Selling by the Numbers

by John Almberg, Identry, LLC -- March 2006
When I started my online business 5 years ago, I didn't know how to get customers. I put up my Web site and waited for the phone to ring. I sat there thinking, "I'm going to be rich."

I knew exactly what I was going to sell. I knew people needed what I had. I figured all I had to do was make my Web site cool enough, and people would call.

How dumb was that? Coolness didn't make the phone ring. I needed to do more to be successful.

The V=P=C=S Formula

Here's a formula every online business owner should know: V=P=C=S. Visitors give you Prospects give you Customers give you Sales. 

If you don't have any Visitors, then you won't have any Prospects. If you don't have any Prospects, then you won't have any Customers. And if you don't have any Customers, then how can you make any Sales?

What Are Your Numbers?

How many Visitors do you need to make your Sales goals? And what conversion rates do you need? If you don't know these numbers (and most dealers don't), then your website probably isn't performing as well as it could.

In my case, I now know I need one Customer and one Sale each week to be successful. To get that one Customer, I know I need to attract 75 new Visitors to my Web site each and every day. Out of those 525 Visitors, about 10 will contact me and become Prospects. A Prospect for me is someone who wants to talk to me about improving his or her online business. For you, a Prospect might be someone who wants you to help them achieve their collecting goals.

I don't expect every Prospect to hire my company to help them, and they don't. But, on average, one Prospect out of every 10 becomes a Customer, and that's my objective.

That brings me back to the question I asked before: what are the numbers you need to reach your goals?

Real Numbers From The Online World

Here are some real numbers from a collectible dealer I'll call Jill:

1700 -> 15 -> 1 -> 6000.

Jill attracts an average of 1700 anonymous new Visitors to her Web site every month, using a variety of print ads in collector magazines.

15 of those Visitors become Prospects. That is, they give Jill their name and email address, but don't buy anything on their first visit. That's less than 1%, which is on the low side, probably because Jill's Website is totally focused on generating Sales, ignoring the importance of generating Prospects. Out of those 15 Prospects, one turns into a new Customer. Again, that's a bit low, probably because Jill doesn't do any follow up. An automated follow-up campaign could double or triple the number of new Customers.

Finally, by looking at her records for the last 5 years, Jill knows that her average new Customer spends $6000 with her every year.

Four Ways To Double Your Sales

Now that sounds pretty good, right? But suppose Jill wanted to double her Sales to new Customers. Now that we know her baseline numbers, we can use those numbers to double her Sales four different ways.

And that's exactly where we'll pick up next month, with some specific techniques that Jill or any dealer can use to improve their results. In the meantime, please send your questions to john@identry.com. I'll answer all emails and maybe use your question in a future column. Have a great month Selling on the Web!