In the traditional sales world, sales people used to use a Rolodex (remember those?), business cards and a call log – and of course, their telephone.  Many still do today.  Of course, modern CRM systems have automated this process nicely.  The Rolodex was the “list” back then… today, CRM software has largely displaced the Rolodex.

In my last several blog posts, I stressed the importance of building a relationship with your list of subscribers.  Don’t have a list of subscribers?

Oops!  You probably aren’t turning a profit online if you aren’t building and nurturing your list – are you?

Today I had a nice discussion with a work at home mom about her attempts to make money online.  She had invested around $5,000 in affiliate marketing and advertising based on some “make money” course she saw on TV… well, I’m always saddened to hear these kinds of stories, when good people are taken advantage of by scams or incomplete sales processes…

I explained to her that the only way to turn a consistent profit in an online business is with a list of customers, subscribers and prospects.  The reasons for this is actually quite simple.  It’s simple economics.

It costs too much to advertise and bring a visitor to your website.  On the first visit to a website, 99% are probably not yet ready to buy whatever you’re selling.  Well, it’s impossible to turn a profit when only 1% or fewer people buy from you, given the cost of bringing visitors to your site.

Instead, it’s a proven fact that in order to run an advertising-driven, profitable online business, you must build a list of subscribers – who you then can develop a relationship with over time and market to them on an ongoing basis.

It seems simple enough, yet I’m still amazed at how many small business owners and entrepreneurs don’t do this properly.  There’s tons of great information freely available on how to develop landing pages that get visitors to register and there’s certainly no shortage of email auto-responders to choose from (arguably there’s too many of them to choose from today).

So what’s the issue?  Why are so many companies and people starting out still missing this critical piece of the online profit puzzle?

Perhaps it’s because they lack the content – the so-called “money magnet” needed to attract the right kinds of people to register and subscribe in the first place.  Money magnet is a term that’s been used in a variety of ways, but I first heard the term applied to online marketing by Frank Kern, a very experienced and successful Internet marketer.

A money-magnet is anything you can give away for free or nearly free that attracts the right kinds of prospective customers to register and become a subscriber.  Now I realize this is online marketing 101 stuff, but like I said, there’s so many people who are skipping right past the basics to put a gorgeous looking website up and then wonder why it’s not making money, that apparently it needs to be stressed more.

I outlined the entire process for building a profitable online business in a post earlier this year called “A PROVEN ONLINE SUCCESS FORMULA“, where I go into quite a lot of detail on proper goal setting and putting the necessary online selling machinery in place.

Incidentally, all of this is spelled out in even greater detail in the Online Leadership Guide, which comes with some very cool free tools and a mini-course you should check out (it’s very affordable, at only $19.95).  Incidentally, this is a decent example of a money magnet and landing page.

So if you’ve tried Google AdWords or other online advertising and are disappointed with the lack of sales results, if you weren’t using a proper landing page with an enticing money-magnet free offer for your visitors to register and learn more, go back and fix your front-end “lead generation” process and start building your list.

Several earlier posts discuss the importance of developing a relationship with your subscribers, giving them even more value for free, then eventually *some* of them will be ready to buy – and when they are ready, some will buy from you.

Done properly, your subscriber and customer list become your more valuable online business asset – much like that Rolodex was to a salesperson in the offline world.  Invest in building your list and the relationship with those on your list, and I promise you’ll be amazed at how much it will help you.

If you’ve been in business for a while as a small business, chances are you already have a “list” of sorts – a mailing list in the making inside your Gmail contact manager, Outlook or other mail client.  This is, in effect, your mailing list – all your contacts.  If you’re like me, you have hundreds of business cards squirreled away in a desk drawer somewhere.

Getting these entered or scanned into your contact manager will begin to round out your business contacts.  Keep in mind that these folks would probably accept a personal email from you, but would consider advertising or other forms of direct promotion as spam, so be careful how you use these resources.

If you are a more established medium to large corporation, then you most likely have a corporate CRM system, which is a primary list source for you.  You also probably have lists scattered all over the place and you may need to do some list consolidation, de-duping and cleansing.  It’s well worth the effort, as these lists are pure gold when used properly with a focused email marketing strategy.

