In this article I develop further on a 3rd point to evaluate when looking to find an online business (view the original video)
The diagram above illustrates a sales funnel with different entry level items in terms of prices for products or services an online business might offer. Now the reason this is illustrated is to show the impact of a particular product or service where multiple options are available for clients to buy into.
A Sales Funnel and an explanation
Let’s just say the above represents an information product offering, specifically in the education sector. The product has three offerings, a FREE or Entry level product, a medium term product, and a high end product. Each product offering has a certain level of information of value or education for the client; the higher the value in the product the more the client receives in training for this particular product.
Let’s assume you promote this as an online business where you are an affiliate (or representative agent) for the offering. So if you sell any of the above products in the funnel, you will earn a certain commission based on what the business pays you for bring sales for the product offering.
Assume through your marketing efforts you bring in 300 leads (or people interested in buying your product) a month through different marketing you apply, the following happens through the sales funnel:
a) At the entry level product of the 300 leads, assume 5% convert into buyers, then this implies 15 people would have bought the product. Let’s assume the $30 fee is once off as a trial/entry price to pay. Let’s assume the online business pays you $20 commission for this product level. So your total earnings for the 15 people are $300. That’s not bad going for a small amount of marketing effort.
b) Now let’s assume of the 15 people you brought in, half of those are interested in raising their education to the next level. So they now look at the medium product offering which is $297 per month. Note medium level products are normally priced monthly, meaning there is monthly residual income now possible. Assume for this offering the commission is $200. That means the 7 people will bring in $1400 in monthly income.
c) We are only just seeing the tip of the effect of such a sales funnel for an online product. Now let’s assume of the 7 people, only 3 are looking to invest further in their education, so the high entry product may provide the level of training they are looking for. So assume from this product level the commission is $1000. Such a product is normally termed a High Ticket product. For the 3 people that bought this product that means the commission earned in total is $3000 for you.
Now if you take your total earnings for the month, you would have earned: $300+$1400+$3000 = $4,700
Let’s look at profitability
Assume your leads cost you $5 per lead. This means your cost was $1500 in marketing (note that cost per lead can vary depending on your level of marketing experience and skill in bringing your costs down).
So your NET PROFIT = $4,700 – $1500 = $3,200
You can see the power of an online multi product offering and how it can give you multiple income through the funnel. The example provided is just an illustration of the POTENTIAL of earning a passive income online, but you need to find the right online business that has such an offering such as this. Do the maths with more leads and you can see what the massive potential is!
Disclaimer: The examples illustrated are only for illustrative purposes. Many factors influence how many you leads you get and how many sales you make; such factors can be the level of your skills learnt and applied, as well as the duration of your marketing and sales experience in an online business!
P.S. The online business I work on has a similar sales funnel, you could get some more on information on it here!