My Notes: Profit Hacking by Steven Daar

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My Notes:

I hope this book will serve to inspire more people to infuse their businesses with a purpose, as well as help purpose-driven business owners to grow their businesses through Profit Hacking principles.

If you could only pick one question to ask for the rest of your life, what would it be?




Here’s the question: “What is a better way to do this?” Or, even better: “What is the best way to do this?”

The Key Leverage Points in Your Business

There are a few leverage points in any business --places where even small amounts of effort can generate big results.

Books don’t work. People do.

I realized that there are only three levers you can pull to grow your profits. You can get more Traffic you can convert a higher percentage of your traffic into buyers you can improve your Economics to earn more money per buyer

Profit Hacking Formula: T x ( C x E ) = R

Traffic x (Conversion x Economics) = Revenue

Let’s say you have a site that gets 20,000 visitors per month. You convert 2% of them into buyers and you earn $ 50 per buyer. With those numbers, you’re earning $ 20,000 per month from your site. Not bad. But let’s say you want to earn $ 40,000 per month from your site. What if you could only pull on one of the three levers in order to do that? Which is there the most leverage? Doubling your traffic from 20,000 a month to 40,000 a month Doubling your conversion from 2% to 4% Doubling your profit per buyer from $ 50 to $ 100 Due to the sheer magnitude of the numbers (it’s generally easier to double a small number than a large number), Conversion tends to have the most leverage, then Economics, and then Traffic --right?

The only three ways to increase profits are through improving your Traffic, your Conversions, or your Economics

Mastery comes from continuously focusing on a small number of key things the fastest way to double your profits is (usually) through improving Conversion and/ or Economics
Hacking Your Traffic

The secret to getting tons of traffic has nothing to do with traffic.

You Don’t Have a Traffic Problem, You Have a Conversion &

You have two levers to pull to become profitable: Improve your conversion rate to at least 1% Offer more products and services to earn $ 200 per buyer

Traffic is not your problem here. Being able to get more Traffic to your site will never improve the Conversion or the Economics side of your equation. Traffic is a Commodity. Conversion and Economics are Assets

The Secret: Conversion and Economics Can Solve All Your Traffic Problems

Cost Per Visitor (CPV)

Revenue per Visitor (RPV)

If your RPV is higher than you CPV then you have the green light to buy as much traffic as you can.

Every improvement to your Conversion and your Economics will increase your RPV. Every improvement to your Conversion and your Economics will make Traffic easier to get. And every improvement to your Conversion and Economics will make each and every visitor that comes to your site more valuable.

But beware: it doesn’t work the other way. Getting more Traffic alone will never increase your RPV. This is why improving Conversion and Economics, not Traffic, is the “secret” solution to your Traffic problems.

Once you’re converting people at a healthy rate, you can seriously expand and scale your business.

Begin with the end in mind.”

Get the foundational building blocks of Conversion and Economics in place. Then erect your Traffic skyscraper.

The secret to Traffic has nothing to do with Traffic and everything to do with Conversion and Economics. The higher you’re Revenue per Visitor (RPV), the easier it is to get traffic. Traffic is a commodity. Conversion and Economics are assets. When you master Conversion and Economics, ramping up your Traffic will be significantly easier.

Failure shows you the way by showing you what isn’t the way.

Every time someone comes to your site and doesn’t convert (buy, subscribe, etc), they are trying to tell you something. They are giving you feedback, precise instructions on How to improve your site. How to best communicate the value & results you can deliver. How to most effectively share your gifts with as many people as possible.

A/ B Testing –A Core Component of Hacking Your Conversions

A/ B testing is a process of creating experiments on various parts of your website. The goal of an A/ B test is to compare the results of two different versions of a page to find out which is more effective at converting a visitor into a buyer, subscriber, fan, etc.

Usually, the “A” is your original, or control, and “B” is your experiment or variation.

The true beauty of this process is that a “losing” experiment will only drag your conversions down for a short time, while a winning experiment will raise the conversion bar of your site for the lifetime of your business.

One important note on A/ B testing: only change one thing at a time between your A and your B. With the exception of one section of copy, one image, color, layout, etc., your A and your B need to be the same. This way you can isolate exactly what resonates better or worse with your visitors.

If your B has 5 differences from your A, it would be great if the B ended up beating the A but you wouldn’t know which of those 5 changes actually helped you or hurt you.

A/ B testing one element at a time is known as “Evolutionary Redesign,” as it causes the gradual evolution of your site into its best possible form. The evolutionary redesign is usually preferable to “Radical Redesign” where you completely change the entire site all at once.

Testing provides truth.

So which pages on your site are most important?

Cart page Checkout pages Lead generation pages Plans & Pricing pages Contact pages

Demo or quote request pages

Why are these the most important pages? They directly impact your bottom line.