Finally, keep in mind that one of your best sources for lists is leveraging lists of your partners through cooperative marketing campaigns, whereby your partners promote your offer to their lists, bringing lots of qualified traffic to your landing page and building your targeted list.

Ultimately, you’ll need to break out from your core contacts and build focused lists of prospects in each of your target markets.  It does take time, but done properly, it is well worth the effort and investment.

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Today, I’d like to offer a proven online success formula you can use with most any business that generates and nurtures leads and sales using online methods.

This post is an excerpt of my Online Business Gameplan, Executive Leadership Guide that covers the up-front goal setting and planning processes invoved in driving controlled business success.

STEP 1 – Set Online Financial Objectives and Goals

As the leader of your online business, you are responsible for getting results. You are also responsible for setting realistic, attainable goals for your team and then ensuring proper plans are put into place for achieving those goals.

Whether you personally determine the financial goals for your online business directly or the objectives are handed down to you, chances are you are responsible for figuring out how to achieve them.

One of the biggest mistakes online business managers make is not being specific enough about their goals. Without specific revenue and profit margin goals, you cannot build a realistic plan.

It’s been said, “Those who fail to plan, plan to fail.” This is especially true with online businesses, yet so often we rush past the planning phase in order to jump straight into execution, without having a plan for success in place first, then find ourselves meandering or struggling (instead of focused on breaking through the next barrier to achieving our milestone goal).

Let me ask you this. If you don’t do the necessary planning for your online business, who will?

Do you believe you can succeed without a clear, well thought out plan?

If you listen to just one thing I have to say here, remember this. If you don’t plan, you’ll struggle, meander, experiment and (very likely) fail to achieve your actual goals (and be forced to move onto something else).

It’s up to you as the leader to ensure proper planning takes place. It’s up to me to make this critically important planning process as easy and as foolproof as possible for you and your online business. So I’ve created some templates and tools for you.

Don’t be afraid to use some traditional business planning tools as well. These tools can often pinpoint problems and opportunities with your market and product strategy that will become key elements of your success.

STEP 2 – Reverse Engineering Key Execution Metrics

The beauty of online marketing is that we can measure almost everything. This enables us to “reverse engineer” the results we seek to achieve, by breaking our revenue goals down into the necessary execution metrics that must be present to succeed.

The Key Metrics Funnel (Figure 1 below) can help you visualize your online business. You drive visitors to your website from your marketplace using various types of traffic (PPC, SEO, banner ads, etc.). These visitors arrive at your Landing Page, where you turn them into a prospect, placing them into your prospect pipeline—a list of prospects in your sales cycle.

Figure 1 Key Metrics Funnel Model

Next, your prospects and visitors go through your Online Seller—a series of pages designed to warm them up, answer their questions and objections, and close the sales.
In addition to tracking your incoming traffic and visitor volume, you track the size of the pipeline and the rate at which prospects are converted to sales, both direct sales page visitors, and those derived from the prospect pipeline.

Going a step deeper, the Online Business Dashboard (Figure 3) shows all the key execution metrics used to plan, track, and achieve your goals. In particular, note the major flow pattern in this diagram first, then each metric.

Your Advertising and Traffic Generation programs create awareness and interest in your product, driving traffic to your site.

These visitors arrive at your Landing Page/Squeeze Page (a squeeze page is a special page where you can only opt-in with your name/email address, or leave).

The Landing Page will result in some percentage of the visitors choosing to opt-in to take advantage of your offers, at which point the visitor becomes a prospect. Prospects are placed into your Prospect Pipeline List—usually an email auto-responder.

After registering as a prospect, the visitor arrives at the Sales Page, where some of these visitors actually purchase now during this visit (others will purchase later on).

