• Marketing response rates hover around 2%. As an example, for every 1 million impressions, approximately 20,000 visits are generated.
• Of the 20,000 visits, 11.5% opt-in to join a mailing list or receive a free product.
• In addition, 3.5% convert to paying customers within three months. Therefore, for every 20,000 visitors or 1 million impressions:
• 700 customers are secured.
• 2,300 potential clients are added to one’s database.
As indicated, assuming a median cost of $2.52/CPM, a typical expenditure will be $2,520 for one million impressions. Based on the above metrics, the lifetime value of a single customer must be $3.60 to break even ($2,520 per 700 customers). This is certainly a viable proposition if $24.95 books, $97 workshops, and other items are being sold with reasonable profit margins.
However, if the ultimate goal is to sell high-end coaching services (e.g. $300/hour with a 3 hour minimum) or multi-session workshops (e.g. $10,000 for six weeks of training) the metrics look pretty darn appealing.
That said, conversion is a byproduct of multiple tangible and intangible factors and there’s no guarantee things will happen as planned. Further, many Internet marketers simply cannot afford pay-for-placement/performance marketing and must pursue other options. If this is the case, low-cost or free traffic must be generated to sustain one’s operation if online sales are the primary component of revenue.
Providing free, high-value products and driving traffic through synergistic partnerships leads directly to the second step of the equation, bypassing the upfront investment required in step one.
Given no out-of-pocket expense, this equates to an immeasurable ROI as each opt-in costs nothing to secure. Even if less than 1% of the 11.5% of visitors who opt-in become paying customers, the metrics are phenomenal. Best of all, the customer views the relationship as a favorable exchange of value: “For providing my name and email address, I receive valuable content. That’s more than worth it.”
Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher