Quality vs Quantity

You're already aware of the crucial importance of getting lots of web traffic to your site. While web site traffic is what we all want, realize that not all traffic is useful for our purposes.

Even more important than the amount of traffic you get, is the quality of that traffic. And by quality, I mean targeted traffic.

What is targeted traffic?

Simply, targeted traffic is traffic that you actively chose based on metrics. Let’s say that you have a wedding dress store that sells local dresses. What would targeted traffic mean for your business?

Simple: it would mean a largely female audience, from your local area, and engaged. It’s better to have 20 visitors a day that fall into that category, than it is to have 1 million visitors from another country who are already married!

There’s more to high quality traffic too. Just as important as the demographics, is the means through which you acquired that traffic, the impression you make on the visitors, and the way in which you market yourself subsequent to gaining that traffic.

Repeat Web Site Traffic

The best type of traffic is actually repeat traffic: returning visitors. This is something that is missing from so many approaches to building traffic, but there are a number of crucial reasons that repeat traffic trumps everything else:

There’s one more factor to consider when thinking about quality traffic though, and this potentially stands in opposition to repeat traffic. That is: user intent.

Traffic Intent

Intent is a CRUCIAL word when it comes to SEO, conversion rates, marketing, and everything else. However, it’s also a term that is only recently being given the importance it deserves, and it’s a term that many people still don’t fully understand.

What is intent? Why does it matter for your business?

Essentially, intent refers to the reason that the traffic is coming to your site. This impacts on your CLV (Customer Lifetime Value) meaning that it impacts on conversion rates, AKA sales.

Because in order for someone to buy a product, they need to be the right person looking at the right product… but this also needs to happen at the right time.

Who is more likely to buy a hat? The person who searches for:

Buy hats online. OR:

How to repair old hat.

The answer is of course the first person. Both people we know wear hats. But the first person is actively looking to buy a hat right now. Thus the intent matches our content/store and this becomes a person that we very much want to bring to our site if we are paying for advertising.

That said, the person who searched the latter term might still be a better long-term customer – which is because they are a big fan of hats and likely to buy many more in future. So both these types of traffic have their merits, but it’s important to understand the difference.

But what you definitely want to avoid is that third kind of person: the person who searches “what to wear instead of a hat to keep your head warm.”

Here the topic is relevant, but the intent is all wrong.

Likewise, someone who searches for “free eBooks” probably isn’t going to spend a whole lot of cash on your new ebook business.

Customer Lifetime Value

How knowing your customer lifetime value can help you build a fool-proof business model.

There are tons of different terms and metrics in business and while it’s not crucial to know what all of them mean, understanding at least a few of these terms will help you to earn more profit in less time and make fewer mistakes along the way.

 Of all those different terms and ideas, one of the single most important is something called ‘Customer Lifetime Value’ or ‘CLV’. If you understand what this term really means, then you can build a business that will be entirely fool-proof and that will guarantee you a certain ROI. Don’t believe me? Read on.

As we’ve seen, CLV stands for ‘Customer Lifetime Value’. If we break this down, then we can work out what that term probably means: this is the value of a customer to us over their lifetime. This can also apply to visitors – units of traffic.

The way to start calculating this metric is to think about how much profit we get from each product or service we sell. This is the price we charge, minus the overheads of COGS (cost of goods sold). So if a customer buys a hat from us that cost $20 to manufacture but which sells for $100, then that customer was worth $80 to us.

Only most customers will buy more than one product. Most customers will buy lots of products over their lifetime. And so now you also need to work out the value of the customer over their lifetime. If the average customer buys 4 things from you, then the average value of that customer is 4 x $80 or $320.

So, how does this guarantee we’ll make profit?

Well, now we know how much we should pay for our customers! If you use an advertising method such as PPC (pay per click advertising) then you know how much you are paying for each visitor to your site (perhaps 10 cents). Now, if you know the conversion rate of your website – what percentage of visitors buy something – then you now know how much you are paying per customer.

If your conversion rate is 1%, then you get one sale for every $10 you spend.

And seeing as the average CLV is $320, you’re now making $310 profit for every $10 you spend!

That’s a flawless business model but only once you’ve managed to get your funnel to this point and only if you have the money you need to invest upfront to get the ball rolling.

What this also means, is that by fixing certain other metrics, you can increase the amount of profit you are making with no downsides. For example: by making your traffic more targeted.

Targeted Traffic Matters

How does this work? Essentially, if you have more of the right people coming to your website, that is going to improve your conversion rate. That acts as a force multiplier, meaning that all the other important metrics also increase in your favor.

What this also means, is that you can now drive more people into that funnel by increasing your traffic-acquisition strategies. Now you’re going to have even more people going through the same process and being convinced to buy from you!

The quality of traffic increases the amount of sales you make per person. You then increase the quantity of traffic in order to drive even more sales and to ramp up the machinery you have in place.

Keep learning and trying more things, and soon you'll know how to get the quality traffic to YOUR site. Keep going and good luck!

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