Figure 2 Online Business Dashboard

Let’s define some of the key metrics in the dashboard:

• Gross Sales: how much revenue you want your online business to generate
• Profit/Loss: how much you make (or lose)
• eCPM: earnings per thousand advertising impressions (average)
• Average Selling Price (referred to as “A.S.P.” or simply ASP): how much revenue is generated by an average sale, computed by averaging all your sales together
• Unit Volume: the total number of average sale units that you must sell to meet the gross revenue target number
• Landing Page Conversion Rate: the rate at which visitors to your landing page convert to prospects, entering the prospect pipeline
• Pipeline-to-Sales Conversion Rate: the rate at which your process converts prospects from your pipeline list into sales (or qualified leads, if you are feeding online leads to an offline sales process)
• Sales Page Conversion Rate: the rate at which your sales page converts visitors into customers (sales close rate)
• Visitors Needed: the total number of visitors you must feed into your sales processes to reach your gross revenue goal
• Total Ad Impressions: number of ad impressions required to reach your goal
• Avg. Click Through Rate: your average click-through rate (CTR); percentage of people who click on your ads
• Advertising Costs: how much you must plan to invest in advertising to reach your revenue goal
• CPM: cost per thousand advertising impressions (how much you can afford to spend on 1,000 ad impressions).

You’ll find these exact metrics (and the dashboard shown above) in the Online Business Gameplanner spreadsheet, which you can download for free. I highly recommended that you spend some time entering your online business’ goals into this spreadsheet, then print out the results to use as the foundation of your plan.

Given the above metrics, you can begin putting plans into place to achieve these results. We will deal with our gross margins and expenses separately to keep things simple here.

For best results, track the metrics on a regular basis—weekly, monthly, quarterly and yearly. This way, as you make changes anywhere in your end-to-end system, you can measure the net effects. Some more experienced managers will also keep running 90-day averages to identify up/down trends and make course adjustments as soon as possible.

Please do this right now (if you did not already do it as requested earlier). Take a piece of paper and write down how much you want your online business to generate in revenue over the next 12 months. Next, subtract that amount from how much the business is making right now on an annual basis.

The difference is how much more revenue you need to achieve your business goal. That’s the figure you should plug into the game planner spreadsheet and build a plan to achieve.

For example, let’s say you have an existing business that’s generating $200,000 per year right now and you want to make $ 2.2 million in the next year. This means you need to drive an additional $2 million dollars in 12 months. That’s a fairly tall order…

STEP 3 – Subdivide into quarterly, more easily achievable goals

Rather than trying to bite off the entire $2.2 million goal (or your next 12 months revenue goal) in one shot, you need to break this goal down into achievable, bite-size chunks that you can swallow and digest along the way.

Perhaps it’s my corporate background, but I prefer to break things down into quarterly chunks and focus on what must be accomplished one quarter at a time. So, let’s subdivide this goal into four pieces

Let’s start by calculating 10% of that $2 million incremental revenue goal, which equals $200,000.

This figure will be our short-term goal for the next 90 days—or until you achieve this initial goal, which might take longer depending on your Learning Plan and development project timelines.

To achieve your goal of $2 million, you must begin this journey with a realistic milestone. Believe me, adding $200,000 in 90 days won’t be a walk in the park, so try to avoid inflating this goal to something higher that will be less realistic to achieve.

In marketing and sales, reverse engineering results is the key to success. Once you have a target figure in mind, you can build a plan for achieving that figure. Let’s continue the example…

Let’s say your product’s average selling price (ASP) is roughly $2,000, after reseller and other discounts (that’s how much your company brings in on an average deal). To make $200K over the next 90 days, you must generate 100 additional sales to reach that first milestone successfully.

Next, you’ll build a plan that will generate the additional sales required to meet your goal, a plan that includes:

• A sales process that can convert enough incoming prospects into 100 additional buyers
• An offer strategy that can attract enough prospects to feed this sales funnel
• A traffic strategy that can deliver enough qualified visitors to your website to meet your goals.

Now, I know this may seem simple, and at the highest level, it actually is. Per the prior section, you’ll reverse-engineer the metric targets that must be achieved at each stage of your development and growth plan.

Continuing with our example…

If you develop a sales process that converts 2% of your qualified website visitors into sales, then you are only closing 1 in 50 visitors who come to your site. That’s not great, but it’s good enough for starting out. You can work on improving your conversion rate later. Right now, it’s more important to start converting visitors on a reliable enough basis with a proven process.

So, to generate those 100 sales, you’ll need 50 times that number of qualified visitors to your website, which means 5,000 total qualified visitors over the next 90 days.

