Taking Your Internet Business To The Top Part 3

28/06/2007 by paul

Don't miss out! Make sure you read Part 1 and Part 2.

Your Plan

You've now evaluated your market and determined what they want most. You've organised your supply-lines and you're ready to start bringing the two together, but before you can, you need to develop your plan.

The plan is the method behind the business. Think of it like this: the market and the supply is the 'what?'; the plan is the 'how?' (the final section 'The Goal' is the 'why?').

What are you planning for?

Let's look at what you're planning for:

• Traffic generation
• Customer conversion
• No. of sales (per customer)
• Sale value
• Profit margin per sale

These are listed in chronological order - you have to generate traffic before you can create customers, etc. Increasing each individual step is often quite easy - you can increase sales by reducing your price, and you can increase margin by increasing your price, but these normally have a compensatory reaction that reduces the net result (decrease price = decrease profit margin; increase price = decrease sales) and, in the case of price reductions, you may end up working harder for the same (or less) profit. The aim is to increase each of these steps without reducing any other. Consider the following equations:

Total profit = Traffic x Conversion x Sales x Value x Margin

Current profit = 1 x 1 x 1 x 1 x 1 = 1

Profit after 10% increase = 1.1 x 1.1 x 1.1 x 1.1 x 1.1 = 1.61

What this equation shows is that if you increase each of the 5 components by just 10% you'll reap a net overal gain of 61% to your bottom line.

Where to start?

It is common practise, particularly in relation to an existing web site, to consider these components in reverse. The theory being that the further down the list you go, the more control you have and therefore the easier it is to implement change. However, my theory is that you should start wherever is easiest and quickest to reap rewards. As we've seen above, each improvement compounds on the next - two 10% improvements is a 21% overall gain. This suggestion, however, is based strictly on the following condition:

You're confident that the website itself is not the problem (e.g. your navigation doesn't work)

To borrow a concept from Steve Krug, author of web usability bible 'Don't Make Me Think', when customers enter your site they come with a base level of goodwill (otherwise they wouldn't come, right?). As the visitor progressively encounters unreadably small fonts, low-contrast, badly positioned navigation, broken links, etc, their level of goodwill reduces until they reach a point where they cannot continue any longer. He or she leaves your site and never comes back. In this day of rapid social networking, that could be a lot of potential customers that will never even come to check for themselves (on the flip side, by doing things well, you increase the level of goodwill and visitors will accept the occasional glitch). So, before you do embark on an expensive traffic generation campaign, look at your website and ask yourself if it's up to the job. Better still, ask someone else, or - the best of all options - ask your customers!

When considering the above, remember that at this stage the plan should have more questions than answers. Unless you're very lucky or have a very simple business, you will not be able to sit down and immediately work out the best way of doing things (more about that in 'Part 4 - The Goal'), but you should have a starting platform. Before you start implementing anything, you need to know where you're starting from so measure where you are now, change something, measure the impact, change again...repeat - but only change one thing at a time!

Part 4

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