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How Selling Lemonade Can Help You Understand Affiliate Marketing

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  • How Selling Lemonade Can Help You Understand Affiliate Marketing

    Today we are going to sell Lemonade in order to understand the significance and power of campaign data.

    Data is one majorly overlooked and widely misunderstood aspect of Affiliate Marketing. Data is the key to everything. It is by far the MOST valuable asset you can possibly obtain in this industry.


    How does data help me?
    Campaign data contains the exact combination of elements necessary to generate a sale.


    How do I obtain Data?
    By testing campaigns and tracking your results.


    Let's demonstrate the power of data and testing using Lemonade Stands as an example.


    You decide to start your very own Lemonade business! You have acquired tables, employees, lemons, cups, pitchers and all other assets required to start your business.


    Let's take a look at your overhead

    Number of Tables = 5
    Daily Cost To Operate Per Table = $100.00
    Daily Total Cost For All Tables = $500.00
    Cost per cup = $3.00
    Sales Goal to break even = 34 cups/$102.00


    You setup each of your tables in different locations within your city:

    Table Locations
    - Construction Site
    - School Zone
    - Downtown
    - Quiet Suburb
    - Basketball court



    DAY #1

    You sell Lemonade for the full day with all 5 tables setup in different locations. Here are your results!


    TABLE #1 - Construction Site - 54 cups - $162 Revenue --> $62 Profit
    TABLE #2 - School Zone - 40 cups - $120 Revenue --> $20 Profit
    TABLE #3 - Down Town - 3 cups - $9 Revenue --> $91 Loss
    TABLE #4 - Quiet Suburb - 10 cups - $30 Revenue --> $70 Loss
    TABLE #5 - Basketball Court - 30 cups $90 Revenue --> $10 Loss

    Total Cost = $500
    Total Revenue = $411
    Profile/Loss = $89 Loss



    Day #1 you lose $89 dollars over all. On the surface this looks like a loss and a waste of time. Luckily we have DATA on each individual table. Let's examine the data.

    Table #1 and Table #2 made a profit. Why?

    Table #1 is in a Construction Zone
    - Majority Men age 25-50
    - Construction workers are doing manual labor and are thirsty.
    - It's much easier for them to walk to the lemonade table then travel in their car to the store.

    Table #2 is in a School Zone
    - Mixed sex (male & Female) age 14-18
    - High amount of potential customers (Students have lunch money)
    - Convenient location instead traveling to local stores.



    Table #3, Table #4 and Table #5 lost money. Why?

    Table #3 is Down Town.
    - Very competitive area with better products and established brands
    - Lack of targeted individuals ( Many different people in this area. Most have no intention of buying)

    Table #4 is in a Quiet Suburb
    - Very few people in this location
    - Most people are working during the day
    - Most people can make lemonade at home or just drinking something in their fridge

    Table #5 is near a Basketball Court
    - Many people bring water or drinks from home
    - Some people prefer water instead of sugar drinks when playing sports
    .


    What do we do next?

    So now it's time to optimize based on our data.

    - Table #1 and Table #2 are profitable and should continue to operate business as usual to generate more data. We need to rule out coincidence. What if it was just a busy day? What if tomorrow loses money?

    - Table #3 and Table #4 are clearly just poor locations and should be closed.

    - Table #5 was close to profit. We only lost $10. How can we make this location profitable?
    -> Bring water to sell as well as lemonade
    -> Bring another alternative like Gatorade or Powerade



    DAY #2

    You sell Lemonade for the full day with all 5 tables setup in different locations. Here are your results!

    TABLE #1 - Construction Site - 74 cups - $222 Revenue --> $122 Profit
    TABLE #2 - School Zone - 67 cups - $201 Revenue --> $101 Profit
    TABLE #3 - Down Town - CLOSED
    TABLE #4 - Quiet Suburb - CLOSED
    TABLE #5 - Basketball Court - 42 cups $126 Revenue --> $26 Profit

    Total Cost = $300
    Total Revenue = $549
    Profile/Loss = $249 Profit



    Day #2 you profit $249. Let's examine the data.


    - Table #1 and Table #2 continue to be profitable and should continue to operate business as usual. We need to continue to gather data so we can potentially scale.

    - Table #5 broke into profit. Including other products like water/Gatorade enabled you to sell more products and make profit. I would continue to operate and gather more data.


    How can we scale?

    - Include more products. Including hotdogs or other food will increase your sales and profit.
    - Are there other construction sites in the area? Are there other schools? It might be a good idea to open a table at these similar locations.
    - Changing the appearance of the table. Have professional banners created. Branding might increase your sales (conversion rate) as your product looks more legit.


    SO HOW DOES THIS HAVE ANYTHING TO DO WITH INTERNET MARKETING?


    What if on Day #1 we only had ONE table and we tried the Down Town location?

    We would have lost money and probably quit.

    We were TESTING locations to find out which would potentially generate sales. If we didn't test we would never have known which locations were profitable.

    Testing is a major factor in Affiliate Marketing. You need to be constantly testing landing pages, ad copies, affiliate offers and traffic sources. Testing is what leads us to find profitable assets within a campaign.


    What if on Day #1 we DIDN'T record sales for each table? What if we only knew the overall number for all tables combined?

    We would have only known that we lost $89. We wouldn't have known that Table #1 and Table #2 were majorly profitable.

    The same thing occurs in Affiliate Marketing! What if you target 100 keywords on bing or google? How do you know which keyword is triggering sales? You NEED a click tracker to collect this data. You may have lost money on a bing campaign but one of more of your keywords could have been MAJORLY PROFITABLE. There is no way to know unless you track your results.


    CONCLUSION.

    Affiliate Marketing is essentially the practice of testing all possible elements and variations within a campaign in order to find a winning combination.

    All the factors in the Lemonade experiment are relevant to factors in your CPA campaigns. Landing pages, Traffic Sources, Ads, Targets and much more. All of these things need to be tested.

    We make educated guesses on what might sell where and how. Testing is the action of putting your educated guesses into action and using the acquired data to make further educated guesses.

    Expect to lose some money when testing just like we did on Day #1 in the lemonade experiment. The data you gain is usually worth much more than dollars lost.


    Give a man a winning campaign and you feed him for a month.
    Teach a man to test and you feed him for a lifetime.












  • #2
    Great way of explaining it....!
    MY STORY >>> How I Quit My Job, Stopped Eating Hashbrowns, dRANK mORE wHISKEY& Changed My Life With Online Business.

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