How to Double, Triple or Even Quadruple Your Profits from Paid Traffic
In this previous article we looked at why it makes sense to focus your efforts on paid advertising which can get instant traffic to your site that you can control rather than on SEO which has no guarantees due to factors outside your control.
In this article we want to talk about some advanced ways that you can leverage paid traffic and some strategies that you can use to maximize your return from it.
One of the best ways to make an ad campaign profitable is to build a proper sales funnel.
For example let’s say that you sell gourmet dog food. And you have a very simple sales funnel which looks like this:
To keep the maths simple we’ll assume this dog food unit sells for €20 and that your profit margin on each sale is €10.
You run some paid advertising and you determine that it costs 30 cent for every click on your ad and that it takes on average 30 clicks for every sale.
This means each sale is costing you €9 (30 clicks x 30 cent)
So in other words for every €9 you spend on ads you make back €10
You have a profitable campaign but it is not great.
What happens if you improve the campaign as follows?
Now you have added a step to your sales funnel which says everyone who purchases dog food will be offered a dog lead set which sells for €25 and gives you €15 per sale.
You run this campaign and discover that 2 people out of every 10 (20%) who purchase dog food will also purchase the dog lead set.
Let’s see how this improves the campaigns’ profitability.
Extra profit per dog food sale from dog lead upsell €3 (€15 profit x 20%)
So now each sale still costs you €9 in advertising costs but makes you back €13
Well done you’ve just quadrupled the ROI of this campaign!
But is doesn’t stop there what if you also added a back end to your sales funnel. Maybe an auto ship of dog food where the customer gets billed every month and a month’s supply of dog food automatically gets sent to them
When you implement this improvement to your sales funnel you now find that 3 people from every 10 (30%) who purchase dog food will sign up for the monthly auto ship.
Guess what you just increased your campaigns profitability again!
Extra profit per dog food sale from the auto ship offer is €3 (€10 profit x 30%)
So now each sale still costs you €9 in advertising costs but now makes you back €16 and extra €3 per month for as long as the client remains on the auto ship.
Over time you learn that you keep each auto ship customer for an average of 8 months. This means from your initial ad spend of €9 you have made €37 (€10 from initial sale, €3 from dog lead upsell and (€3 x 8 months for the auto ship).
So by making the same ad spend you can make 37 times more profit by implementing a proper sales funnel!
Hopefully I haven’t blown your mind with the maths. Needless to say it is important to remember that the way to increase your profits from paid traffic is to develop a solid funnel, or back end. Most small business owners do not do this – they are too focused on making the initial sale. Smart marketers know that if you have a solid backend you can afford to make less, break even, or make a loss on the front end sale as they will make it later in the customer relationship.
The trouble with a lot of the self-serve ad networks such as Google Ads and Facebook Ads is that it is relatively easy for anyone to open an account and set ads running. The question is just because you can do it should you? In the same way if your car broke down it would be easy to go online and buy parts and try and fix your car yourself – in reality you are probably not skilled or trained enough to know what you are doing. Just because you can run ads yourself doesn’t necessarily mean that you should. Here at Better Business Results we are Google Adwords certified and can use our ad buying and sales funnel experience to get you the best results online.