitors)
(3) Send them straight to the merchant for th (e.g. Amazon, Walmart, whatever)
(4) Make commissions and ultimately earn a "full-time" income

If the average conversion rate (from clicks - not visitors) is just 1%, then I think it's going to be extremely hard for anyone to make a full-time income from this model, unless they have literally 50-100 pages doing it.

To take up James' point (about how much the product costs):

Suppose the product costs $500. Amazon pay out 4% commission initially, so that would be $20 per sale.
Suppose you get 2000 "targeted" visitors to your site per month and suppose you get 500 of them to click on your link. If you convert 1% of those 500 clicks, you get 5 sales. 5 x $20 = $100.

$100 per month for all the hard work it took to rank at the top of Google. Doesn't seem great.

Suppose you want to make at least $3000 a month (and consider that a "full-time income"). Well then you need to create 30 more pages just like the first one.

30! That's a LOT. And all the while MOST of your traffic is not converting. And most of those clicks are basically going to waste.

I take your point James - conversions vary. Perhaps you end up with a 10% conversion rate from clicks instead (rather than 1%).

And I take your point too Jimcoe- it takes time before you can say with confidence what your conversion rate is and whether you're "doing well" or not.

But I'm still not sure the model outlined above is a good one (at least not when it's touted as a way to make a full time income online).

I don't think it's a coincidence that a lot of people teaching this model spend so much of their time SELLING it to people (e.g.via webinars, which, as you point out James, convert at a much higher rate than "cold" visitors to a sales page).

To go back to your original questions and thoughts James (in your first message), I can say that:

(1) I'm currently getting about 3000 "targeted" visitors a month to a particular page
(2) They are arriving via so-called "buyer keywords" (e.g. "cheap [product name]," [product name] best price," "buy [product name]"
(3) About 20-30% of visitors turn into clicks on my aff links (i.e. click-through rate is at least 20%)
(4) The landing pages (for the merchants) are good and the offers are the lowest available
(5) The product is said to sell extremely well

And yet I hardly make any sales - conversion rate (from clicks) is about 0.8% - so close to this so-called "average" of 1%.

I think it's enough to make me give up on this business model. It might be OK if you're promoting a clickbank product and getting 50% per sale, or if you're promoting a monster $1000+ physical product on Amazon, but if not the income seems too low!

Anyway, thanks again for your ideas!

A
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jmpruitt
Posts: 4723
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I really understand where you are coming from. At first it seemed impossibly hard to me too. But, with time and experience, you will get better and faster. you will also learn the basics of what works and you will be able to do more things right the first time, rather than doing a lot of testing new things, which will make things go faster.

One thing that is a problem though is that this negative mindset has to go if you really want to succeed long term. that mindset of giving up is why so many people fail. you can blame the system or accept that YOU are the only one responsible for the effort you put into your business, and where you put that effort.

Focus on things you CAN control instead of wasting time on things you can't control, and you will achieve a lot more in the long run.

Amazon can be profitable, although I wouldn't recommend JUST doing amazon products. what I usually recommend is building an authority site focussed on solving a specific niche problem, and offering a variety of products that will help solve that problem, across various pages.


Just getting traffic does NOT mean you will get conversions. If you are getting that kind of traffic, you are doing a lot better than about 50% of the people online. Be proud of that accomplishment. YOU need to realize that success is measured by progress, not whether you reach the finish line the fastest.


the really important questions you didn't answer:

its not about having the best price or the best offer. actually I generally avoid keywords like
[list=]cheap
discount
lowest price

etc....[/list]

these are showing people value the product less and the less they pay, the lower your commission will be!

However the biggest reason you aren't getting sales is probably 1 thing: how well are you ENGAGING PEOPLE who come to that page? DO they trust you or even know anything about you before finding your reviews or are they cold leads from search who have never heard of you?

what are you doing to build trust?

in order to succeed, you HAVE To answer these questions honestly. In fact, most people I talk to BELIEVE They are doing these things, but they are so caught up in blowing smoke up their own **** that they don't look honestly at how they are writing their content, and how their content doesn't build trust with the potential customer.

Your reviews need to follow a specific formula in order to succeed.

First, you need to immediately identify a huge problem in your niche! Then, you need to show empathy for people with that problem, and connect with their emotional attachment to that problem.

One way to do that is to show personal experience with that problem through a true story about how you had that problem and how you found a solution to it. ( if you fake this, you run a HUGE chance of getting caught eventually and destroy your reputation. always remember bad news travels a lot more viral than good news about someone. just look at all the celebrity gossip trash.... this is why I only go into niches I am personally involved in. )

This is what HOOKS people into reading your review. Once you get that part right, you can go into your review of the product, share your experiences with it, and the key benefits. again, every benefit should tie into how it solves that initial problem that you identified earlier in the review.

follow that up with a strong call to action. your call to action shouldn't be:

buy xyz product NOW


It should be

Solve XYZ PROBLEM here!
REmember, your job is not to sell a product, your job is to identify a problem that people have and offer a solution to that problem through your reviews and websites. focus on the problem, and helping people solve that problem, rather than focusing on a product and you will improve your conversions.

These are really general tips though. I would have to look at your specific site, and drill down on your page in order to help you increase the conversions on it. If you want me to do that, you can PM me and we will talk about it. I have helped several other members here do that with their own sites.

again, it seems daunting at first, but if you can get 1 page ranking and converting, you can get 100 or even 1000, over time. Also, if you are running it like a business, you will take the money you do make and PAY OTHER PEOPLE to do a lot of the work for you as you build up new properties. Yes, it costs money, but it will save YOU time and energy that you can focus on doing things like analyzing why your conversions are so low.

NOBODY hits the ball out of the park on their very first campaign. Even a .8% sales conversion is better than many people do on their first few sites. It will get better. this is where you have to learn how to study your pitch, and how well you are preselling people on the product.

Are you sharing general information about your product, or are you sharing specific, personal EXPERIENCES? PErsonal experience will always convert better than general info that you can find on ANY website.

One reason I don't like amazon is they don't allow incentivized sales (i.e. you can't offer bonuses for buying through your link. its against their Affiliate TOS)

Bonus offers really help you improve conversions, but only if you do it right. One way I do that is to use the product, find a weakness in the product, and create a bonus offer that overcomes that weakness.

This makes your review look more natural because instead of just saying the product is perfect, which you KNOW is never true, it shows that you know that it has flaws and point those out. then you offer a bonus that overcomes the flaws in the program, and helps people achieve more with the system in question.
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Your Focus Determines Your Reality
 
bigarsenalbear
Posts: 65
Joined: 08 May 11
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Hi James,

Lots of good stuff in your response, so thanks for that.

I definitely see the importance of connecting with your prospects and building trust (before trying to sell them on something).

I just don't know how much this applies when visitors are just looking for a cheap price on a physical product. I "kinda" thought my job was just to show them where they could get the thing for a cheap price and then send them on their way. Judging by the click-through rate on my links (20-30%) that doesn't seem to be too far of the mark.

I get the feeling that people typing in "cheap [product name]" just want to find out where they can get that product for a cheap price, so I'm not really sure there's space/time/reason to connect with them emotionally. But hey, I might be wrong (been wrong about a LOT of things so far!)

Had I been targeting "product name review," though, I'd definitely have gone in for the comprehensive, empathetic, trust-building type of review (what you're describing) - the value of which I can definitely see.

By the way, thanks for the encouragement on the traffic thing - i was thrilled to see my page at the top of Google for the desired keywords and it's nice to see so many visitors hitting the page. Just not so thrilled with the conversion rate when I got there.

"Send them to Amazon and you'll see lots of sales" people said. Well that just ain't happening.

But I'm determined to make it work and am looking at how I can improve my landing page, get a higher click-through rate, and maybe put people in more of a buying mood before they go to Amazon.

Anyway, thanks again for your input!

A
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endy daniyanto
Posts: 157
Joined: 02 Jun 12
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Hi James,

Thank you thank you thank you for the tips! I've just started the off page SEO part of AffiloBlueprint and am getting some traffic (although it's very little at this stage).

Recently, I realized I need to get specific about my targets especially about how many sales of a product do I need to sell to pull in the income that I want. A quick search about conversion led me to find your post here, and you have answered many of my questions and even more!

I agree with what you say about not giving up. As a beginner, I've been doubting myself more times than I know I should, what with the amount of work we have to do and the time it takes to start making sales. Thanks for the kind reminder.

I will definitely apply your tips. Cheers!
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Songwriter. Affiliate marketer. Casual gamer.
 

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