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How Much Traffic Does your Online Store Need to Increase its Revenue

How Much Traffic Does your Online Store need to increase

How Much Traffic Does your Online Store need to increase its revenue? It's strange to make a statement like "The more traffic you have, the more sales you'll get." It seems to make e-commerce sound simpler than it really is. Is that correct? But the problem is true. The more traffic you have, the more you can earn. Even with 1% conversion rate, 1% will still see an increase of 100-100,000 visitors. So if you want to make more money with online sales, one of the first things you need to improve is site traffic. Today, I'll show you exactly how you can increase your revenue with increased traffic. It also provides formulas that you can use to determine what you can get as your site traffic, order value, or conversion rate increases.

Let's look at how closely traffic and revenue are related.

For users unfamiliar with e-commerce, let's look at how store traffic and revenue are closely related, and how conversion rates are related. (If you already know, you can skip it.) The conversion rate for your store is the approximate number of visitors who take the desired action (assuming you've "translated" the visitor into a paid customer). If you buy something for every 100 shop visitors, you'll see a conversion rate of 5%.

How traffic and revenue are related to your store

More conversions = more money. Typically, conversion rates are adjusted up and down with traffic. Even if your traffic increases from 100 to 1,000 per month, your conversion rate is likely to approach 5%. It's not perfect science, but it's generally assumed that if the circumstances are the same, the proportions remain consistent. Online Store Need to Increase It's important to be able to see how your site's revenue grows with traffic. Your site has an average order value or an item called AOV. If 5% of your 100 visitors convert and your AOV is $ 50, your sales will be $ 250. But 5% of your 1,000 visitors convert to $ 2,500! Now you've seen how you can increase your revenue by getting more traffic. Now, just decide how much traffic you need to generate more revenue.

First step: Find your current traffic, conversion rate, and AOV.

Assuming you are already using Google Analytics in your store or accessing similar data sources, the first step is to look for three unique values:
  • Average Monthly Visits (Session)
  • Store conversion rate
  • Average order amount
There are many ways to use the first metric, but the quickest way is to open Google Analytics, navigate to your audience, and go to Overview. Google calls your site visits "session", so the first data on the page is needed here. By default, you can see the data for the most recent 30 days here. Online Store Need to Increase What if I want to use averages for 6 months or 1 year if my traffic has surged recently? There is no problem. Select a custom date range and divide the new session total by the number of months. So if you have 500,000 sessions in 6 months, you can see about 83,000 sessions per month.

Use the calendar on the top right to select a new set of dates.

For Conversion Rate and AOV, go to Ecommerce and then click Overview. On this first screen you will receive both data. If you like, you can change the date to get an average of these values over a period of 30 days, 90 days, etc. The difference is that Google provides an automatically adjusted average. Freely define your own time range for the mean value. You must use the same date range for all items so all items match correctly.

Did you get the data? I'll start the calculation.

The formula you want for this part is: Traffic x Conversion Rate x AOV = Estimated Monthly Revenue That is, the average monthly session is multiplied by the conversion rate to get a new value. Visits that are expected to lead to conversions. Online Store Need to Increase You multiply this value by the average order amount to get the dollar amount, or estimated monthly revenue.
  • Be prepared to do some calculations!
  • Let me give you an example. If you visit 5,000 visits a month and your conversion rate is 5% and your AOV is $ 40, your mathematics looks like this:
  • (5,000 x 0.05) x $ 40 = $ 10,000 / month

  • About 250 conversions occur at about $ 40. It's not bad!

  • What happens if 1,000 visitors are added to this store every month?

  • (6,000 x 0.05) x $ 40 = $ 12,000 / month
When the conversion rate is 5%, there are an additional 50 conversions, which adds $ 2,000 in monthly revenue. Replace unique values in this formula and then increase the amount of traffic to see how additional visitors impact your revenue. You may be surprised that there may be additional 500 sessions or 1,000 sessions. An important part of this formula is that you can use it to estimate how much additional traffic will help your site over time. Online Store Need to Increase You can also use this to accurately determine how much traffic you need to meet your revenue goals. Let's use the example above. A store with 5,000 visitors a month and $ 10,000 sales will earn about $ 120,000 a year. However, if you increase traffic to 1,000 sessions per month, you'll add $ 2,000 per month and your annual revenue will increase to $ 144,000. It is an important difference! What if this store owner had the goal of earning $ 200,000 a year? All they have to do is divide by monthly goal - about $ 16,700 - and do math to find the nearest number of visits. This will result in an additional 3,500 visits to the top of your starting traffic. (8,500 x 0.05) x $ 40 = $ 17,000 / month (or $ 204,000 / yr) Again, assign your own values to this formula to see how you can reach your goals with additional traffic.

What happens if the average order amount also increases?

All this assumes, of course, that the average order value and conversion rate do not change. It is not always the case. Online Store Need to Increase If you want to actively improve your website as you drive traffic, you can discover the potential to drive customers to make more purchases, like custom recommendations or product bundles. By substituting the new AOV in the calculations, you can determine the impact of this increase in value on revenues. Exchange your new third value without modifying or modifying your monthly visit and watch the magic happen.
  • The impact of increased AOV on sales can be calculated.
  • What if 5,000 visits to the store change the AOV from $ 40 to $ 45?
  • (5,000 x 0.05) x $ 45 = $ 11,250 per month

  • 250 visits will generate sales, but an additional $ 5 will be added.

  • Now pair this increase with just 1,000 visits.

  • (6,000 x 0.05) x $ 45 = $ 13,500 / month

  • It is $ 3,500 a month and $ 42,000 a year. Enough to hire an employee!
Finally, you can adjust your store's conversion rate as expected to see how the increase impacts your sales. You can do this independently of the other factors in the formula, and you can combine the two or all three to see how the changes can benefit you. (5,000 x 0.06) x $ 40 = $ 12,000 / month This is 300 purchases, 6% instead of 250, estimated at 5%. An additional $ 2,000 a month is required. Now let's combine the conversion rate increase with more than 1,000 visitors. (6,000 x 0.06) x $ 40 = $ 14,400 / month It's 360 conversions, selling more than 110 times, starting with this sample store, and spending $ 4,400 more in monthly sales. It is quickly merged!

Next step: Focus on increasing traffic.

Now that you know how much more traffic you can get from your store because of your traffic, the next step is definitely getting more traffic. But it's not easy to do especially if your store is new and you're not sure which marketing method is right for you. Online Store Need to Increase In a future installment, we'll discuss some of the ways you can scale your store's traffic and provide criteria you can use to determine the best way for your users, industry, and current steps.

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