Chapter 3: Importance of knowing your customer lifetime value
How knowing your customer lifetime value can help you build a fool-proof business model: There are tons of different terms and metrics in business and while it’s not crucial...
English |
Once a week, we will send an email update with the new abstracts that came up on the page, and we will be happy to send you as well.
We do not know much more exciting things than you chose to trust us! Now we just have to leave you with everything that is hot and interesting.
Thanks a lot. We'll get back to you soon.
Our site uses cookies technology for functional purposes and the study of usage characteristics. The use of the Site constitutes acceptance of the Terms of Use and the use of cookies.
$19.00
$9.00How knowing your customer lifetime value can help you build a fool-proof business model: There are tons of different terms and metrics in business and while it’s not crucial...
How knowing your customer lifetime value can help you build a fool-proof business model:
There are tons of different terms and metrics in business and while it’s not crucial to know what all of them mean, understanding at least a few of these terms will help you to earn more profit in less time and make fewer mistakes along the way.
Of all those different terms and ideas, one of the single most important is something called ‘Customer Lifetime Value’ or ‘CLV’. If you understand what this term really means, then you can build a business that will be entirely fool-proof and that will guarantee you a certain ROI. Don’t believe me? Read on.
As we’ve seen, CLV stands for ‘Customer Lifetime Value’. If we break this down, then we can work out what that term probably means: this is the value of a customer to us over their lifetime. This can also apply to visitors – units of traffic.
The way to start calculating this metric is to think about how much profit we get from each product or service we sell. This is the price we charge, minus the overheads of COGS (cost of goods sold). So if a customer buys a hat from us that cost $20 to manufacture but which sells for $100, then that customer was worth $80 to us.
Only most customers will buy more than one product. Most customers will buy lots of products over their lifetime. And so now you also need to work out the value of the customer over their lifetime. If the average customer buys 4 things from you, then the average value of that customer is 4 x $80 or $320.
So, how does this guarantee we’ll make profit?
Well, now we know how much we should pay for our customers! If you use an advertising method such as PPC (pay per click advertising) then you know how much you are paying for each visitor to your site (perhaps 10 cents). Now, if you know the conversion rate of your website – what percentage of visitors buy something – then you now know how much you are paying per customer.
If your conversion rate is 1%, then you get one sale for every $10 you spend.
And seeing as the average CLV is $320, you’re now making $310 profit for every $10 you spend!
That’s a flawless business model but only once you’ve managed to get your funnel to this point and only if you have the money you need to invest upfront to get the ball rolling.
What this also means, is that by fixing certain other metrics, you can increase the amount of profit you are making with no downsides. For example: by making your traffic more targeted.
How does this work? Essentially, if you have more of the right people coming to your website, that is going to improve your conversion rate. That acts as a force multiplier, meaning that all the other important metrics also increase in your favor.
What this also means, is that you can now drive more people into that funnel by increasing your traffic-acquisition strategies. Now you’re going to have even more people going through the same process and being convinced to buy from you!
The quality of traffic increases the amount of sales you make per person. You then increase the quantity of traffic in order to drive even more sales and to ramp up the machinery you have in place.
After entering the number, the mobile send button will be available to you in all items.
![]() |
Summurai
Chapter 2: Quality vs QuantityAs much as the last chapter should have woken you up to the crucial importance of getting lots of traffic to your site, you shouldn’t think for one moment that that is the whole ...
