Website Success Formula – for Real!

Written by: Gary Horsman

Website and Blog Success

Where to Focus Your Attention

There are so many things that you can focus on to achieve a more successful website. However, people often get overwhelmed with the multitude to activities and things to do.

The best way to achieve success is to focus. A concentrated approach enables you to get things done – to achieve success. This post will give you some advice on where to focus and it starts with the mathematical website formula for success. Every website owner needs to know this formula and how to apply it.

I will define this website success formula as the growth success equation.

The equation is: T x CR x CV = $

T = Traffic to Your Website

CR = Conversion Rate

CV = The Value of a Conversion

$ = Profit

We also must realize that we can initiate action that allows us to manipulate each of the components of success. We can therefore, influence the outcome which is profit.

Let’s examine each of these components of success individually.

Website or Blog Traffic

Traffic is the number of visitors that reach your website or blog. It is fundamental to success. Without traffic, nothing much happens and you cannot even do experiments with the other two factors to learn more and to influence the outcome.

How can you increase traffic?

• Search Engine Optimization of your Content
• Creating Depth and Variety of Content – Blogging
• Link Building
• PPC
• Social Advertising and Sharing Exposure

Website or Blog Conversion Rate

The conversion rate is the percentage of website or blog visitors that perform the desired action. Desired actions could be:

• Filling Out a Contact Form
• Calling You on The Phone
• Subscribing to Your Newsletter
• Buying a Product

The conversion rate is calculated using conversion / total traffic x 100 expressed at percent. If 3 people convert and 600 people visited your site, then your conversion rate would be (3 / 600) x 100 = 0.5%

How can you improve your conversion rate?

• A/B Split Testing
• Content Experiments
• User Experience Improvements (with measurements)
• Quality Testing
• Improving the Incentive

Website or Blog Conversion Value

Your conversion value is your gross profit when someone completes an action. In most cases, it will be your average sale value. However, for savvy website owners, it can be more than that as it is often better to look at the lifetime value of a customer.

How can you improve your conversion value?

• Raise Prices
• Increase Repeat Sales

This equation can be applied to most online business it not all.

Let examine a B&B.

The average room rate is $200 per night.

Their average monthly traffic level is 1,200 visitors per month.

The conversion rate is 4%.

Using these values in the formula we get:

T x CR x CV = $

1200 x 4% x $200 = $9,600 in revenue

The business will make $9,600 per month from their website if everything remains constant. However, few things in life are constant. The economy can change. There can be a big storm. Competitors changes tactics or new competitors enter the market.

If some competitors do a better job with the search engine optimization, then our reference B&B may experience a drop in traffic. Perhaps a similar quality competitor lowers prices and the conversion rate of our reference B&B may drop. A 5% drop in traffic combined with a 0.5% drop in conversion rate will result in a drop in gross profit of $1,620 or almost 17%.

The action to protect the business and increase gross profit will be to examine opportunities to increase traffic and to do experiments to increase conversion rate.

Let’s use the equation to examine what could happen with a focus on growth.

By studying Google search volume, we realize that the total search volume in each month for important high-quality keyword phrases is 11,340 searches. Our reference B&B – with 1,200 visitors per month – has a 10.5% market share in terms of search volume. That’s not bad but there are opportunities for an increase.

The B&B takes action on search engine optimization and achieves a market share increase to 13.3% which increases traffic to 1,508 visitors per month.

Moreover, with some clever content experiments the conversion rate increases to 4.5% and they raise prices by 5% to $210 per night.

The growth equation now shows a revenue of:

1,508 x 4.5% x $210 = $14,250

This is almost a 50% increase in revenue. This increase is even more valuable to the business as it relates only to variable cost if the fixed costs were already covered before at the revenue level of $9,600. The SEO work and the conversion rate experiments have made the B&B much more profitable.

The SEO work and the conversion rate experiments have made the B&B much more profitable.

Let’s look at another example.

We have a website that sells a book. The book sells for $20.

The website traffic is 200 visitors per month.

The conversion rate is 2.5%.

The monthly revenue is:

T x CR x CV = $

200 x 2.5% x $20 = $100

Now we do a pricing experiment and lower the price to $15. You may think that this will only lower the monthly revenue.

200 x 2.5% x $15 = $75

However, with the lower price the conversion rate moves up to 4.5% and the revenue is $135. This is an example of when a lower price leads to an increase in conversion rate which leads to more revenue. In this case 35% more revenue.

If this business also increases the traffic to the site to 400 visitors with some proper SEO then they could double revenue again to $270 per month.

The Website Success Formula and You

This equation can be a powerful tool in helping small businesses shape their marketing strategy. It can help streamline conversations about how various online marketing strategies can affect top line revenue and bottom line profit.

This equation is powerful in practice. However, you need to be aware that the data for the variables is rarely constant. Traffic to the website can change seasonally or conversion rates can fluctuate over time with no changes to your website or your online strategy. This growth equation is not meant to be the be-all, end-all calculator.

Instead, it can be a starting point for a conversation with your marketing team or your SEO Consultant or your Website Marketing Expert. Test different strategies and tactics to improve your business. Start by plugging your business’s numbers into the equation to see where you stand now and to see how it works.

If you want some additional expertise in the area of market studies, search engine optimization and conversation rate optimization fill out the form below. It will initiate a discussion on how we can work together to improve your business.