The price that you pick for your site’s offerings will be intimately tied to your sites conversion rate. If the price you pick is too high, then even with excellent presentation, your conversion rate will begin to drop. On the other hand, if you price your offering too low people will assume your product is not of much value, and your conversion rate will also suffer.

The exception to the two guidelines mentioned above is websites that run as discount operations. These kinds of sites can be successful, however this is very difficult model for those just starting their first business. One reason for this is because these kinds of sites usually require the business owner to maintain his own inventory.

If you are drop shipping, and acting as a middle man, then chances are that it will be just about impossible for you to undercut your competitors and still make a profit. The problem with keeping an inventory when starting out is that it requires storage space, and that it comes with the risk of taking a loss if you are not able to move your inventory.

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So as we touched on in our last post, all things that relate to monetization in the online business world start with Traffic. It is the river flowing towards your online business. Feel free to let me know if I am getting too metaphysical sounding.

Anywho, once we have this traffic flowing towards us, it is our job to funnel it through some sort of conversion piece. The purpose of this conversion piece is to catch a certain percentage of the traffic flowing towards us and to convert them into some actionable event, such as a sale.

If you are sending traffic from an email list to a specific landing page on one of your e-commerce sites that sells a single product, or a single product with multiple variations, then in theory your conversion rate could get as high as 5%

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So by now you may have heard that Twitter has purchased the search engine Summize for a deal worth an estimated 15 million dollars, according to Silicon Alley Insider. For more on this story, check out the article “Twitter Buys Summize For About 15M…”

This of course comes as good news to the five founders of Summize who are currently based in the D.C. metro area. This story is good news to us here at Feedback Secrets as well since we are a start up based in the D.C. area… GO D.C.!

The important question is, what does this story mean for entrepreneurs with small online businesses? I think the lesson in this story is something that has been suggested before on this site, which is that “You Can Always Monetize Web Traffic“.

Looking at the sale from a technology point or view sparks some interesting questions. First of which is, why in the world didn’t Twitter just create there own Summize clone to compete with Summize. I don’t think that Summize created some technological marvel, that in terms of their algorithm would be near impossible to duplicate.

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So let’s say that you already have a fair amount of traffic coming into your service based website but your conversion rate is not quite where you’d like it to be.

Improving conversion rate, for just about any type of website, is a matter of split testing. Our question then becomes what specifically we should split test for a service based website in order to be as efficient as possible with our time and effort.

Three specific areas come to mind regarding the question of where you should start your conversion boosting campaign. The first of these areas is your unique selling proposition or (USP). The term USP refers to the way in which you express your company’s unique blend of benefits to prospective clients.

Having a well defined USP is at the core of product differentiation and if your product is not perceivably different from those of your competitors then you inject unnecessary doubt in the minds of your prospects regarding the question of why they should buy from you, and not from your competitors. Keep in mind that a USP will never be just one selling point but rather several selling points that distinguish and define your offerings.

The next area to consider revamping and split testing is site design. We live in an attention deficit society with too much information and not enough time to consume it. For this reason we must assume that the visitors who land on our sites are making split second decisions about our companys based on the initial impressions that our sites leave on them.

This is why split testing site design offers large potential improvements in conversion rates for service based companies. When considering possible improvements to your site let your creativity give you ideas for potential improvements but don’t trust these hunches for the final verdict, make sure to make your final verdict is based on the raw data and results you get from your split tests.

The third area that I would suggest you consider split testing for your service based website is the addition of and adjustment of testimonials. If you don’t have any testimonials on your site, you should definitely consider adding some since testimonials are a powerful signal to potential customers that your company is reputable.

Keep in mind that some of the people who are considering buying your service may have first herd about your company after landing on your webpage in the last 20 seconds. They need reasons to believe in, and to trust you. In this day and age where anyone from any corner of the globe can quickly throw up a website and process credit card payments, the ability to convince customers that your company is trustworthy is invaluable.

The fact that people are willing you place their picture and name on your website to attest to the quality and level of service associated with your product goes a long way.

The three above mentioned points are just for starters, if you can think of anything else you might want to split test, then by all means, test away!

In a post on his blog, GoDaddy.com founder and CEO, Bob Parsons explains that “Everything that is watched improves.” If this statement is true it means that just the act of starting to pay attention to the VPV metric should cause your Value Per-Visit to improve. And of course, if your average VPV grows and your traffic stays the same, your site’s revenue increases.

