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Action: Develop a Sales Plan For Your Business. Action Steps: 1) Calculate the visitors required to meet your income goal. 2) Estimate your true "Net Per Sale". 3) Create realistic expectations for selling to your list. 4) Plot your weekly graph so you can see how many "dollars per unique customer" you are earning. 5) Calculate your conversion ratio. 6) Understand other key numbers in your business.
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Your Sales Plan Action: Develop a sales plan for your business Your business plan begins with your desired annual income. You start with how much you want to make in the next year. Then you chunk down from that point of reference.
Here's a simple little equation you can use to create a sales plan for your business: TrafficRequired = (DesiredAnnualIncome/365) / (net profit per sale * visitors-to-sales conversion rate) Hypothetical illustration: You sell a $500 product and have $450 net profit per sale. You want to make $1,000,000 pre-tax in 12 months and 1 out of every 100 visitors buy from you (.01). ($1,000,000/365) / ($450 * .01) = 608. You'd need 608 visitors a day to reach your goal with these numbers. That is actual visitors, not hits. Hits are different from visitors. Yes, 365 days. Buyers don't take holidays online. So, $1,000,000 divided by 365 equals 2739.726. $450 times .01 equals 4.5. Now you divide 2739 by 4.5 and come up with the figure 608. That's over 27,390 visitors a month. Not impossible but a lofty goal. It's also hypothetical. Most people with 30,000 visitors a month don't make anywhere near a million dollars. Let's say, though, that you only want to make $100,000 this year based on the same $450 profit. 100,000 divided by 365 equals 273. Then you divide 273 by 4.5 and get 60.66. Now there's a goal you can shoot for. If you can get 60.66 unique visitors a day to our site, you can reach your sales goal, If you convert at that ratio and make that amount of profit.
Let me point out that $450 net profit per sale on a $500 sale is not actually realistic. Why? Because you have to subtract the cost of doing business. You have advertising, software, computer, vendors, services and other expenses. For a new home-based business with little overhead, you may net as much as 50% per sale, in which case you would be making $250 per sale. However, in a direct response marketing business, spending 50% of the sales price to obtain a sale is not uncommon at all. That means you may have to pay your resellers $250 to get that $500 sale for you. In my business, the cost of a sale is 30%. While I pay out 50% and more to associates, I also get a lot of traffic just from name recognition. That lowers the cost per sale to 30%. At 30%, you have a promotion cost of $150. Then out of the remaining $350, you deduct your expenses such as software, computer, graphic design, and so forth. A net profit in the 10% to 25% range would be realistic. That means, on a $500 sale, you're probably only actually netting $125 to $150. For your initial calculations, I suggest you use a 25% profit figure. You could do better than that. But 25% is a good number to begin with. The other thing I want to point out is that you probably won't begin with a $450 product. If you're creating and selling an information product as so many do, your price point will be $50.00. That means a net of $12.50 per sale using the 25% figure. To make $100,000 in a year, you have to sell 8000 products total, or 666 per month. Now, I'm told top Clickbank sellers sell 100 ebooks a day. I have not personally verified that data. I can tell you from experience that it's hard to sell 666 ebooks month in and month out.
