The gold rush of this century is booming. People are rushing to the
Internet to get their piece of the pie. The Internet is the place to be
- Right? With the big fall out of many dotcom companies, it could be
that their marketing approaches may be missing a few important items.
One of them is running their marketing by the numbers.

Running them by the numbers? What does that mean? If you want to
succeed in business, you need to know the facts about what is working
and what is not working. The common approach for most Internet and
non-Internet marketers is to throw money at something to see if it will
stick. If it doesn't, they move on to the next opportunity. Sound
familiar?

The fact is marketing any product is possible if you know the numbers
behind your marketing approach. Now before you begin to yawn too big,
we will show you some very important simple calculations that can make
a big difference in your marketing success.

To be successful in marketing your business online, you need to be able
to calculate three numbers. They are the

· cost per visitor
· sales conversion rate
· dollars earned per visitor.

With these three numbers, you will be able to determine the
effectiveness of any marketing campaign.

How do you determine these? Let's take them one at a time.

Cost per visitor is determined by the cost of a marketing campaign
divided by the number of visitors the campaign sends to your web site.
Let's take a look at two different approaches and calculate the cost
per visitor. This example will show you a common error made by most
Internet marketers. They assume that buying a lower cost per name they
advertise is more cost effective.

Many marketers want to market to as many people as possible for the
lowest cost. Now this is a good thing from the standpoint of budgeting.
However, many marketers run their whole marketing campaign budget
strictly off the cost per name basis which will usually put them out of
business.

We have tested many types of lists on the Internet over the 9+ years we
have been marketing. So we know the typical results that one can expect
from various types of lists. Many marketers will consider using
"opt-in" lists which are really nothing more than a list of email
addresses gleaned off of web sites via a software program. They
advertise their lists as targeted opt-in lists and sell them for
ridiculously low prices (under one cent a name). They will even send
out the emails for you from
their bulk email server in some foreign country. They may charge
something like $99 for 300,000 people. They advertise their lists via
hype and greed, claiming that if you have a 0.1 percent response how
much money you can make. The reality is that these lists have a very
low response rate of 1 to 5 out of 100,000 (0.001 to 0.005 percent
response rate).

Since many of these low price lists are emailed via a foreign bulk
email service, you will get about 10 to 20 or more complaints of spam
to your ISP. So make sure you have money budgeted for the shut down of
your site while you attempt to find someone willing to host your
domain. Also your domain name will probably get black listed on the
Spam Cop sites on the web. We do not want you to find this out the hard
way, so we are telling you all the facts up front. Costs for spam
complaints could be as high as $500 per email sent. Some states have a
$50,000 limit on the penalty. So if you are operating your marketing
budget on the cost per name basis, make sure you factor in potential
unsolicited email complaint costs into your budget.

On the other hand, there are TRUE targeted opt-in lists. These lists
cost money and time to develop. The company that developed the lists
has documented the people joining the lists and the people are familiar
with the company sending them the emails. They can use their ISP
service in any country because the people on the lists welcome their
email. It may have cost the person who developed the list up to a
dollar or more per name. So when they have a list of 100,000, it could
have taken them a year or two and an investment of up to $100,000 to
build this list. These types of lists are much more responsive. Typical
response rates can vary between 3% and 10% depending on the list
and the ad copy.

Now let's look at the cost per visitor for each list using the typical
response rates. In the first list the cost per email sent is 0.0033
cents. That is determined by dividing $99.00 by 300,000. But that is
not the important number.
The one you want to know is the cost per visitor. Using the typical
response rate of 1 to 5 per 100,000, you would have between 3 and 15
people visit the site. This would give you a cost per visitor of $6.60
to $33.00. This is determined by dividing $99.00 by 3 and 15.

The TRUE targeted opt-in list would give you between 30 and 100
visitors. If we calculate the cost per email sent, it is 14.9 cents.
But the more important number is the cost per visitor. This number is
between $1.49 and $4.97.

When we look at the cost per visitor, you will see that the TRUE
targeted opt-in list is the best approach and will give you a better
return on your investment. In fact, choosing the bigger, cheaper list
costs you more in the long run. That is why many people will do an
advertisement to these cheap lists and say that marketing on the
Internet does not work. The reality is they used the more costly, less
targeted list.

The second number you need to calculate is the sales conversion rate.
This is determined by knowing how many visitors it takes to your site
to get one sale. For example, if you have 1,000 visitors to your site
and you get 10 sales, you know that your site is converting 1 out of
100 visitors into customers. (Sales conversion rate
is the number of sales divided by the number of visitors.)

The sales conversion rate is a VERY important number to know. By
knowing this, you can determine the success or failure of a marketing
campaign. Here's why...

Once you know your sales conversion rate, you can...

1) Know how much you can afford to pay for advertising.
2) Know if a change to your web site is good or bad.

The sales conversion rate will let you calculate the dollars earned per
visitor (the third vital number you need to know). Let's say you sell a
product for $100 dollars. Your sales conversion rate is 1 out of 25.
Now you divide $100 by 25 visitors to see that you will earn $4.00 per
visitor to your site. Once you have determined
this number, you know how much you can afford to pay for your marketing
campaigns.

If you know that you earn $4 for every visitor to your site, how much
can you afford to pay per visitor to your web site? $4 or less. Now you
know what to pay for marketing campaigns. Let's say you have been
approached by someone who has a TRUE opt-in list of 100,000. You can
test a small mailing of 1,000 or 2,000 and see how many
visitors it generates to your site. If you find that your cost per
visitor is under $4, you would probably want to send your ad to the
whole list. Do you see the power and control you have by knowing these
numbers?

The other thing you can determine is how changes to your web site have
impacted your sales. Let's use the same example of $4 per visitor. You
want to test to see if revising your order page will impact your sales.
You set up a new order page and then collect your data. You find out
that your conversion rate is now 1 in 20 which translates to $5 per
visitor. You know that the change was a good one.

On the other hand, if you make a change and see that your sales
conversion rate drops to 1 out of 40, you know that the change was a
bad one and you revise the order page back to the original one.

Another thing that having these numbers can do, is help you determine
the success of your ad copy in your emails sent. If you want to test
headlines or ad copy, you could send two different ads to the same
list. (We are assuming
a large list where you can run small tests of 1,000.) If one ad
generates 50 visitors and the other ad generates 20 visitors, you know
which one pulls the best. In fact, you have the dollars per visitor
calculated at $4.The first ad would generate $200 per thousand and the
second one
$80 per thousand.

Many people do not want to take the time to evaluate these numbers. In
fact, many Internet marketers are not really marketers. They are
playing a numbers game similar to the lottery. They want to buy as many
tickets for as cheap as they can. They hope that by having 300,000
tickets, they will get that one visitor who will make a difference in
their business. Just as most people lose money in the lottery, the same
thing happens to people who look for cheap ways to market their
business without knowing
their numbers.

To be successful, you need to throw off the lottery mentality and
become a TRUE Internet marketer. Marketers know their numbers. They
know when their campaign has been successful. They know how much they
can spend on various
types of advertising and make a profit.

Now the question for you is this - Which approach do you want to take?
One guarantees failure while the other leads to success. A friend of
ours has a statement which applies here.

"The only thing more expensive than education is
ignorance."

The choice is yours.

Do you want to be a marketer or play the lottery?

Until then,

Dave Cones
http://www.CommissionMarketing.com

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