Once you start to measure VPV you can decide on how fancy you want to get refining your measurements. For example if your site usually gets many more visits than unique visits, you may choose to track Value Per-Unique-Visitor (VPUV) instead of VPV.

Even if you choose to refine your measurement from tracking the Value Per-Visitor to tracking the Value Per-Unique-Visitor this metric you can still refine things a step further. This is due to the fact that a site’s average VPV could be calculated from traffic from several sites, and the VPV from each of these sites can sway wildly.

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The following post about extra ways to make money online was submitted by Marsello Oentoro. 

During tough financial times, like the recession we currently find ourselves in, many of people try to find creative ways to make some extra income.  Some take part time jobs bagging groceries or working at Target, but is that the most efficient way to make extra money? 

I’ve been guilty of such short sightedness myself, committing my time to a mundane translating job at a law firm.  Even though the money was pretty good, the gruesome hours I put into that job finally took its toll in the form of sleep depravation, which ultimately affected my full time job.

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I recently heard the term “Social Media Equity” for the first time in a recent post entitled ”The Benefits of Social Media Aggregators and Lifestreaming: A Look at Friendfeed” written by Maki of DoshDosh.com. I have to say that I like this term a lot. The virtual world has become a fascinating place and its financial impact is beginning to rival that of the physical world.

Take the term “digital real estate”, which some use to refer to virtual properties in online games like Second Life. According to the article “Is there real money in online real estate?” by MSN Real Estate correspondent Christopher Solomon, Ailin Graef may be making around $150,000 per year from her digital real estate empire.

When speaking of digital real estate, it is important of course not to confuse it with “virtual real estate”, which is a term that some use to refer to web domains. Domain names have potential cash value or equity based on several factors which might include how clever the domain name is, the amount of incoming traffic, any pre-existing name recognition, or similarity to a popular pre-existing domain.

For about $10 a year you can sit on a domain name without the need for any hosting in the hopes that someone will come along someday and buy it. Starting at about $5 a month you can ad hosting to your domain and change your online prospects dramatically.

With virtual real estate, as with physical, it’s not just the address that is important in determining value, you also have to look at the size of the property. With hosting you can add as many pages to your site as you want, with each and every page that you add your SEO presence grows, and as it grows so does your site’s value.

All of this suggests that the equity of the virtual world has very real value in terms of real dollars and cents. What is great about this is the nature of the barriers to entry in the online world.

At Feedback Secrets, we believe that if an opportunity has no barriers to entry then it is not a very good one. There are definitely barriers to building your online equity; however they are barriers of desire as opposed to barriers of circumstance.

For example, if you wanted to get started with investment properties or flipping houses but you had $100 in the bank and no job, you would most likely be out of luck. The barriers to entry, when it comes to virtual equity are the willingness to work hard, be creative, and potentially risk your time.

Tags: social networking, social media, virtual real estate

Online entrepreneur Shea Gunther recently raised $20K in four days using Twitter and other media. Feedback Secrets caught up with Shea to ask him some questions regarding his unorthodox fundraising technique, and to get the scoop on his latest venture.

Could you tell us a little bit about your new start up venture?

I’m starting up a screen printing and t-shirt company. We’ll start with a handful of shirt designs and build out more lines focusing on green themes, social media and news, online celebrities, and pop culture.

How much money did you raise, how much equity was sold, and how long did it take you?

In four days I raised $20k and I have another person considering going in for another $5k. All told so far I’ve sliced off 30% of our equity to my investors/partners.

Can you tell us about your business background before you started using Twitter?

I’ve been starting businesses since I was 20 and founded a $16M VC funded online video dot com. I’m 30 now so I guess that means I have a decade of being an entrepreneur under my belt (that makes me feel old). My day job time spent is working on a new green web startup. I’m working with some amazing guys in Chicago on a news site targeting the college set. This is my fifth startup with $100k+ in funding and I’ve started a handful of smaller businesses in between and on the side.

How much did your business background, prior to establishing a presence on Twitter, contribute to your ability to raise capital so fast?

I think my investors and partners know that I’ve been around the entrepreneurial block. We’ve built a tight little business model and I think we’ll do good in the niches we’re going after. I’ve been friends with my lead investor for a few years now- it’s all about who you know and who knows you.

