Congratulations! You have gone through the grueling task of deciding whether or not to try your luck with affiliate marketing, choosing the products you would be promoting, and establishing your affiliate marketing sites.
The first few dollars have managed to come marching in, and you think it is enough. I know you are fed up with decision making and would rather just wait for the money to flow, but in order for you to succeed more, you have to make more decisions: that is what businesses are all about.
One of the best tools you can use to aid you in your affiliate program decisions is the hit per sale ratio. What is hit per sale ratio?
Everyday, a number of unique individuals visit your site. Each unique individual is called a “click.” However, out of the hundreds, nay, thousands who visit your site, only a handful end up purchasing your product.
This handful of people is called your “sales.” A hit per sale ratio is the number of hits you must get in order to get one sale. To calculate, simply divide all of the hits you get in a day by the number of sales you get in a day, and voila!
You have the hit per sale ratio of your affiliate marketing sites!
But how, you ask, do you get anything important out of a simple number? Well, knowing your hit per sale ratio and making informed affiliate program decisions based on that is one of the best things you could ever do to elevate your affiliate marketing enterprise.
You might find yourself wishing you had a higher hit per sale ratio by either having more hits everyday, or having more sales out of your current hits.
You could actually choose from a million solutions out there, but in this article, the liberty has been taken to discuss two of the most logical affiliate program decisions you can make and to which a lot of other affiliate marketers can attest to.
Ads are great if you simply want increased hits, which can lead to increased sales, everyday.
You should take note, however, that since you are working on increasing your profit, you should never shell out more cash than you can afford (you might especially be tempted to bet all or more than your earnings when you discover that the ads you pay for are significantly raising your profits).
Do a simple computation of how much money you can spend on these advertisements, and base your decisions on these.
For example, if you have a total of 300 hits per day, to which only 5 are ending up in sales, which means it takes 60 hits before you could establish sales (this is your hit per sale ratio). And if each sale gives you a profit of $25, it means you are earning $225 per day.
This is the maximum amount you can spend on advertisements. To play it safe, pay for something that is significantly lower than your current profit so that when your ads prove to be worthless, you still have a bit of cash to take home.
So let’s say you made the decision to spend $100 bucks on ads. That leaves you $125 assured take-home money, which isn’t half as bad as taking home nothing.
Let’s say your $100 ad doubled your total hits per day, and thus, doubling your sales (from 5 sales to 10 sales). That would mean that you have a $450 figure as your total sales. Subtract the amount of the ad, and you have yourself a total profit of $350. Not bad, eh?
PAY PER CLICK PROGRAMS
Pay per click programs are programs you could establish with search engines for your products to appear on top of searches. You are bidding per click here (for the keywords you have chosen), and this means those who bid highest find themselves on the top of the food chain.
This is a relatively tricky business, so don’t get caught up in false hopes.
Now, to our calculations. Supposing you have a hit per sale ratio of 60, and a profit of $25 per sale, like the last example.
In order to know the total amount you can risk on bidding, simply divide your profit per sale by your hit per sale ratio. That leaves you with a $0.40 figure. Again, do not risk this entire amount into bidding.
You would do well to bid half of your safe value just so you can still be reassured of a bit of profit even if this program does not work out. A $0.20 bid per click shouldn’t be bad enough.
You would find some affiliate marketing enterprises bidding dollars for each click. DO NOT DO THE MISTAKE OF FOLLOWING THEIR STEPS. Instead, find a way around them by bidding on different keywords. Always keep your profits in mind.
However, in the world of affiliate marketing, increasing your profits isn’t as easy as simple arithmetic. You have to weigh your options well, and no one could ever teach you that as good as experience can.
Try your different options as well as you can, make smart and informed decisions, and if you work hard enough, you might find yourself singing happily all the way to the bank.