Online Traffic Margin Tutorial
Analyzing Traffic Margins
Google Analytics is by far the best free tool to start analyzing your KPI’s but there are other great paid platforms to help you analyze even deeper data like customer life time value.
Analyzing contribution margin opens up new opportunities to improve profitability in the areas of price optimization, vendor negotiation, marketing performance and shipping and inventory management.
Margin analysis first identifies areas where gross and contribution margins are not aligned and then isolates the factors that have the biggest impact on margin at the SKU or category level.
It’s so simple that it seems to go without saying, but if you start A/B testing when 75 percent of your traffic isn’t interested, then you’re basically making the same mistake. A sample of true potential customers will give your test much more reliable data than a sample of “sparkle princess kitten” fans. The wrong traffic dilutes your test results.
If you want to succeed at online marketing, you need to prove that your business has what your potential customers need. For this reason, online marketers have started to put less emphasis on getting more traffic and more attention on making a better pitch to the traffic you already have. There are a lot of ways to do this, but the most scientific methods involve systematic A/B tests to build better ads, landing pages and websites.
There are really only four ways to improve your sales and profitability from eCommerce, increasing traffic, improving your conversion rate, increasing your average order value, and improving your profit margin.
Traffic acquisition cost (TAC) consists of payments made by Internet search companies to affiliates and online firms that direct consumer and business traffic to their websites.
When people hear “conversion rate optimization” (CRO) they usually think of site modification strategies like A/B testing, not traffic. I don’t know about you, but when I see a conversion rate go from average to the top 10 percent in one fell swoop, that seems pretty optimized.3.
Quite simply put, often a company must spend money to make money, and that is the case with traffic acquisition costs and driving up a website’s number of visitors.
Subscribe Through the use of pricing intelligence and traffic management solutions online retailer Build.com has seen conversion rates at some of its sites soar as high as 7% — overall conversion across the brand is an eye-opening 3.5%.
In 2017, Google also allocated 23% of all its advertising revenues for this purpose, which earmarked billions of dollars for traffic acquisition. As with other companies that thrive online, Google will have to continue paying close attention to the trend of its TAC because it can greatly affect its overall profit margin.
You can optimize each product page or landing page on your website with long-tail keywords to help attract high-quality traffic that’s more likely to convert.
To put it simply, good traffic makes it easier to spot the effects of your testing. In my previous eCommerce example, a conversion rate change from 1.84 percent to 2.58 percent might seem small enough that it could be overlooked, even though it represents a 40 percent increase.
If two companies start improving their sites with A/B testing at the same time, but one has already optimized its traffic, then -- even if both sites produce the same number of sales -- the one with better traffic will always have a higher profit margin.
If you eliminate the campaigns that are driving the wrong traffic to your site, you can save yourself a lot of money. Cutting the fat from your account might seem drastic and a little scary, but remember, you’re not getting rid of any of the traffic that makes you money.
Website testing and optimization operates on the basic assumption that you have the right traffic -- that people who visit your site are actually interested in your product. But what if they aren’t actually interested? You can send the right message to the wrong traffic till the cows come home and never make a sale.
Since you are already paying in some way to acquire traffic to your website — through PPC, SEO, Email, etc — it would be a great idea to convert more of those visitors into customers.
If you’ve been in business for a year or more, you probably have an idea of traffic and sales fluctuations month-to-month—if you notice distinct patterns, try to incorporate what you learn as you plan ahead for the coming year.
Traffic acquisition costs (TAC) are a critical cost of revenue for Internet search firms such as Google.
Organic search marketing, Search Engine Optimization (SEO), focuses on increasing the quantity and quality of website traffic through organic search engines like google and yahoo like Google.
Identify which traffic sources are driving the most traffic, conversions and customers and customize your manufacturing marketing strategy around this to increase profit margins.
As you plan for long-term growth, take some simple, creative steps to increase your profit margins now—whether that’s building a website for your future eCommerce store, maximizing on seasonal sales patterns, or limiting inventory costs by creating your own products.
To determine what a good profit margin is for your business, start by looking at the revenue generated by sales, and how you’re spending that revenue before you see a profit.
If you’ve been in the sales space for some time, you might have heard the phrase “always be closing,” aka “ABC.” This sales strategy simply means that there’s a constant drive to convert marketplace consumers into paying customers, in order to keep sales on pace with spending.
The campaigns ran for two months and within that period, BikeBerry not only increased sales, but they were able to widen their profit margins by not offering discounts that are too big to customers who would convert at a lower threshold.
You need to track your PPC ads’ conversions and sales metrics in order to improve your ROAS, which is the revenue brought in by a campaign, divided by the amount spent on that campaign.
Increasing profit margins is top of mind for most retailers, and depending on your business, there are a number of actionable ways to improve margins right now—starting with an evaluation of your operating expenses and inventory.
Although Amazon’s pricing strategy and ultra-low margins aren’t feasible for most small business owners, independent retailers can definitely incorporate big-business tactics for increasing profit margins.
As you increase your profit margins, you will be able to add to the products that you offer, improve your tour and activity operating equipment and ultimately develop better brand loyalty.
Ultimately, the most successful way to sustainably increase profit margins is a mixed approach that incorporates various tactics—all of which share a bottom line of spending less and selling more.
Improving profit margins is on the top of the list for retailers and pricing strategies are central to reaching that goal.
There are a few profit margin variants—the standard net profit margin or net margin is a profitability ratio of net profit to your revenue, expressed as the percentage of each dollar of revenue that you keep as earnings.
Tour and activity operators must continually evaluate their operating procedures and business strategies in order to keep increasing their profit margins over time.
To establish a solid ROAS goal, you need to define your budget and get a firm handle on your profit margins so you can create an overall online paid advertising strategy that meets your business’s objectives.
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