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.

Let us suppose your Minimum Viable sales is $20k per month.

This is the amount you need to sustain your business and marketing operations and remain profitable and in business. .

Let us suppose the current ecommerce conversion rate of your website is 1%.

So every 1 in 100 visitors who come to your website make a purchase.

Let us suppose your website average order value is $70.


Now number of additional orders required to generate an additional sales of $20k

= Proposed Sale/Average order value

= 20k / 70 = 286 orders

Now the volume of traffic you would need to generate additional 286 orders

= Additional orders / ecommerce conversion rate

= 286 / 1% = 28,600 visits/clicks


So you would need around 28.6k visits /clicks per month just to stay in business.  This is your minimum viable traffic.

Now let us suppose your average cost per click is $1, so additional 14,300 visits/clicks on your website (provided it is all paid traffic) would cost you around $14,300 per month.

So you would have to spend 
$14,300 per month to generate sales of $20,000 per month.

This is obviously not an ideal state.

In order to increase your profit margin, you would need to work on increasing your average order value and decreasing the cost of acquiring customers. 
So that you can generate more sales from existing traffic.

However you get an idea of your marketing cost now. Higher your targeted revenue, higher your marketing cost is going to be.

You can use my example as a calculator.

Enter your desired income and you will get a good idea of traffic, orders and marketing cost.



Generally 2 out of every 100 people make a purchase, on an ‘average ecommerce website’.

Keeping that in mind, if the website traffic is only 2000 visitors a month then even with an average order value of $100 and ecommerce conversion rate as high as 10%, monthly sales would still not be more than $20,000 (2000 * $100 * 10/100 = $20,000)

This will barely cover the marketing and running cost of the ecommerce businesses whose monthly viable sales is $20k

Unfortunately this is also the maximum amount an ecommerce business who gets 2000 visitors a month can realistically expect to generate each month.

So we need more traffic. And how much traffic we need, depends upon our financial goals.

Having said that 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.  

As a rule of thumb, for every additional thousand visitors to your website, you can’t expect to earn more than $10k .

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

 

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 2% ecommerce conversion rate and average order value of $50.

So in real life, with 2% ecommerce conversion rate and average order value of $50, 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 is worth $1.


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) and 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.

Announcement about my books

Maths and Stats for Web Analytics and Conversion Optimization
This expert guide will teach you how to leverage the knowledge of maths and statistics in order to accurately interpret data and take actions, which can quickly improve the bottom-line of your online business.

Master the Essentials of Email Marketing Analytics
This book focuses solely on the ‘analytics’ that power your email marketing optimization program and will help you dramatically reduce your cost per acquisition and increase marketing ROI by tracking the performance of the various KPIs and metrics used for email marketing.

Attribution Modelling in Google Analytics and Beyond
Attribution modelling is the process of determining the most effective marketing channels for investment. This book has been written to help you implement attribution modelling. It will teach you how to leverage the knowledge of attribution modelling in order to allocate marketing budget and understand buying behaviour.

Himanshu Sharma

Certified web analyst and founder of OptimizeSmart.com

My name is Himanshu Sharma and I help businesses find and fix their Google Analytics and conversion issues. If you have any questions or comments please contact me.

  • Over eleven years' experience in SEO, PPC and web analytics
  • Google Analytics certified
  • Google AdWords certified
  • Nominated for Digital Analytics Association Award for Excellence
  • Bachelors degree in Internet Science
  • Founder of OptimizeSmart.com and EventEducation.com

I am also the author of three books:

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