03:59
Chapter 2: Quality vs Quantity
As much as the last chapter should have woken you up to the crucial importance of getting lots of traffic to your site, you shouldn’t think for one moment that that is the whole story – it is not! Even more important than the amount of traffic you get, is the quality of that traffic. And by quality, I mean targeted traffic. What is targeted traffic? Simply, targeted traffic is traffic that you actively chose based on metrics. Let’s say that you have a wedding dress store that sells local dresses. What would targeted traffic mean for your business? Simple: it would mean a largely female audience, from your local area, and engaged. It’s better to have 20 visitors a day that fall into that category, than it is to have 1 million visitors from another country who are already married! There’s more to high quality traffic too. Just as important as the demographics, is the means through which you acquired that traffic, the impression you make on the visitors, and the way in which you market yourself subsequent to gaining that traffic. The best type of traffic is actually repeat traffic: returning visitors. This is something that is missing from so many approaches to building traffic, but there are a number of crucial reasons that repeat traffic trumps everything else: Repeat visitors have experienced more “touches” – that means they have interacted with your brand more times, and should have higher engagement and trust. In other words, they’re much more likely to buy! Repeat visitors are extremely You know they must be interested in what you’re talking about/selling because otherwise they wouldn’t have come back! Repeat visitors give you a constant supply of If those visitors are coming back to your site over and over again, this means recurring income and it means a more stable and resilient business. Repeat visitors are likely also examples of direct traffic. This means they’re visiting your site by simply typing in your URL rather than going through Google or social media. While Google and social media are extremely valuable tools that you should definitely invest time in, they are also third That means you’re relying on those platforms remaining available in order for your business model to work. This puts you in a risky position! There’s one more factor to consider when thinking about quality traffic though, and this potentially stands in opposition to repeat traffic. That is: user intent. Intent is a CRUCIAL word when it comes to SEO, conversion rates, marketing, and everything else. However, it’s also a term that is only recently being given the importance it deserves, and it’s a term that many people still don’t fully understand. What is intent? Why does it matter for your business? Essentially, intent refers to the reason that the traffic is coming to your site. This impacts on your CLV (see next section) meaning that it impacts on conversion rates, AKA sales. Because in order for someone to buy a product, they need to be the right person looking at the right product… but this also needs to happen at the right time. Who is more likely to buy a hat? The person who searches for "Buy hats online" or "How to repair old hat"? The answer is of course the first person. Both people we know wear hats. But the first person is actively looking to buy a hat right now. Thus the intent matches our content/store and this becomes a person that we very much want to bring to our site if we are paying for advertising. That said, the person who searched the latter term might still be a better long-term customer – which is because they are a big fan of hats and likely to buy many more in future. So both these types of traffic have their merits, but it’s important to understand the difference. But what you definitely want to avoid is that third kind of person: the person who searches “what to wear instead of a hat to keep your head warm.” Here the topic is relevant, but the intent is all wrong.Likewise, someone who searches for “free eBooks” probably isn’t going to spend a whole lot of cash on your new ebook business. ![]() ![]() We just need your phone...
After entering the number, the mobile send button will be available to you in all items. Send to mobile
After a short one-time registration, all the articles will be opened to you and we will be able to send you the content directly to the mobile (SMS) with a click.
![]() We sent you!
The option to cancel sending by email and mobile Will be available in the sent email.
00:00
![]()
60% Complete
Soon...
|
![]() |
Summurai
Introduction: Why Traffic is Your Most Valuable ResourceIf you are going to succeed as an online business – whether you run a blog, a website, or an ecommerce store – then you need to recognize the crucial, inherent value of traffic...
03:45
Introduction: Why Traffic is Your Most Valuable Resource
If you are going to succeed as an online business – whether you run a blog, a website, or an ecommerce store – then you need to recognize the crucial, inherent value of traffic. It is no exaggeration to say that traffic is any online business’ most valuable resource and is what will ultimately make or break its long term success. If you make money from ad revenue, that means that advertisers are paying you to show their adverts to your visitors. You will only be able to strike up the very best sponsorship deals and banner ad deals if you can demonstrate that you have a large number of regular visitors coming to your site. Alternatively, should you use a service like Google AdSense, you will get paid per click or per impression. That means you’ll earn a few cents for every person that clicks on / views your adverts. That means you’re going to need a LOT of your visitors to your site in order for that to have a cumulative effect and begin earning serious money! Maybe you sell a product or a service? Again: the number of visitors you get to your website will directly correlate with the number of eyes on your offering. The more people come to your site – the more traffic you have – the more you will stand to earn. Of course, you still need to convince people to buy your product. You still need a good product to sell in the first place… But if you don’t have people coming to your site in order to learn about your product, then none of that even matters! As Arnold Schwarzenegger once said: you could be giving away free gold, but if nobody knows you’re giving it away… you still won’t get any takers! (I’m paraphrasing.) And of course, this applies to affiliate marketing too: if you have an affiliate product that you need to sell, you first need to build/find an audience to sell it to. Even if you sell something else – like a Software as a Service model –then you’re going to need traffic in order for people to discover and sign up to your services! For all these reasons, traffic should be the number one priority for most online businesses. This should be the main point on most meeting agendas. This should be the single metric you pay most attention to. And yet that is seldom the case. Too often, we focus on everything but the traffic. We focus on trying to reduce overheads or to sell more profitable products. Maybe we worry about our website design/the content we are writing. Or maybe we allow our content to be dictated by a few business partners that – of course – only have their own best interests at heart. The danger in all these cases, is that you might end up missing the forest for the trees. Focussing too much on other factors that end up steering you in the wrong direction. The result is that your traffic either stagnates or starts to shrink. And as we’ve already established that traffic is the primary source of income for nearly EVERY online business. So what happens? All those other metrics start to shrink as well. This playlist is a wakeup call. This book is here to remind you of the crucial importance of traffic, and how to realign your strategies and goals in accordance with that. More importantly, this book is a blueprint to help you gain that much more traffic. That means writing articles that are designed to bring in more traffic. It means posting links in places that you know will drive more traffic. It means designing an ad campaign that maximizes the amount and QUALITY of traffic coming to your page for the smallest amount. You’ll discover the key factors that are preventing your site from growing right now. You’ll learn what the biggest websites on the web are doing to grow their traffic, and you’ll learn to emulate those strategies so that you can grow just as quickly and effectively. ![]() ![]() We just need your phone...
