We've been in business for over a decade and have owned (and still
do) MANY businesses. A few failed miserably ... but most are extremely profitable (especially
since we started doing most of our business online). Anyway, here's a question we received from
one of our clients. He purchased one of our products (from another web site) and wanted to make
"more" money ...
While Only Getting A 2% Response Rate!?!
I'm going to give you another example of how to DRAMATICALLY increase your profits with almost ZERO work. The examples I'm going to give you are REAL (from our own ad/promotion campaigns), but to keep it simple, I'm going to use simple round numbers (like $10, rather than $28.20). Nobody likes math, so let's use easy numbers and keep the confusion to a minimum.
Okay, let's say you are doing a promotion. A simple one where you are going to put classified ads in 3 different newsletters/ezines. Again, for the sake of simplicity, let's assume everything is similar for all the ads and the only variable that changes is the PRICE of the ad based on the QUANTITY of subscribers (the more subscribers, the higher the cost of the ad).
You place the ads and here are your results:
As you can see ALL the ads were profitable, the costs were the same, and the response rate was almost the same as well. But "Newsletter #3" brought in the most profits. What most people do is look at their "home-made" tracking system (only writing down the ad costs and sales generated) and say to themselves, "Great! They were all profitable ... I'll just repeat it all again."
Well, that looks good on paper, but in the REAL world, things are different and there is a better way to do it. Instead of spending another $300 on all three newsletters and making $900 ($600 in profits). Why not spend $300 on a higher priced ad for "Newsletter #3" (like a sponsor ad) and make $1350 and a profit of $1050 (you almost doubled your profits with no extra effort)!
Plus, the sponsor ad will probably bring in an even higher response rate as well since it's at the top of the newsletter - which means even MORE PROFIT and sales for you! And as simple as this little tactic is 99% of marketers NEVER do it. They just keep wasting valuable time on bad promotions or spending money on ads blindly "as long as they show a profit".
Unfortunately, in the real world, things are never that simple and "clear cut". The concept IS SIMPLE, but implementing it is the hard part. If your business is to grow and you are going to "re-invest half of your profits back into your advertising each and every month" (like I stated above), then you'll be dealing with a ton of ads soon.
Banner ads, newsletter ads, search engines, ezine articles, ebooks, publicity etc., etc., etc., and it'll be almost impossible to track everything. You'll be lucky if you can just figure out if you are making a profit at the end of each month.
This is a problem that we use to have with our own web sites and that many of the businesses we consult STILL have. In fact, a while back a marketing associate of mine told me of a story of one of his major clients (I think it was Sears or Macy's or something like that). He said that the CEO told him, "we know HALF of our advertising works ... we just don't know which half? ..."
When you're dealing with millions of dollars worth of advertising, you BETTER find out which half works ... and do it real fast (this is why so many web businesses are going out of business... they just spend and spend and have no idea if they are really making a profit until it's too late)!
See, even at the top, the same mistakes are being made. You HAVE to know which ads work the best and invest the majority of your time, money and efforts into those big winners!
When you are a small home-based business, you can't just go around wasting money like these big companies. They have investors, you don't. You have to be smart and creative!