A question came up from a friend the other day when a company they reached out to asked, “How are you going to drive traffic?”
It’s a valid question but it got me thinking, does this person understand the relationship between Traffic and Conversion. Probably not because then their question would have been, “How will you convert at a higher rate?”
This is the more appropriate question, here’s why:
In finance and stock trading, we view the price of the stock and the ability or room for its overall value to increase. We search for a winner, so we can profit. But for ages upon ages, many people focus on the wrong metrics to gauge success.
A $1.00 stock rises to $1.02 is equivalent to a 2% increase.
A $100.00 stock rises to $102.00 is still equivalent to a 2% increase.
The notion here is whether it is easier for the cheaper stock to raise to $1.02 or the more expensive stock to get to $102.00. Arguments can be made for both sides and a lot is dependent on the brand, but most uninformed people would bet that the smaller stock had a greater chance of reaching $1.02 over the larger stock to reach $102.00 simply because 2 cents is less than 2 dollars.
Also, there are a good number of people that would rather invest in the smaller one to increase the number of shares they could purchase and net out a larger return looking for a moonshot.
The fallacy that exists though is it doesn’t matter, the return percentage wise, is the exact same, the return in monetary gains with $100 invested is also the exact same.
So what does all this have to do with Traffic v. Conversion?
Driving lots of traffic to your website, the cheap stock, has the exact same return as driving tailored, the more expensive stock, to your website. At the end of the day, all that matters is the conversion rate, the percentage that the stock grows.
Cheap traffic rarely leads to long standing customers. Additionally, depending on your product or service and it’s price point, your pool of investors are arguably smaller than you think. Like any calculation, remember, those that are willing to invest hope to see a return, ROI works not only for businesses but also for those that purchase goods as well.
At the end of the day, depending on your product, invest in the stock or audience, you believe will find the most value in your product and be willing to invest long term.
I’ve heard countless times from VPs of Sales, “Everyone with X is our market.”
Maybe they need a lesson in statistics and the stock market because they’re betting on the cheap stock that caters to sucker investors riddled with fallacies, and those don’t make for good long-term investors.
Instead, cater to an audience that can afford your product and ask them upfront what percentage returns they are hoping to see on their investment. You’ll find out really quickly whether they are looking for a moonshot or a product with steady growth gains they hope to stick with long term.