I’m Lanie Lamarre and my go-to perfume is Tom Ford’s Black Orchid and I’m also the weirdo who likes smelling her own shirts – I’m like that last scene in Brokeback Mountain, except I’m loving on my own dang self – and that makes me very happy.
Another thing that makes me happy – and because I know you, I know this makes you happy, too – but what puts a bigger smile on our faces than healthy profit margins, amirite? Let’s talk about how we can forecast those in this week’s episode.
Aight, so you’re a boss with great offers and people find you and they sign up to your email list and the buy the holy-heck out of the voodoo that you do. Awesome sauce! Well done! End of episode – baiieeeee!
Just kidding. Because it’s great you’re selling the holy heck out of your offer, but that doesn’t actually MEAN anything. At least, not in a way that we can improve so let’s define a few things so we can elevate your profit margins as high as we can get them and leverage the holy heck out of our results.
(Clearly, we have a LOT to holy heck about here.)
CONVERSION RATES 101
If we’re going to talk about improving your profit margins, we’re going to have to talk about conversion rates, and I’ll say it right now: this is one of those topics that gets me all worked up and loved ones will be, like, “ohmigod, take a Valium, you’re gonna stroke out.”
So you’ve been warned.
But there’s this weird and hella-wrong insinuation that goes down when people talk about their conversion rates.
- “My webinar converted at 7%”; or
- “My sales page converts at 10%”; or
- “My email list converts at 4%”.
That’s the percent of WHAT, boss?
Conversion rates tell the story about how you’re performing and like any story, you need a beginning and an end.
To say something as goofy as “my webinar converted at 7%” is misleading at best and manipulative at worst.
Because what exactly converted to 7%? Was it the cold audience you attracted through Facebook ads or was it a segment of your email list who you had tagged as being interested in the subject you were presenting on? Because these two very different audiences are your starting point and you can expect to see wildly different results from each.
And by the way: the end point isn’t all that clear here either. Your webinar converted WHAT to 7%? Are we talking about the people who attended your webinar live or are we talking about sales? Again, this is all-kinds-of-important to identify and be clear about.
Anyone who isn’t being clear about WHAT they’re measuring – especially if they’re trying to sell you on their secret system that will help you achieve the results they’re bragging about – should be approached with caution.
You most certainly want to have baseline numbers as to what your conversion rates are – after all, this is the tool and yard stick against which you will measure your progress and profitability – but for as many ways as you are marketing to and segmenting your audience, you WILL have a different conversion rate for each.
For instance, you can expect different rates from your referral traffic than your paid and you shouldn’t be disappointed if the conversion rates to sales from your paid traffic is half that of the people who were referred to you – that’s normal, natural and frankly, human.
Your conversion rates are as much a study of natural, human behavior as they are about marketing and profitability.
The reason you want to have them is to have a better understanding of how specific segments of your audience behave and interact with you. By understanding that, you’re positioning yourself to improve how you’re showing up for the people who are loving on you.
HOW TO CALCULATE YOUR CONVERSION RATES
OK, so now that I’ve made my public service announcement about conversion rates – and yes, I DO feel better, thank you! – let’s talk about HOW you can calculate your conversion rates.
Basically, you’re taking the end point and dividing it by your starting point, and finally multiplying by 100 to get your percentage.
For as many audiences and touchpoints as you have, you can expect to be able to create as many conversion rates.
What’s more is that by improving just one single area, you can improve your overall performance.
Let’s use an example because you know I love those:
One of the main conversion rates you want to know is your sales page to your sales made. You want a baseline, general number informing how your overall sales page performs in terms of making those sales.
Now, realize that you don’t have to LIKE where you are… but you do have to know where you’re starting from.
Because knowing that single piece of information will help guide you towards identifying where the opportunities for improvement are.
INSERT ROI UPGRADE
Your overall conversion from sales page visits to sales made will represent everyone who comes to your page, including everyone from cold audiences who may never have heard you to the people who have visited and read through your sales page a number of times but have yet hit the “buy now” button.
There are a lot of things you could try to improve your sales page: the design, the copy, the colors, the price. But keep in mind:
Change doesn’t necessarily equal improvement.
Which is why if you ARE making these types of structural changes, I recommend you only change one thing at a time and see what impact that is having on your results.
The other thing you could try to improve are you traffic sources. Identify which sales page visitors lead to the most sales and try to understand what’s happening there.
Are your email subscribers the ones who convert the highest? Try to get more people on your email list to see your offer.
Are the people coming from YouTube the ones most likely to buy? Figure out how you can either get those videos in front of more of your audience, or get more new people to see those videos.
If you can figure out what is working well and try to not only capitalize on that but also replicate it in other areas, that’s the low-lying fruit to improving your overall conversion rates and increasing your profit margins, without having it be a huge expense to get there.
Because as much as the quick fixes like buying traffic through ads SOUNDS great, it doesn’t help you fix whatever is keeping your warm audiences from buying.
So here are your ACTION ITEMS for improving your conversion rates so you can see an increase in your profitability:
1) You want to start by optimizing the experience for the people who are already there with you and you want to focus on this before you invest a bunch of time and money trying to make your milkshake bring more boys to the yard.
“More traffic” is sometimes the answer to being more profitable but it’s rarely the answer to improving your conversion rates. If the people who follow you aren’t picking up what you’re throwing down, don’t waste your resources on ads to attract MORE people who won’t pick up what you’re throwing down.
You’ll be better off investing your resources into identifying where the gaps are in your conversion rates.
2) Even when you are ready to invest in ads, make sure you’re clear about where you want and need your conversion rates to be to meet your expectations and profit margins.
You may have an excellent conversion rate but the cost per lead versus the cost of your product doesn’t provide you with the profit margins you need to meet your goals. That’s totally possible and it’s good to know what those baseline expectations are FOR your profitability before you make the investment.
I know it can be intimidating to figure these types of things out and that’s what THE ROI CALCULATORS are for; it’s plug-and-play the numbers to lickety-split see how much you can afford to spend and how much you can afford to make, based on what YOU see happening in your business (and not what someone else is bragging to you about in your social feeds).
Being data-driven isn’t about being analyst or loving spreadsheets so if you needed a permission slip on that front, consider it granted.
But what being data-driven IS about is knowing what you’re working with and making that better, over and over and over again.
If this podcast is helping you be better, 5-star reviews are the thank you card for podcasters and I would all-kinds-of-appreciate you if you did that for me. I look forward to sharing more OMGrowth moments with next week so be sure you’re subscribed and we will talk to you soon!