However, the highest-impact parts of most pages tend to be: The Headline and/ or Value Proposition

Direct response copywriters say the headline of an ad is 80% of the battle.

If you can capture attention and interest with the headline, people will begin reading the rest. If you can’t, people are going to leave in a heartbeat. We, humans, have very short attention spans --especially on the web.

The rule of 80/ 20 says that 5 of those 25 would be four times more effective than the other 20. It also says that 1 of those 5 would be another four times more effective than the other 4 (so a whopping sixteen times better than 20 of the headlines).

Quick Hacking Tip: Want some fast ways to test headlines? Try out some different ad copy in Google AdWords or Facebook Ads Ask your social media audience or email list to rank different potential headlines in a survey (offer a prize to randomly selected survey participants to boost completion percentage) A/ B test two very different headlines

When creating your headline or value proposition, you have to think about: What your product or service is What problem it solves or what benefit they can derive from it Why it’s unique and/ or better than the competition Who is you your market, industry, niche, or audience How much your customers know about your brand or your offering

For a headline (and overall copywriting) master course, I recommend Eugene Schwartz’s Breakthrough Advertising.

Start with the clarity of your offer. Is it abundantly clear what the visitor will get if they subscribe or purchase?

You can also strengthen your offer by including things such as bonuses, a warranty, or a guarantee. Quick Hacking Tip: Do you offer a guarantee with your products or services? If you do, can you make it stronger?

The Call to Action (CTA) this is the make-or-break point of your page. It’s the trigger that will either convert the visitor or let them bounce.

Quick Hacking Tip:

Compare all of that to Amazon’s One-Click Checkout. So easy. So effortless. This easy, frictionless buying process is something for your business to aspire to.

Quick Hacking Tip: The Mom Test: My Mom has many talents & abilities. Technological know-how is not one of them. When trying to determine if a web page or website is clear enough in showing the user what to do, I imagine my Mom visiting that site. Better yet, sometimes I observe as she uses the site. I pay attention to where she hesitates, gets frustrated, gets confused, or ultimately decides to bounce. Her feedback almost always inspires a winning A/ B test or two.

How do you decide the order of what to test? Use the PIE Framework.

PIE stands for: Potential Importance Ease

Potential how much potential is there for a lift in conversions from this test? How much potential is there for a lift in profit from this test? How much traffic does this page get?

The importance you mostly took care of this step at the beginning by taking the time to identify your most important pages and the most important elements of those pages.

Ease the third part of the PIE Framework is Ease: How much work is it going to take to get the test up and running? The less work it takes, the higher the score you give the test. This is especially true with the first handful of tests you run. If the first couple of tests require a lot of time or resources to implement, you may quit before you even start.

The easiest tests are changes to the copy or images on a page. Changes to the location or placement of various elements are also pretty easy. Adding or subtracting elements usually take little work as well.

Tests that require more resources to implement are things like changes to the layout or design of a page.

The True Leverage of Conversion Optimization

There is a lot of leverage in small numbers there is a significant multiplier effect with Conversion optimization

I’ve seen single A/ B tests that double conversion rates.

This is why conversions are likely the fastest path to hacking your profits.


If you keep a mindset of kaizen (constant improvement), it will be very difficult for your competition to out-convert you.

The Profit Hack Recap: Every visitor who comes to your site and doesn’t convert is trying to tell you something about your business. Are you listening to them? Start by relentlessly focusing on only the most important elements of the most important pages of your site Use the PIE Framework to prioritize the order of the tests you run Allow the natural leverage that exists within increasing conversions to propel your business to the next level

Just as you can A/ B test copy, images, layout, design, etc., you can test your prices. Price changes can have an enormous impact on your profits. So when you plan your tests, don’t forget to include pricing.

To clarify: you’re looking for the price that brings you the highest profit, not necessarily the most sales. A higher price may get a lower percent of visitors to buy, but you could still end up with more profit (and vice-versa). Quick Hacking Tip: Two principles of successful pricing: One is that prices that end in a 7 or a 9 tend to convert higher. Two is that the smaller the price looks, the higher the conversions tend to be. By this, I mean that $ 99 looks smaller than $ 99.00 and that $ 1250 looks smaller than $ 1,250.

Here is a list of ways to add to your back end: Upsells Examples: Upgrading from economy class to business class Supersizing your meal Cross-sells Examples

Getting a Blu-Ray player when buying a TV Ink cartridges when buying a printer Membership / Subscription Offers Coaching Done-For-You Services Live Events A Product That Goes Along With Your Service A Service That Goes Along With Your Product Implementation of Referral Strategies Add Luxury, Gourmet, Premium, Personalized, or Custom Solutions (More on this in the next section)

You don’t need to create all of these things yourself. You can find partners who offer a great complement to what you sell and create an agreement to cross-promote or to earn a percentage of revenue you send them.