After entering the number, the mobile send button will be available to you in all items. Send to mobile
After a short one-time registration, all the articles will be opened to you and we will be able to send you the content directly to the mobile (SMS) with a click.
![]() We sent you!
The option to cancel sending by email and mobile Will be available in the sent email.
00:00
![]()
60% Complete
Soon...
|
As much as the last chapter should have woken you up to the crucial importance of getting lots of traffic to your ...
As much as the last chapter should have woken you up to the crucial importance of getting lots of traffic to your site, you shouldn’t think for one moment that that is the whole story – it is not!
Even more important than the amount of traffic you get, is the quality of that traffic. And by quality, I mean targeted traffic.
What is targeted traffic?
Simply, targeted traffic is traffic that you actively chose based on metrics. Let’s say that you have a wedding dress store that sells local dresses. What would targeted traffic mean for your business?
Simple: it would mean a largely female audience, from your local area, and engaged. It’s better to have 20 visitors a day that fall into that category, than it is to have 1 million visitors from another country who are already married!
There’s more to high quality traffic too. Just as important as the demographics, is the means through which you acquired that traffic, the impression you make on the visitors, and the way in which you market yourself subsequent to gaining that traffic.
The best type of traffic is actually repeat traffic: returning visitors. This is something that is missing from so many approaches to building traffic, but there are a number of crucial reasons that repeat traffic trumps everything else:
Repeat visitors have experienced more “touches” – that means they have interacted with your brand more times, and should have higher engagement and trust. In other words, they’re much more likely to buy!
Repeat visitors are extremely You know they must be interested in what you’re talking about/selling because otherwise they wouldn’t have come back!
Repeat visitors give you a constant supply of If those visitors are coming back to your site over and over again, this means recurring income and it means a more stable and resilient business.
Repeat visitors are likely also examples of direct traffic. This means they’re visiting your site by simply typing in your URL rather than going through Google or social media. While Google and social media are extremely valuable tools that you should definitely invest time in, they are also third That means you’re relying on those platforms remaining available in order for your business model to work. This puts you in a risky position!
There’s one more factor to consider when thinking about quality traffic though, and this potentially stands in opposition to repeat traffic. That is: user intent.
Intent is a CRUCIAL word when it comes to SEO, conversion rates, marketing, and everything else. However, it’s also a term that is only recently being given the importance it deserves, and it’s a term that many people still don’t fully understand.
What is intent? Why does it matter for your business?
Essentially, intent refers to the reason that the traffic is coming to your site. This impacts on your CLV (see next section) meaning that it impacts on conversion rates, AKA sales.
Because in order for someone to buy a product, they need to be the right person looking at the right product… but this also needs to happen at the right time.
Who is more likely to buy a hat? The person who searches for "Buy hats online" or "How to repair old hat"?
The answer is of course the first person. Both people we know wear hats. But the first person is actively looking to buy a hat right now.
Thus the intent matches our content/store and this becomes a person that we very much want to bring to our site if we are paying for advertising.
That said, the person who searched the latter term might still be a better long-term customer – which is because they are a big fan of hats and likely to buy many more in future. So both these types of traffic have their merits, but it’s important to understand the difference.
But what you definitely want to avoid is that third kind of person: the person who searches “what to wear instead of a hat to keep your head warm.”
Here the topic is relevant, but the intent is all wrong.Likewise, someone who searches for “free eBooks” probably isn’t going to spend a whole lot of cash on your new ebook business.
After entering the number, the mobile send button will be available to you in all items.
If you are going to succeed as an online business – whether you run a blog, a website, or an ecommerce store – ...
If you are going to succeed as an online business – whether you run a blog, a website, or an ecommerce store – then you need to recognize the crucial, inherent value of traffic. It is no exaggeration to say that traffic is any online business’ most valuable resource and is what will ultimately make or break its long term success.
If you make money from ad revenue, that means that advertisers are paying you to show their adverts to your visitors. You will only be able to strike up the very best sponsorship deals and banner ad deals if you can demonstrate that you have a large number of regular visitors coming to your site.
Alternatively, should you use a service like Google AdSense, you will get paid per click or per impression. That means you’ll earn a few cents for every person that clicks on / views your adverts. That means you’re going to need a LOT of your visitors to your site in order for that to have a cumulative effect and begin earning serious money!
Maybe you sell a product or a service? Again: the number of visitors you get to your website will directly correlate with the number of eyes on your offering. The more people come to your site – the more traffic you have – the more you will stand to earn. Of course, you still need to convince people to buy your product. You still need a good product to sell in the first place…
But if you don’t have people coming to your site in order to learn about your product, then none of that even matters!
As Arnold Schwarzenegger once said: you could be giving away free gold, but if nobody knows you’re giving it away… you still won’t get any takers! (I’m paraphrasing.)
And of course, this applies to affiliate marketing too: if you have an affiliate product that you need to sell, you first need to build/find an audience to sell it to.
Even if you sell something else – like a Software as a Service model –then you’re going to need traffic in order for people to discover and sign up to your services!
For all these reasons, traffic should be the number one priority for most online businesses. This should be the main point on most meeting agendas. This should be the single metric you pay most attention to.
And yet that is seldom the case. Too often, we focus on everything but the traffic. We focus on trying to reduce overheads or to sell more profitable products. Maybe we worry about our website design/the content we are writing.
Or maybe we allow our content to be dictated by a few business partners that – of course – only have their own best interests at heart.
The danger in all these cases, is that you might end up missing the forest for the trees. Focussing too much on other factors that end up steering you in the wrong direction. The result is that your traffic either stagnates or starts to shrink. And as we’ve already established that traffic is the primary source of income for nearly EVERY online business. So what happens? All those other metrics start to shrink as well.
This playlist is a wakeup call. This book is here to remind you of the crucial importance of traffic, and how to realign your strategies and goals in accordance with that. More importantly, this book is a blueprint to help you gain that much more traffic.
That means writing articles that are designed to bring in more traffic. It means posting links in places that you know will drive more traffic.
It means designing an ad campaign that maximizes the amount and QUALITY of traffic coming to your page for the smallest amount.
You’ll discover the key factors that are preventing your site from growing right now. You’ll learn what the biggest websites on the web are doing to grow their traffic, and you’ll learn to emulate those strategies so that you can grow just as quickly and effectively.
After entering the number, the mobile send button will be available to you in all items.
|
SummuraiChapter 2: Quality vs Quantity |
03:59
|
Chapter 2: Quality vs Quantity
As much as the last chapter should have woken you up to the crucial importance of getting lots of traffic to your site, you shouldn’t think for one moment that that is the whole story – it is not! Even more important than the amount of traffic you get, is the quality of that traffic. And by quality, I mean targeted traffic. What is targeted traffic? Simply, targeted traffic is traffic that you actively chose based on metrics. Let’s say that you have a wedding dress store that sells local dresses. What would targeted traffic mean for your business? Simple: it would mean a largely female audience, from your local area, and engaged. It’s better to have 20 visitors a day that fall into that category, than it is to have 1 million visitors from another country who are already married! There’s more to high quality traffic too. Just as important as the demographics, is the means through which you acquired that traffic, the impression you make on the visitors, and the way in which you market yourself subsequent to gaining that traffic. The best type of traffic is actually repeat traffic: returning visitors. This is something that is missing from so many approaches to building traffic, but there are a number of crucial reasons that repeat traffic trumps everything else: Repeat visitors have experienced more “touches” – that means they have interacted with your brand more times, and should have higher engagement and trust. In other words, they’re much more likely to buy! Repeat visitors are extremely You know they must be interested in what you’re talking about/selling because otherwise they wouldn’t have come back! Repeat visitors give you a constant supply of If those visitors are coming back to your site over and over again, this means recurring income and it means a more stable and resilient business. Repeat visitors are likely also examples of direct traffic. This means they’re visiting your site by simply typing in your URL rather than going through Google or social media. While Google and social media are extremely valuable tools that you should definitely invest time in, they are also third That means you’re relying on those platforms remaining available in order for your business model to work. This puts you in a risky position! There’s one more factor to consider when thinking about quality traffic though, and this potentially stands in opposition to repeat traffic. That is: user intent. Intent is a CRUCIAL word when it comes to SEO, conversion rates, marketing, and everything else. However, it’s also a term that is only recently being given the importance it deserves, and it’s a term that many people still don’t fully understand. What is intent? Why does it matter for your business? Essentially, intent refers to the reason that the traffic is coming to your site. This impacts on your CLV (see next section) meaning that it impacts on conversion rates, AKA sales. Because in order for someone to buy a product, they need to be the right person looking at the right product… but this also needs to happen at the right time. Who is more likely to buy a hat? The person who searches for "Buy hats online" or "How to repair old hat"? The answer is of course the first person. Both people we know wear hats. But the first person is actively looking to buy a hat right now. Thus the intent matches our content/store and this becomes a person that we very much want to bring to our site if we are paying for advertising. That said, the person who searched the latter term might still be a better long-term customer – which is because they are a big fan of hats and likely to buy many more in future. So both these types of traffic have their merits, but it’s important to understand the difference. But what you definitely want to avoid is that third kind of person: the person who searches “what to wear instead of a hat to keep your head warm.” Here the topic is relevant, but the intent is all wrong.Likewise, someone who searches for “free eBooks” probably isn’t going to spend a whole lot of cash on your new ebook business. ![]() ![]() We just need your phone...
After entering the number, the mobile send button will be available to you in all items. Send to mobile
After a short one-time registration, all the articles will be opened to you and we will be able to send you the content directly to the mobile (SMS) with a click.
![]() We sent you!
The option to cancel sending by email and mobile Will be available in the sent email.
00:00
![]()
60% Complete
|
|
SummuraiIntroduction: Why Traffic is Your Most Valuable Resource |
03:45
|
Introduction: Why Traffic is Your Most Valuable Resource
If you are going to succeed as an online business – whether you run a blog, a website, or an ecommerce store – then you need to recognize the crucial, inherent value of traffic. It is no exaggeration to say that traffic is any online business’ most valuable resource and is what will ultimately make or break its long term success. If you make money from ad revenue, that means that advertisers are paying you to show their adverts to your visitors. You will only be able to strike up the very best sponsorship deals and banner ad deals if you can demonstrate that you have a large number of regular visitors coming to your site. Alternatively, should you use a service like Google AdSense, you will get paid per click or per impression. That means you’ll earn a few cents for every person that clicks on / views your adverts. That means you’re going to need a LOT of your visitors to your site in order for that to have a cumulative effect and begin earning serious money! Maybe you sell a product or a service? Again: the number of visitors you get to your website will directly correlate with the number of eyes on your offering. The more people come to your site – the more traffic you have – the more you will stand to earn. Of course, you still need to convince people to buy your product. You still need a good product to sell in the first place… But if you don’t have people coming to your site in order to learn about your product, then none of that even matters! As Arnold Schwarzenegger once said: you could be giving away free gold, but if nobody knows you’re giving it away… you still won’t get any takers! (I’m paraphrasing.) And of course, this applies to affiliate marketing too: if you have an affiliate product that you need to sell, you first need to build/find an audience to sell it to. Even if you sell something else – like a Software as a Service model –then you’re going to need traffic in order for people to discover and sign up to your services! For all these reasons, traffic should be the number one priority for most online businesses. This should be the main point on most meeting agendas. This should be the single metric you pay most attention to. And yet that is seldom the case. Too often, we focus on everything but the traffic. We focus on trying to reduce overheads or to sell more profitable products. Maybe we worry about our website design/the content we are writing. Or maybe we allow our content to be dictated by a few business partners that – of course – only have their own best interests at heart. The danger in all these cases, is that you might end up missing the forest for the trees. Focussing too much on other factors that end up steering you in the wrong direction. The result is that your traffic either stagnates or starts to shrink. And as we’ve already established that traffic is the primary source of income for nearly EVERY online business. So what happens? All those other metrics start to shrink as well. This playlist is a wakeup call. This book is here to remind you of the crucial importance of traffic, and how to realign your strategies and goals in accordance with that. More importantly, this book is a blueprint to help you gain that much more traffic. That means writing articles that are designed to bring in more traffic. It means posting links in places that you know will drive more traffic. It means designing an ad campaign that maximizes the amount and QUALITY of traffic coming to your page for the smallest amount. You’ll discover the key factors that are preventing your site from growing right now. You’ll learn what the biggest websites on the web are doing to grow their traffic, and you’ll learn to emulate those strategies so that you can grow just as quickly and effectively. ![]() ![]() We just need your phone...
After entering the number, the mobile send button will be available to you in all items. Send to mobile
After a short one-time registration, all the articles will be opened to you and we will be able to send you the content directly to the mobile (SMS) with a click.
![]() We sent you!
The option to cancel sending by email and mobile Will be available in the sent email.
00:00
![]()
60% Complete
|
We’d love to hear your thoughts.
We are happy to learn and improve for you.