How has Twitter increased your leverage as an entrepreneur, both in terms of this fundraising effort and in general?

I’ve been able to build a network of acquaintances on Twitter that’s proven invaluable. I’ve made some very real friends out of people who started off as followers and it’s provided me a platform to promote myself, my work, and my friends work. Twitter has so far seemed to attract a high proportion of smart, high achieving people and it’s been great to be able to tap into that.

What are the different methods by which prospective investors contacted you with questions regarding potential investment?

I didn’t write a business plan for this one. I didn’t have time and frankly hate having to write them. I do a LOT of business planning, I just despise writing out the formal business plan. If I was raising $200k or $2M it’d be harder to justify not writing a plan, but because I was targeting people for $5k and $10k investments I was able to get away with it. I wrote a lot of emails outlining everything I had planned and followed it up with Q&As on the phone. It was actually a very easy process, everyone came in excited to get involved.

Someone left a reply on your Twitter profile suggesting that the SEC might not be happy about you raising funds on Twitter. What are your thoughts on this subject?

I said something to the effect of “I’m raising $20k in all, I’d welcome the links I’d get from an SEC investigation”. I’m not blasting spam out to a hundred million people asking for investments in the next hot new stock, I’m asking my big circle of friends if anyone else wants to help start a t-shirt company with me. Boing Boing would be all over any federal heat coming my way. That would almost be worth it alone. ;D

When can we expect T-Shirts to be available for purchase?

We’ll be up and running at the end of June, beginning of July. We’re in no huge rush to get up and want to make sure we have production and the whole sales and shipping cycle down before we sell shirt one.

I think that I am officially on an unorthodox strategy kick! The idea for today’s post comes from the mind of Tommy Vallier. Tommy is looking to obtain a new iMac but he seems to be a little low on funds at the moment. The solution… to make the internet “an offer [it] can’t refuse”. In exchange for the new iMac Tommy will wear the company T-Shirt of whoever buy’s his new computer, for one year. I have simplified the details of this transaction and for the full scoop I suggest you check out Mr. Vallier’s site. I would especially suggest that you check out the question “How will we know you’re wearing it?” on the questions page of his site.

Here is why this is an awesome idea… you may be saying to yourself “that’s a horrible deal, I would never go for that.” And if you have such a view, it’s a very understandable position. But it seems that Vallier understands that the internet is an awfully big place. Let’s say that his conversion rate is 1 in 10,000 people. If he were selling an ebook, that would be awful conversion rate. But he’s not selling an ebook!

With what looks like very little marketing overhead and the viral power of the blogosphere, this proposition should get itself in front of the eyeballs of 10,000 people, easy. You might be tempted to think that there is going to be a lot of follow up work for Vallier after reading his questions page. The answer to that question is an emphatic YES and NO!

If Vallier decides to use social networking sites and blog extensively about the experience then yes on one hand that might entail a lot of work, on the other hand it should be well worthwhile for Mr. Vallier since not only does his sponsor have the potential of gaining lot’s of exposure, but Mr. Vallier himself stands to gain ton’s of exposure.

This story is a great example of the kind of symbiotic marketing that Web 2.0 is becoming known for. Vallier could potentially spin this little idea into a huge opportunity or string of opportunities. As I suggested in my last post, study those who are marketing themselves online that are doing things a little differently, it may well lead you to your own million dollar idea!

Tags: iMac, Apple, Internet Marketing, Viral Marketing, Web 2.0 , T-Shirt

Let’s start with some facts and figures… According the “Executive Summary” Blog, Facebook.com has been valued at lest as high as 1.6 billion dollars. In August of 2007 Facebook had 69,296,915 unique visitors according to an article by Max Freiert on Compete.com. Now let’s consider Facebook’s rival MySpace, the article “Was MySpace Sold on the Cheap?” by Olga Kharif from BusinessWeek.com reports that MySpace.com was sold for 560 million in 2005. According to the same Compete.com article mentioned above, MySpace.com had 26,224,486 unique visitors in August of 2007.

We don’t need to restrict ourselves to examining social networking sites like Facebook and MySpace. We can look at companies like Digg.com and YouTube.com. Both of these sites get tons of traffic (YouTube gets more) and both are highly valued.

You might be asking yourself, “What do these juggernauts of online business have to do with me?” Surprisingly the answer might be, a lot. More…