You can also use the back end to ask customers for things other than money, such as referrals or testimonials.

The key takeaway is that it is far easier to sell to someone who has already bought from you once than it is to someone who hasn’t bought from you yet.

So long as the value is there to justify the higher costs, you’ll be surprised at how many people take you up on a premium option.

In fact, if you don’t have this option available, you will drive this segment of your market straight to a competitor who does offer one.

Going back to the law of 80/ 20, we know that 20% of customers will spend 4x more money than the median customer if you offer something at a higher price point and value point. And remember, there’s an 80/ 20 within that 80/ 20 too. 4% of your customers will spend 16x more money than the median if you offer something where the value justifies the price point.

Quick Hacking Tip: Here are some things that tend to command premium prices:

Done-For-You Services Exclusivity Unique Events & Experiences Status Symbols Strong Guarantees

How do you find out what your customers want? Ask them! It doesn’t matter if you do it in person, by phone, or online14.

Find ways to add more value and you’ll be able to sell at higher prices.

The Profit Hack Recap Economics is the core component of all marketing. If you begin with the end in mind, then you want to start with Economics. One of the most important things you can test in your business is the prices you charge for your products or services. The back end is where the real profit is made Create and offer premium options to your prospects and customers Work with all three pillars regularly to keep your business optimized
A Brief Warning

Quick Hacking Tip: A hidden benefit of using Google AdWords is that you will see exact traffic volumes for the various keywords that are important for your business. You can also find out which keywords convert into customers at the highest rate. This can inform your SEO efforts by redirecting efforts towards the keywords that are proven most effective and most profitable through your PPC efforts.

Quick Hacking Tip: When you make your first foray into direct mail, test small. Many businesses (including the first business I started when I was 22) have ignored this rule and lost a lot of money by sending mail to an entire list rather than testing small first. Postage adds up quick.

SEO is definitely worth pursuing its great rewards. You can get massive amounts of traffic for “free,” and people really trust the top couple results in search engines (especially the #1 result).

I wouldn’t suggest building your entire traffic strategy on SEO.

There are many people and businesses out there who already have the trust, attention, and ability to reach many people. Some of their contacts will be your ideal customers. It is possible to reach a form of partnership with these people where they will promote your business, product, or service to their audience in exchange for a percentage of the revenue generated from their promotion. This is known as an affiliate or joint venture partnership.

But people won’t do this for you unless you meet two conditions. One, what you have to offer must be valuable to their audience. Two, they (usually) must stand to earn more by promoting your business than they would use that opportunity to promote their own business.

Don’t fall into the trap of spreading yourself too thin. Pick one social media site where your customers hang out. Invest your business’s social efforts there. Be great at engaging customers on that one site rather than being mediocre at engaging customers on four or more sites.

Social media is mostly a place to have conversations, interactions, and a bit of fun with your customers rather than a place to sell.

Study the websites who cater to your target audience. Look at the stories they publish. Can you find a way to inject your brand or business into the type of story that they often cover?

Can you position yourself or your business as an authority or market leader? Being perceived as an authority, expert, or even a “celebrity” in your market is another great way to boost your business.

If you’re so inclined, you can also learn some controversial ways to earn media attention through Ryan Holiday’s book Trust Me I’m Lying: True Confessions of A Media Manipulator.

Massive Scale and Growth: Economics

To increase a customer’s Lifetime Customer Value (LCV), there are two main levers to pull: increasing average order value and increasing purchase frequency.

One of the best ways is to turn your product or service into a subscription or membership.

The Profit Hack Recap:

After you’ve maximized the Traffic, Conversion and Economics of what you’re currently doing --you’re ready for massive scale and growth there is essentially an endless amount of traffic out there. Start with what you have the most control over & perfect your marketing there. Then slowly expand out to traffic sources where you have less control. Find out what else you can do for your customers, create recurring revenue, and expand to new markets to further spur your growth.

The New Economy

A recent Edelman study of consumers found that: When quality and price are equal, the most important factor influencing brand choice is purpose 72% of consumers would recommend a brand that supports a good cause over one that doesn’t 73% of consumers would switch brands if a different brand of similar quality supported a good cause

For one thing, employees of conscious businesses are more inspired, motivated, and productive. They identify with the missions and purposes of those businesses, and they want to do excellent work to further those causes.

Bottom line:

I hope you choose to create wealth in such a way that the world is a better place because you have lived.

Conclusion:

If a business has an advantage in all three of the pillars of the Profit Hacking Formula AND they diligently keep working to improve in each of them, it will be very difficult for a competitor to overcome that advantage.



Instead of always trying to do more, more, more --I challenge you to engage in the disciplined pursuit of doing less. Eliminate the superfluous and concentrate your effort on the key fundamentals of your business.

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