Chapter 1: Before You Start

About Your Business

• If you earn a high profit per average visitor:
  
  Imagine that you sold a product or service, which makes on $100 profit per sale, and you expect to sell to 1% of your web site visitors. This would mean, on average, you would make $1 (1% of $100) per visitor. So, assuming you could maintain the 1% sales conversion ratio and $100 profit per sale figures, you would increase your profits by any marketing or advertising strategy that attracted additional visitors at less than $1 each (1% of $100 = $1).
  
  
• If you earn a low profit per average visitor:
  
  Imagine that you operated a web site that earned revenue by showing banner advertisements. If your average visitor viewed 3 web pages on your site (each containing 2 banner ads), and you earned (for example) $5 per thousand banner displays ("CPM"), you'd only be earning ( 3 X 2 X $5 ) / 1000 = $0.03 per average visitor. Thus, in this case, marketing and advertising strategies which attracted visitors at a cost of more than $0.03 each, would not be profitable for you.

• If you only have one product and the customer has bought it, then it may not particularly help you to encourage your customers to visit your site again and again.
  
  
• If you earn revenue every time a person visits your site (like the low profit banner advertising scenario above), unprofitable marketing campaigns can become worthwhile if you can encourage enough of your new visitors to visit regularly.