Author: Darryl Boren
In previous articles we discussed the importance of developing a good business model as well as a good business website. But what constitutes a good website? Some of the factors we have already covered are things such as having a website that is composed of FAST loading pages, and the need for advanced visitor-tracking abilities. We also briefly mentioned the ABSOLUTE MUST of a website to have what is known as a good "sell-through". In this issue we will be exploring website sell-through in greater detail. Sell-through is such an important subject, that without a good sell-through, you will NEVER succeed on the web in marketing products or services! So, get the idea of "boring" out of your mind and FOCUS on this article. Let's go for it...
Out of the millions upon millions of business websites on the Internet, most of them have a lousy sell-through. Say what? Isn't that a rather rash statement that I just made? Maybe it is, but it is also a FACTUAL one. Since this is a factual statement, could it also stand to reason that this might have something to do with the majority of Internet Businesses failing? The answer is quite simply...YES. I am NOT saying that this is the ONLY thing that is responsible for 97% of online marketers and businesses to fail. What I am saying though, is that it is one of the main factors that contribute to the eventual failure of many businesses.
Before we continue with our discussion, allow me to mention a common mistake of many new online marketers. Many beginners are concerned about getting visitors to their new websites and so this is often the very first thing that they focus upon doing. However, they have their "pecking order" mixed up. The horse comes before the cart! You need two qualities for a successful Internet Business as I have discussed in previous tutorials. You need a quality website and secondly you need to drive massive numbers of visitors to your website. However, in order to have a quality website we have to break that down further and see what a quality website consists of. Also, when we get to our study of obtaining visitors, you will also see that this needs to be taken apart and dissected, as there are many qualities to that subject as well. It takes many years to build a large online presence and it MUST begin with creating a quality website and NOT by obtaining visitors. People are in way too big of a hurry to accomplish something that usually takes several years anyway. For now, pretend that visitors do not even exist. Simply forget all about that aspect. You need to be focusing on creating the best Business website that you possibly can. Once you are satisfied that your website is"business ready", then you can concentrate on obtaining visitors. We will be studying all of the various promotional techniques and more, but for now, we are learning about things that are important for any business website. Let us move on to examining this quality known as sell-through....
What exactly is sell-through and why do I claim that it is so important? It is defined as the ability of a website to CONVERT visitors into paying customers. Obviously, the more visitors that purchase items from you, then it can be said that your website has a better ability at converting visitors into paying customers. The better your website is at converting visitors into paying customers, then the higher your sell-through is. A higher sell-through means that you have a high quality business website. In mathematics remember the fraction? Fractions are also known as ratios. Sell-through is also expressed as a ratio. It is a comparison of the number of visitors to a website compared to the number of those visitors who actually purchase something or sign-up for something. Suppose that you received 100 visitors to your website. Also suppose that out of those 100 visitors, that 2 of them actually purchased whatever product(s) you are marketing. You would divide 2 by 100 and get the decimal answer of (.02).... Since percentages are easier to visualize in a person's mind, we next need to turn our answer into a percentage. You simply do this by moving the decimal point two places to the right and add a % symbol. In this example you would then have 2%. In the above example, you would have a sell-through of 2%, which is an extremely good and high sell-through percentage. As you can plainly imagine, the goal of any business is to make as many sales as possible. More sales means more profit. As you can also plainly see, the higher your number of sales for a given amount of visitors, the higher your sell-through ratio (percentage). You may be wondering what the big deal is about this ratio when it is plain common sense that a person would naturally want to have the highest possible amount of sales out of a given number of visitors. To answer this you must realize that since the sell-through is a mathematical ratio, it can effectively be used to calculate the number of your future orders and how well your website will do in the future regarding actual sales!
Let's take a closer look by these examples... Suppose that you received 166 visitors in one day and that out of those 166 visitors, one of them purchased something. You would have a ratio of visitors to paying customers of 166 to 1. Because you know what your sell-through is for this particular website, you can get a fairly accurate indication of just how many sales you will make with more visitors. If you have a sell-through of 166 to 1, then you would automatically know that if you received 100 times that many visitors in a days time (or 16,600 visitors) that you would expect to get 100 orders. Since 16,600 visitors are 100 times as many visitors as 166 visitors, and since this website has a set sell-through, then you simply multiply your number of previous sales by 100 as well. 100 X 1 sale = 100 sales
Lets take a look at the same website only this time we will assume that the sell-through is even higher. Let's assume that the sell-through ratio is 166 to 2, which means that you now are getting two sales for each 166 visitors instead of 1 sale as in the previous example. Again, you could get a fairly accurate idea of how many sales you would get after 16,600 visitors. Only this time, since your sell-through is higher, then the number of sales from 16,600 visitors will be higher. You would now have about 2sales x 100 = 200 sales after you received 16,600 visitors.
As you can see, it is desirable to have a website with a high sell-through. If your website has a low sell-through it can be improved by techniques that we will be discussing. However, there is another IMPORTANT aspect of sell-through that may not be visible at first glance and it has to do with ADVERTISING COSTS. The best way I can explain this is with a simple example: Let us imagine that you went somewhere on the internet and paid small fees for each visitor who clicks on your ad and goes to your website. There are several types of advertising services on the Internet in which you pay for each visitor that clicks to your website. One of these forms of advertising is known as PAY PER CLICK SEARCH ENGINES. All promotional and advertising techniques will fully be covered in later tutorials.