Now, all that’s left is to create the offers and ads that will bring you those 5,000 qualified visitors in 90 days. Easier said than done, right? Well, we’re going to provide you with plenty of offer and traffic strategies to achieve that goal.

Once you’ve managed to put the sales process in place that converts at least 2% of website visitors into sales, along with the offer and traffic strategies that drives 5,000 visitors, you’ll make your initial goal. In reality, depending upon how mature your business, product, and market are, this may take more or less than 90 days to achieve.

You should remain committed to achieving this first major milestone, even if it takes you longer than you’d prefer. Keep in mind that you’re in a learning process here, which is to be expected if you’re new to the online business world; have a new business or a new product; or are entering a new market that’s unfamiliar.

Once you achieve this first milestone, you’ll be ready to move on to the next one. Achieving that first milestone is often the hardest of all, since you need to get so many things right all at once—the offer, the online sales process, and the lead-generation (aka traffic) process. The good news is now that you have a functioning online business system, you can begin to optimize it and scale up to meet subsequent goals.

So, it’s time to raise your sights, to double your original milestone to 20% of the year’s goal, or in this example, $400,000. If your conversion rate remained the same, you’d have to double your qualified traffic, which is tough to do in many cases. So, you may need to employ some additional strategies this time.

What if you could double your conversion rate from 2% to 4%? That would do it. With the same amount of incoming traffic you already have, you could boost revenues enough to meet your goal. Therefore, that’s exactly what you’ll learn how to do:

• Ramp conversion rates through testing and optimization
• Boost conversion rates through improving your offers
• Increase conversion rates by building a better relationship with your prospects who are visiting your website, so more of them buy.

So, I think you’ve probably got the hang of this by now. Each quarter (or planning period) you’re going to raise your sights incrementally, and then figure out what aspects of the selling and lead-generation machinery you’re going to improve. Don’t worry. There’s typically no shortage of available ways to optimize and improve—only available time and resources for actually executing these optimizations.

By the time you reach the last part of the year, your site should be converting at least 5% of visitors into sales, and you should’ve found numerous viable sources of increased website traffic. Best of all, if your product is hitting the mark with your customers and market (it needs to be), then you’ll begin seeing repeat business, word-of-mouth and some momentum building, making it easier to grow your fledgling online business.

As you knock off each quarterly plan, reset your sights higher with a specific set of goals. Then, create a specific set of traffic and conversion plans for achieving the corresponding performance metric goals and your revenue results will naturally follow.

So that you can hit the ground running, we’re providing a spreadsheet tool that will enable you to plug in a few figures and quickly calculate the key metrics for your online business. We call this the WinningWare™ Online Gameplanner™ tool.

Click here to access the Online Gameplanner™ spreadsheet
(You’ll need Microsoft Excel for opening the file named “OnlineGamePlanner.xls.”)

Instructions for using the spreadsheet are included. You can change the cells shown in orange in the spreadsheet to reflect your business’ goals and expected performance targets.

For example, you enter your desired revenue goal for the next year (or planning period), your product’s average selling price, the percent of each sale that your company receives after a sale is made (after credit card fees, affiliate and sales commissions, royalties, etc.—after all the variable costs in your business have been paid).

Then, you enter your expected landing page opt-in rates and sales conversion rates for your sales page and prospect pipeline (the list of opt-ins you have captured). You can also enter the size of your existing lists, if you already have lists or a pipeline started.

The rest of the spreadsheet is self-explanatory. There are four tabs: the Planner tab, Dashboard tab, the Instructions tab and Legend/Terminology tab. Just read the instructions and then fill in the orange fields (or use the default settings) to set your financial goals and calculate conversion metrics and traffic you’ll need to achieve those goals.

You’ll see all the financial, selling, and traffic machinery metrics for your business. You can then build a plan to achieve your goals.

Feel free to adapt this spreadsheet to include other factors that go beyond what’s provided. This tool is intended to give you a head start using a proven model.

The resulting calculated values show you how many visitors you’ll need to bring to your site from various advertising, offers, and traffic programs to meet your financial targets. You can play with all these variables until you have a set of metrics that you’re comfortable enough with to build a plan.

I hope this proven online success formula helps you set your financial goals, and do the planning that’s required on the front-end to make achieving those goals possible.

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