That means you're going to additional products and services to sell your customers. You will want to have a $500 or $1000 product or service. In general, you run into price resistance at $500 and $1000. As you can see, you really have to spend a significant part of your energy and focus making additional offers to your existing customers. In my business, I do this by making a weekly mailing to my customer list. I found out that if you mail your customers monthly, that is not often enough. They literally will forget who you are. If you mail every day, you'll probably have too many of your customers unsubscribe and your list size will dwindle. That leaves you with mailing your customer list once or twice per week. Figure that each time you mail an offer to your list of combined customers and prospects (people who have opted in to your list but haven't bought yet), 1% to 2% will buy. If you have a list of 1,000 names, 10 to 20 sales per week should be your goal. But when you launch a hot new product, you will convert 3.5% to 6% to buyers. Again, you'll hear marketers toss out numbers much higher than that. But it's all relative. If you do teleconference calls with your list, your conversion numbers will be higher. If you mail only to customers, your conversion numbers will be higher. If you make some extraordinary offer, your numbers will be higher. But I think when you're starting out, a good rule of thumb to use (and it is just that, a rule of thumb) is 1% to 2% conversions each week with good, targeted offers that match what your list wants. If you don't convert 1%, then you're likely emailing your list offers they are not interested in. In this case, you go back to the drawing board and use the pushbuttonsurvey.com software to do a survey and find out what they DO want. You receive a FREE 30 day trial of the Push Button Survey software with this product. For more info, click on the 12 Product Survey icon. Please Note: It is NOT essential for you to use the software to conduct your surveys but it is an excellent tool that makes your life easier, therefore I feel compelled to recommend it to you. In a pinch, of course, you can just send out plain text surveys by email and compile the responses by hand. This is more time consuming so it really just comes down to which makes more sense for you.
The number you use in the above formula, then, is actually a figure that represents the dollar value of an average customer over the period of one year. This is hard to guess at first. But after you've been in business a year, it's easy to calculate. You just take the total sales you made during the year and divide that by your number of customers. That tells you how much revenue you brought in per customer. I suggest you use our Push Button Stats software to graph this figure weekly or monthly. Let's say you graph it monthly. For that month, you divide total sales by the total number of customers. That tells you dollars bought per customer. As part of the Dashboard you get a FREE 30 day trial of the Push Button Stats software that lets you graph your figures weekly or monthly. Your FREE trial is located on the icon labelled "YOUR PROFIT STATISTICS". Now, if you're on a limited budget you can keep your graph or graphs on some inexpensive graph paper that you put in a 3 ring binder. Or, if you have Microsoft Excel, you can create your own Excel spreadsheet. As I'll explain later, I added some bells and whistles and sizzles to the Stats Software that I think make life a lot easier, if you don't mind spending a few bucks for it. That's why I give you a 30 day free trial, so you can check it out.
To use the above formula, you need to know or estimate your conversion ratio. Your conversion ratio is the number of visitors to your web site who convert to or turn into sales. The first nut you have to crack is getting the number for your unique visitors. Some stats programs give it to you. Some don't. A "hit" is not the same thing as a unique visitor. A "hit" is registered each time a graphic or image loads on your web page. A unique visitor means just that. A unique visitor to your web site. Add up your unique visitors for 4 months. Then total the number of sales you had in that four-month period. Here's the formula: Conversion Ratio = Sales/UniqueVisitors For example, if I had 100 sales and 5,000 unique visitors, I divide 100 by 5,000 and get .02. So the conversion ratio is 2%. I recommend you calculate your goals using 3 possible conversion ratios: Ratio one: 1/2% conversion Ratio two: 1% conversion Ratio three: 2% conversion If you're converting 1/2% to 1% of unique visitors to sales, you're about average. So those are good numbers to use in creating your plan.
Net Profit = Sales - (Cost of Sale + Product Cost + Fixed Overhead And Capital Costs) This calculation is for a direct response business, which is the type of business my game plan is for. The cost of sale is how much you have to spend on advertising and promotion to get a customer. In the example above, that figure was $150. Product fulfillment is the total cost to deliver the product to the consumer. Fixed overhead and capital costs accounts for the ongoing costs to run your business such as payroll, rents and utilities as well as the cost of borrowed money. You also need to be able to figure your break-even point. Here's the calculation for that: Break Even = Cost of ad / (Sales Price - Product Cost) In the example above, our product sold for $500 and it had a hard cost of $50. By the way, for an information product, this isn't unusual. Of course, those figures are totally unrealistic for other businesses. So let's say we pay $675 on banner ad buys. We take $675 divided by $450 and we get 1.5. In other words, we have to make 1.5 sales to break even.
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