Profit Optimisation

Now we come to where the rubber really hits the road.

How do we know if our business is actually profitable or not? And what can we do to not only ensure it becomes profitable but also continues into the future becoming more profitable over time?

Unfortunately there are a lot of website owners out there that really have no clue as to how well or poorly their online salesman is performing for them.


Don’t be like this.

You’ve done all the hard work of building a web presence, you’ve got traffic coming to your website and you’ve got product and services sales funnels in place.

Now it’s time to put in place a data collection layer. Collect all the data you can about the performance of your traffic, your web presence and your sales funnels. At its most simple this can involve installing a statistics package onto your website, such as Google Analytics. Data collection should cover the entire sales funnels process from end to end, this may mean going outside the internet and collecting data about your offline processes as well.

A note of caution

There are a lot of people out there who think that by installing a statistics package like Google Analytics, then that is all that is required…but collecting data is only the beginning.

Once you have the data collection processes in place, it is then necessary to analyse that data.

Don’t analyse everything. While we are collecting a lot of data, if you get into over analysing then you only end up with “analysis paralysis”. Analysis Paralysis means that you are looking at so much data that you can no longer see anything worthwhile. The exercise here is not to analyse data, it is to use key aspects of the data to come up with actionable insights. Actionable insights that will lead to improvements in the overall performance of your business.

Remember the website is not a business. The website is a piece of technology that is used to act as a lead generator for your business, act as an online salesman for your business, act as a delivery tool for electronic deliverables for your business. Your business is more than just the technology.

Do you know the key metrics for any business? The business formula will tell you how successful you are at generating profit (or at making a loss) and gives you 5 key areas to concentrate on making improvements to.

The Business Formula

Leads x Conversion = Customers x Average $ Sale x # Transactions = Sales Revenue x Gross Profit Margin = Gross Profit

Learn this formula, learn how to measure 5 key metrics within it (leads, conversions, average $ sales, # transactions and gross profit margin) and identify areas within each of those 5 areas to be continuously improving them. Do you realise that if you just increased each of the 5 key metrics by 10%, your overall profit would increase as a result by 43%!

business formula

What this is teaching us is this: when you break the process into steps and then work on improving each of the steps the results of a small improvement in each step become exponential.

How does this relate to our web based business presence?

Firstly, if your web presence is about generating leads for your offline business…..then prospects come from generating traffic to our website and converting qualified visitors into leads …. both these steps fall into the Prospects step on the diagram above. The lead is then converted by your sales process into a customer.

Secondly, if your web presence is about generating sales for your business eg an ecommerce store … then you generate the prospects from visitors by qualifying them and utilise the sales process within the website to generate the sale. Your sales process could provide upsells and cross sells to increase both the number of transactions and you can promote higher priced items to customers to increase average transaction value. Repeat customers can also be acquired through follow up processes like remarketing and email list building.

So, what’s the key of all this … online, offline or combinations of the two.

The key is to document your sales processes and break them down into individual steps. Know what your metrics are for each of those steps and then be constantly seeking to make small improvements to each of those steps. The cumulative effect will be mind blowing for your business.

Here are the main points from this discussion:


know your sales process and break it down step by step
put in place measurement processes for all of the steps
collect the data and 80/20 the plethora of data that the systems like Google Analytics will collect for you


ask business questions of your data and let the data show you what is happening
turn the key data into presentable forms through use of visualisation like charts and reports


Many people will put in place tools like Google Analytics and even pretend to look at the data sometimes and think that is it…but its not, in fact if you only do those two things then you may as well not bother doing it at all
the power of Profit Optimisations comes from gaining insights into customer behaviour. Where are people leaving your sales process? What can we try to make an improvement and have fewer people leave at that step? Did our improvement actually make a difference and improve the process? (through further measurement..not from guessing)
gaining Insights, making Decisions and taking Actions as a result of those insights and decisions … then keep reiterating through the process as a continuous improvement cycle.

One Final Key Point

Averages Lie.


If average lie … then we need to ensure we are looking deeper and segmenting our data to find the actionable insights. Some examples:

Your website has 1000 visitors per month .. you feel great about that or do you? Why aren’t those 1000 visitors taking any action?

  • Segment by geography and you find that 950 of those visitors have come from countries known for hacking activities and really only 50 visitors have come from your target market
  • Segment by time on site and you find out that of those 50 true visitors most of them only stayed on your website for less than 10 seconds and bounced
  • Segment the visitors by device and you find that the majority of visitors are coming from mobile phones but your website is not mobile friendly…hence one reason they may be bouncing so quickly
  • oh and don’t forget to segment the visitors by IP address…. then you found out that most of the remaining visitors who stayed on your website for longer than 10 seconds were actually people from your own office.