Felix Lee from Easy.my shared about the five ways to increase your profits if you are selling something online. Watch his sharing below:

When we talk about profit, everybody is very happy. A lot of my friends or even customers asked me, “If I want to increase my online profit, is there a formula?” I would say, “Yes.”

The formula is first, you would need to determine the Number of Website Visitors that you have. Then, we have the Conversion Rate. For example, you have 1000 visitors for this month. A visitor doesn’t mean 100% sales, they might just be visiting your website to see what you’re selling. So, Conversion Rate depends on how you are able to convert them into becoming your customer.

Then, we have our Customer, from whom we have to be able to generate sales revenue. The first step depends on the Sales Transaction – how many times they purchase for a particular month or period. Second is that it depends on the Average Dollar Sales. That means how much the customers are willing to spend on purchasing from the website of your online business. With these, we will start to get our Sales Revenue, which also depends on your Profit Margin, and then comes our profit.

You will see there are five ways that are done in a certain order: Website Visitor, Conversion Rate, Sales Transaction, Average Dollar Sales, and Profit Margin.

Now, before I talk about these five areas, I want to show you how it looks if you do it properly. This is the formula:

No. of Website Visitors x Conversion Rate = No. of Customers.

Let’s say, this month I’ve got 1000 visitors to my website. It happened that I’m only able to convert 1% of them to become my customers. So, that means for 1,000 visitors, I am able to convert 1% of them to purchase something with me – so I’ve got 10 customers. Then, each of them only buy one order from me and they spend only RM50. The Sales Revenue is only RM500.

So, I’ve got RM500 from the customers when they spend money at my website, but my Average Profit Margin is only 20%. That makes my profit only RM100. Then I would say, “Oh, my gosh! How would I survive for this month?” This is how we play the game if you want to earn extra: it depends on how we increase our wealth.

First, for the website visitor, do a lot of promotions and advertisements. For example, I do a lot of advertisement and marketing. This might help me to increase the number of my website visitors to 2000. Then, I come up with an idea to increase the Conversion Rate – to make them buy what they see and make sure that they don’t just come over to visit my website. I want to make sure that they purchase something. So, say I increase the Conversion Rate a little to 2%. The number of customers now becomes 40 instead of 10.

How do I increase the Sales Transactions? Do some promotions: buy 1/take 1, spend money and get a lucky draw, whatever. This is so that the number of purchases is no longer one per month, and the purchases will increase a bit to two times.

To increase the Average Dollar sales, say, you go to some hypermart or supermarket, you can see that there are purchase promotions. So, for your website, you should expect that if you do something like this, you’ll get higher dollar sales from the customer.

The computation over here is: 40 x 2, then 80 x 100. Now, from RM500 we’ve increased a lot to RM8,000. It’s those little things that we do to go the extra mile in order to get more sales revenue. So, from RM8,000 if we can adjust the profit margin by maybe lessening the expenses that are not necessary, we can increase the profit margin up to 50%. Our total profit now becomes RM24,000. If we run our online business like this, then this is what we’re looking for to survive.

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Personal finance author and trainer

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