Let’s look at the ACV and AVV
The Average Visitor Value and the Average Customer Value
Evaluating a Business – Part 1
There is several ways to do this – and we have to decide what to calculate first.
1 – We have two product at hand
1b – Signup fee – Bronze level at $49.95
2 – Silver upgrade at $139.95
Both pay out 100% commission at purchase – 1 first month.
Next we have a monthly residual income when everyone renew at $39.95 and $139.95 from their second month.
Monthly residual income. This is dependent on……..
1: your membership level – Bronze or Silver…..
2: it’s also a direct result from the number of members in your downline – and their member level again.
More about Residual Income later..
See also… TheVikings M&G PowerTeam Bonus
Back to the calculation….
My first choice here would be to make this as simple as possible.
I would start with calculating the ACV for signup at Bronze first.
Paid adverticing – Offer price $49.95 – Conversionrate 1%
Why use 1%? I always use that as a starting point. This is by many considered to be the “low end” of the industry standard.
So let’s do that: $49.95 X 1% = $49.95 ACV – And $0,50 AVV
In detail this means that if we buy 100 clicks – we would generate 1 sale.
And we can also see that since the AVV is $0,50 – we know that we can pay up to $0,50 for each click (visitor) – and break even.
What if we could get a better conversion rate:
At 3% conversion it would be: $49.95 ACV – And $1,50 AVV
So at 3% we can pay up to $1,50/click and be at break even
At 5% conversion it would be: $49.95 ACV – And $2,50 AVV
At 7% conversion it would be: $49.95 ACV – And $3,50 AVV
At 10% conversion it would be: $49.95 ACV – And $5,00 AVV
At 16% conversion it would be: $49.95 ACV – And $7,99 AVV
At 16 % conversion we could pay up to $7,99 and still be at break even.
Why are these numbers important?
This is the most vital point in building ANY business! Know your numbers!
Let’s look at result of these numbers – how we actually earn best possible from knowing the metrics.
From the calculations above we can also establish that the better the conversion – the better the possibility to earn.
So let us put these numbers to “The Test”
From experience I know that I can get conversion at 4% – and even much higher.
I also know that I can receive targeted traffic for $0,35/click all the way down to $0,05/click.
I do that by starting low – often at only $5,00 campaigns.
Then I split-test, tweak, rince and repeat – and when I achieve the best possible conversion – scale and automate.
Let’s us $0,25/click and 4% as a starting point and see what happens.
If I start with a budget of $50,00 – it would get me 200 clicks.
200 clicks at 4% = 8 sales – 8 X 49,95 = $399,60 = $349,60 in Profit!
This is almost like printing your own money!
But this is only the beginning…. Initially we talked about 2 products – so we also have to consider what the Silver upgrade brings to the table…
Since we here are talking about to products that are dependant of each other – we can assume that actually 100% eventually will upgrade to Silver as well.
In this case we have: $189.90 ACV Average Customer Value – And $7,60 AVV Average Visitor Value
Let’s first calculate with 4% conversion – we already have our campaign optimized and ready to go.
We start with the $50 and $0,25/click – so we would make the same 8 sales.
$189,95 ACV X 8 = $1519,60 = $1469,90 in profit!
Sure, all wont upgrade to Silver emediately – but hey – when they see people flodding into their downline – no way they are letting go of commissions this generate.
I’m here talking about the monthly residual income.
As a Bronze member one can earn $1 000+ monthly.
As a Silver member one can earn $4 000+ monthly.
You be the judge of that…..
In a situation like this – when I have a well working campaign – it’s time to scale and automate. I use “traffic arbitrage” – meaning I invest some – or all of my first profits to generate more traffic and profit.
So let’s say that we take $1 000 and reinvest in traffic. At the same rate it would purchase some 4 000 Cliks!
That again translates to 160 sales at 4% coversion.
$189,95 ACV X 160 = $30932 = $29 932 in profit!
At only 1% conversion it would still be $7348 in profit
So what about buying some more traffic – maybe $3 000 this time.
You do the math – the previous profit times 3……
Ok, this was the technical part. Maybe it went a bit over your head – if so that’s ok. But believe it – the numbers don’t lie.
This is the way I evaluate and conduct all the opportunities BEFORE I decide to go for them – or not.
Next I want to look at how to get there from scratch – how to achieve results like this…
For one – we know that the M&G Home Business we have evaluated can work really well – and produce some nice front end and residual income.
So we need to put our promotion together.
Sure, one could just start driving traffic to the two included sales pages – or just sit back and wait for the automated guarantied subscribers to come in and do the job on autopilot. That would work to – but much slower.
So what we need is a sort of high converting sales funnel optimized for converting best possible with the two M&G sales pages as main offer.
Watch out for my next article – I will then dig deeper into how to set up a well working promotion plan – for this – or Any Home Based Business.