In our imaginary example, let's assume that you are paying 10 cents for each visitor that visits your website. This means that 10 visitors would cost you $1.00 and 100 visitors would cost you $10.00 dollars. Lets also assume that each product that you are selling, cost you $5.00 to buy from a warehouse and that you desire to sell each product for $15.00...Of course, this would mean that you would intend to make a $10.00 profit off of each item sold because you raised the price of each item by $10.00 dollars. In this imaginary example, we will also assume that the sell-through of your website is 100 to 1. In other words, one out of the first hundred people actually bought one of your $15.00 items. Please pay close attention to what has just taken place in this imaginary (but likely) example. Read on....
Think about this... you paid $5.00 for the item that you intended to resell at a higher price, so you are 5 dollars in the whole before you even try and sell it. Then, you spent $10.00 on advertising before you finally made your first sale. This means that the total money that you have spent out of your own pocket would be $5 + $10 = $15.00.... Now, let's take a quick look at how much money you made. You only sold one item and you sold it for $15.00. Since you spent $15.00 of your own money in order to make $15.00 from this one sale, you broke even and made ZERO profits! Welcome to the "zero profits" club that about 97% of online website owners find themselves.
Again, lets us use the same imaginary example, only this time lets assume that you have modified your website so that you increased your sell-through. (You will learn to do this shortly) Let us assume that you raised your sell-through from 100 to 1 and it has now become 100 to 4. This means that out of every 100 visitors to your website that 4 of them purchased your $15.00 item. Let's also assume that nothing else has changed and that you still spent 10 cents for each visitor to your website. The same as before, this means that you would have spent $10.00 in advertising in order to get 100 visitors. As before, each item that you are reselling cost you $5.00 to obtain from whatever warehouse. However, this time you have purchased 4 items because you sold 4 items. Supposing that you still purchased each item for $5.00, then you would have spent $20.00 to obtain those items to sell. The total out of pocket expenses would be $10.00 (same as before) for advertising, plus $20.00 for the items that you sold. After 100 visitors to your website, you would have spent a total of $30.00 out of your pocket. However, because you raised the ALL-IMPORTANT sell-through of your website, you were able to make 4 sales out of 100 people and each sell was for $15.00. This means that you received $60.00 dollars worth of sales. Guess what? You are no longer a part of the "zero profits" club! You would have made $60.00 but you spent $30.00 on products and advertising. Therefore, your total profits would be $60.00-$30.00 = $30.00 Congratulations, you have just made a PROFIT of $30.00 off of 100 website visitors and you even paid to have the visitors come to your website! Are you starting to see the VALUE and IMPORTANCE of having a higher sell-through yet?
Concerning sell-through and paid advertising that you may purchase, let us examine this a tad bit more in depth... In the first example above, you would have made a zero profit and you paid 10 cents for each visitor to your website. Since you did not make any type of a profit or generate any revenue, then you CANNOT justify paying 10 cents for each website visitor. In other words, because of the sell-through in the first example, the amount of advertising dollars that you spent was NOT worth it. However, in the second example where we used the same website but improved upon the sell-through of the website, a profit was generated and the same $10.00 that was spent on advertising is justified and definitely worth it. As a matter of fact, you could even spend slightly more on advertising in the second example and still make a profit!
In a nutshell, not only does sell-through allow the website owner the ability to predict how many future sales his website will make for a certain number of visitors, but it also lets you know how much you can afford to spend on advertising for each website visitor and still make your desired amount of profit. The higher your sell-through, then the more money you can spend on advertising and the more money that you can spend on advertising, then the more visitors and sales you will get! When you know how, sell-through is fully adjustable and fairly easy to do!
In the examples above, you may be wondering why you can't just spend less for each visitor and make a profit that way. Instead of paying 10 cents for each visitor, if we paid 5 cents for each visitor wouldn't we then be making a profit? Yes, in the first example of making zero profit, you would spend $5 less dollars on advertising and your total profit would rise from zero to $5.00... Can you live on $5.00 per month if your website only received 100 visitors within the month? I think not. In the second example above your total profit would increase from $30.00 to $35.00... In BOTH cases, you would only be raising your total profit by $5 lousy dollars.
You should have also noticed how your profits jumped up very fast from ZERO profit to $30.00 profit and you did not obtain any more visitors with the second example than you did with the first example. You also didn't perform any more extra work! So we see, that the secret to generating huge profits with website is NOT be reducing your advertising costs but it is due to "tweaking" your website so that it has a higher sell-through!
If any of you have been marketing for awhile, you can now see one of the MAJOR reasons why Business websites fail. Firstly, lots of people have never even heard of sell-through. Secondly, lots of beginner's sling up a website and quickly try and get massive amounts of visitors while "hoping" that things work out. Internet marketing has nothing to do with "hoping" or "wishing" or "luck". Internet marketing as some of you are discovering from these tutorials and other sources, is simply composed of common sense methods and the CONTINUOUS practice of these logical methods.
Great! We know what sell-through is, but how do we "tweak" our websites to improve our sell-through? Since sell-through is such an important subject and will cause your Business to fail if you have low sell-through, I plan on devoting several tutorials to techniques and strategies to use to get your website with as high of a sell-through as possible. After this comes promotion and all of its pitfalls and blessings. We have a long way to go I want my readers to learn the CORRECT way to not only build an online Business with minimal expenses but to also build a LARGE one! More on sell-through in the next tutorial....
