Minimum Viable Traffic – the Maths behind Conversion Optimization

Minimal Viable Traffic is the volume of traffic you need on your website to sustain your business and marketing operations and make some money on top of that.

This is the volume of traffic you need just to remain profitable and in business.

 

Follow the steps below to determine your minimum viable traffic:

Step-1: Get following stats about your website/business:

  1. Current Operating Profit per month
  2. Operating Profit Margin
  3. Average Order Value
  4. Current avg. Website Sales per month
  5. Current avg. number of orders per month
  6. Current avg. Traffic (visitors) to your website per month
  7. Current Ecommerce Conversion Rate

Let us suppose following are your website stats:

Step-2: Determine/calculate following stats about your website/business:

  1. Target Operating Profit per month
  2. New Operating Profit Margin
  3. New Average Order Value
  4. Target avg. Website Sales per month
  5. Target avg. number of orders per month
  6. Target avg. Traffic (visitors) to your website per month
  7. Target Ecommerce Conversion Rate

Let us suppose your target operating profit per month is $20k.

You don’t want to change your operating profit margin and average order value.

And you are not trying to improve your ecommerce conversion rate.

Under such circumstances, the amount of sales you would need each month in order to achieve your target operating profit would be:

Target avg. Website Sales per month = Target Operating Profit per month / Operating Profit Margin

= $20,000 / 20% = $100,000

Now lets calculate the number of orders you would need each month in order to achieve your target monthly sales.

Target avg. number of orders per month = Target avg. Website Sales per month / Average Order Value

= $100,000 / $70 = 1429 orders

Now lets calculate the website traffic (visitors) you would need each month in order to achieve your target monthly orders.

Target avg. traffic (visitors) to your website per month = Target avg. number of orders per month / Ecommerce Conversion Rate

= 1429 orders / 1.10% = 129870 visitors per month

Step-3: Determine/calculate following stats about your website/business:

  1. Additional orders you need per month
  2. Additional traffic (visitors/users) you need each month
  3. Cost to acquire additional traffic (with Avg. CPC of $1)
  4. Current monthly avg. cost to acquire existing traffic
  5. Operating Profit Achieved after acquiring additional traffic

 

Additional orders you need per month

= Target avg. number of orders per month – Current avg. number of orders per month

= 1429 – 550 = 879

Additional traffic (visitors/users) you need each month

= Target avg. Traffic (visitors) to your website per month – Current avg. Traffic (visitors) to your website per month

= 129870 – 50000 = 79870 visitors per month

 

Cost to acquire additional traffic (with Avg. CPC of $1)

= Additional traffic (visitors/users) you need each month * $1

= 79870 visitors per month * $1

= $79870

Operating Profit Achieved after acquiring additional traffic

= Target avg. Website Sales per month – (Cost to acquire additional traffic + Current monthly avg. cost to acquire existing traffic)

= $100,000 – $79870

= $20130

You can download the Google sheet from here and play with different numbers to get to your desired operating profit.

From the table below:

We can conclude that you need 129870 visitors in order to generate $100,000 sales each month.

So each visitor to your website is worth around $1

So with 10% ecommerce conversion rate, each visitor to your website is worth around $10.

So,

If a website gets 1000 visitors a month, its maximum earning potential would be around $10k / month.

If a website gets 2000 visitors a month, its maximum earning potential would be around $20k / month

If a website gets 10,000 visitors a month, its maximum earning potential would be around $100k / month

If a website gets 20,000 visitors a month, its maximum earning potential would be around $200k / month

If a website gets 200,000 visitors a month, its maximum earning potential would be around $2M / month

 

What that also mean, you can’t expect a website which gets 1000 visitors a month to generate sales of $40k – $50k / month, unless following two conditions are met:

#1 The average order value of the website is above $100.

#2 The website ecommerce conversion rate is above 10%.

For majority of ecommerce websites, the aforesaid two conditions never really apply. They would be lucky to have 1% ecommerce conversion rate and average order value of $50.

So in real life, with 1% ecommerce conversion rate, for every additional thousand visitors to your website, you can expect to earn a maximum of, additional $1k .

So,

If a website gets 1000 visitors a month, its maximum earning potential would be around $1k / month.

If a website gets 2000 visitors a month, its maximum earning potential would be around $2k / month

If a website gets 10,000 visitors a month, its maximum earning potential would be around $10k / month

If a website gets 20,000 visitors a month, its maximum earning potential would be around $20k / month

If a website gets 200,000 visitors a month, its maximum earning potential would be around $200k / month

So basically, Each visitor’s maximum worth is around $1.

 

There are so many businesses (esp. small business owners) out there who do not understand this basic maths and wish to earn tens of thousands of dollars from a minuscule amount of traffic.  

You can use these calculations to get an idea of the earning potential of your website or your client’s website.

You need minimum viable traffic just to remain in business. But obviously you want to make more money. So you need more traffic.

Your website traffic will always increase (ideally it should) but it won’t always increase in proportion to conversion volume. So as website traffic increases, conversion rate tends to go down.

If this wasn’t the case, every website owner getting quarter million or more visits a month, would be a millionaire.

The crux of this article is, be realistic about how much you can truly grow even with intense conversion optimization program and do not try to use high conversion rate as a substitute for traffic.

You need minimum viable traffic and much more.

 

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Himanshu Sharma

Digital Marketing Consultant and Founder of Optimizesmart.com

Himanshu helps business owners and marketing professionals in generating more sales and ROI by fixing their website tracking issues, helping them understand their true customers purchase journey and helping them determine the most effective marketing channels for investment.

He has over 12 years experience in digital analytics and digital marketing.

He was nominated for the Digital Analytics Association's Awards for Excellence.

The Digital Analytics Association is a world renowned not-for-profit association which helps organisations overcome the challenges of data acquisition and application.

He is the author of four best-selling books on analytics and conversion optimization:

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