Copywriting is sexy…
Now, I’ll admit — a large percentage of my list is copywriters. Probably because that’s where my background is in business and marketing.
But having the ability to come up with a message out of thin air, and have people send you money… That’s a tantalizing skill.
And so if I promise you a pile of headline formulas guaranteed to hook your readers and get them salivating…
Well, that’s the kind of thing you’d eat up.
I see it in my email open rates.
There are other things that are decidedly un-sexy. Other things everybody hates.
Topics that cause a precipitous drop in open rates when included in the subject line.
And so I have to promise the RESULT without revealing what the heck I’m actually talking about.
(In fact, there’s a HUGE marketing lesson in there, especially relevant in mature markets — financial publishing being the example that readily springs to mind.)
Here’s what’s un-sexy, but extremely profitable…
Math. Economics.
Back in the early 2000s, at The System Seminar, Ken McCarthy taught an equation that would define effective online marketing.
Traffic + Conversion = Profits.
In fact, it still dominates the equation so heavily that the most popular internet marketing conference I’m aware of today is the Traffic & Conversion Summit. (What, you didn’t think Ryan Deiss made that up, did you?)
Well, that equation was hard to improve upon.
After all…
It’s absolutely true that if you have a website without traffic, it can’t make money. No matter how good your selling messages are.
And if you have a website with all the traffic in the world, but that doesn’t convert? Well, you’re in the same boat. No profits.
This points to the most common mistakes in internet marketing. Namely, to try to fix a conversion problem by throwing more traffic at it. Or, to try making a website that nobody visits more profitable by simply updating the content.
You need both traffic and conversions to make your online marketing profitable. Even better: QUALIFIED traffic, and CONSISTENT conversions.
And yet, I teased that improvement was possible — if difficult.
Enter, economics…
Perry Marshall, in his book 80/20 Sales and Marketing, teaches a concept called The 80/20 Power Triangle.
Pretty sure he got it from Jack Born, while Jack worked for him. But since Perry put it in print, he’s managed to co-opt the credit in my head. (Perry was also both student and faculty at Ken’s System Seminar.)
Basically, the 80/20 Power Triangle acknowledges that you can maximize profits by adding one more element to Ken’s original equation.
It becomes: Traffic + Conversions + Economics = Profits.
Here’s where this gets really useful — and its results sexy, if not so much the math part.
Let’s say you have a goal to grow your internet business.
You could increase the traffic. All else being equal, if you find a way to increase traffic to your website by 25%, your sales go up by 25%.
Or, you could increase the conversions. Again, all else equal (because this is for illustrative purposes to convey the principle), boost conversions by 25% and sales go up by 25%.
Or, you could increase both by 25%. And because you have 25% more traffic converting 25% better, your total growth is actually 56%! (It’s geometric, not linear.)
But then let’s say you increase the per-customer value by 25% as well — this is the economics part. 25% more traffic, becoming customers at a 25% higher conversion rate, spending 25% more per customer — and you’ve nearly doubled sales, with over 95% total growth.
This is the opposite of how most small business owners think about growth…
Most business owners think only in terms of new customers.
More new customers. More new customers. More new customers.
And if you keep getting new customers, it CAN be great for your business!
But in most markets, there’s at least someone who understands the math above.
And so they work on getting in front of more prospects. Getting more of them to become customers. And then increasing customer value through upsells and future transactions.
And the more they optimize that, the harder it becomes to compete with them.
In fact, this can be a marketing superpower that doesn’t require you to write a word of copy…
The marketer or business that understands The Magic Number can quickly dominate a market…
What’s The Magic Number?
It’s the maximum amount you’re willing to spend to acquire a new customer.
For example, let’s say you want to bring a bunch of new customers in through the door.
And let’s say you have a book that’s particularly appealing to a wide swath of your potential market.
You could try to sell that book at full price. And you could work to develop your paid traffic and conversion systems to sell that book at a profit.
Good luck.
The best way to profit in the book business is to sell massive volumes of lots of titles. Selling a single title is almost never a profitable venture. It’s the exception, not the rule.
But let’s say you’ve developed your business to know that your average customer for your main product is worth $400. And 50% of your book buyers will go on to buy that main product.
Which means that on average, getting a book into the hands of a customer is worth $200.
So instead of selling the book at full price, you opt to make it free, and charge shipping.
There’s no profit to be had here. Trust me, I do it every day.
But again, we don’t expect to profit by giving away books and only charging shipping.
If you’ve figured out that getting your book in the hands of a paying customer is worth $200 each, perhaps you could spend up to $100 just to give away that free book. And still expect to clear an additional $100 per customer when the dust settles.
Now, I know giving away $100 in profits doesn’t sound too good. And making $100 per customer isn’t all that appealing, either.
The real power of this is when you scale…
Let’s say you’ve got The Magic Number pegged at $100 for giving away a copy of the book.
And your economics continue to work out that for every book you give away at up to $100, you get $200 in total value down the line.
How many places does that allow you to show up that would be out of your budget if you expected to make a profit selling the book at retail?
What could you do to command the attention of your market that would be financially off-limits if you couldn’t spend $100?
Hint: you can show up more places, in much bigger ways.
Which translates into more attention, more customers, and more sales.
And here’s the thing: not every customer will cost $100. That’s simply your max — The Magic Number.
Some will cost $5. Some will cost $20. Some $50. And some $100. And the few campaigns that require more than $100 to get a customer can be optimized or stopped.
You get more and more of the market.
Your competition can’t figure out how you do it. If they’re trying to make things profitable when bringing new customers in the door — and they try to copy you — they throw in the towel when they figure out it takes $10, $20, $50, $80 per sale to show up in the way you do.
Now: here’s a really practical way to apply this lesson…
Perry Marshall once told me he hadn’t seen a really successful AdWords or Facebook marketer that wasn’t using email autoresponders or another lead nurturing approach.
That is, if you want to make paid traffic work, you probably can’t just drive that traffic to a landing page and expect to convert enough on the first visit to make it profitable.
Instead, you have to consider the economics. A small percentage will convert on their first visit. But if you can manage to get a soft conversion — permission to follow up (or now, a retargeting pixel) — you have many more opportunities to convert. Which sends your overall conversion rate up. Plus, with future email marketing, you can increase the value per visitor/lead dramatically.
That’s The 80/20 Power Triangle in action.
Also, this has been the reason for the rise of funnels in recent years.
Yes, it can be annoying to be bombarded with a series of offers that go from $10 to $100 to $500 to $2,000 to $10,000.
You paid $10 for a book, and suddenly you’re being offered a $10,000 program — what gives?!
But here’s the thing — SOMEONE actually feels like that offer is the right opportunity, at the right time.
And getting just one $10,000 sale DRAMATICALLY shifts the economics of every $10 sale.
That funnel may not be profitable with just the $10 and $100 sales. But starting at the $500 level, suddenly the economics shift dramatically and it makes the whole funnel both profitable and scalable.
Again, that’s The 80/20 Power Triangle in action.
Do it right, and it can be a total breakthrough.
My training on The Most Valuable Customer Strategy takes this even further. It breaks down 11 touch points in the customer lifecycle that can be improved and optimized to increase traffic, conversions, and economics in a big way. Watch the video — The Most Valuable Customer parable — right here.
Yours for bigger breakthroughs,
Roy Furr
