Before I go into explain the 1% rule for online businesses can I assume that we have all heard of the 80/20 rule? Otherwise known as Paretos law or Pareto’s Principle? For example that 80% of a company’s sales are made by 20% of the sales force or that 80% percent of the time you walk on the same 20% of the carpet or 80% of profit is made from 20% of the customers.
When I was doing some research I stumbled across the 1% rule for online business. The rule suggests that only 1% of people will actually do what you want them to do online:
- 1% CTR on Adwords ads - A bare minimum of 1% click through rate would be acceptable. Many people get a lot higher and with continual optimization is quite easy
- 1% sales conversions - Most ecommerce sites aim to get a minimum of 1% of their visitors to buy and most achieve it. Doing a quick search on Google brought up an ecommerce site called Schwans; an online grocery that claims to have a 40.6% conversion rate.
- 1% feedback rate - When you ask people to like or comment on a post, usually at least 1% will do so.
- 1% CTR on posts - Studies suggest that 1% of people that see a post with a link will click on it.
In my eyes these are some pretty interesting statistics and I am sure there will be many people out there that have landing pages that convert at 40% and click through rates of 10% and posts they have published with links that get 75% click through rate and 100% guarantee that you will have this that and the other if you invest today.
In fact interesting may not be the correct term to use. Astounding maybe!
I mean in what context is 1% ever deemed successful. I suppose the answer to my own question is that if your small online business can sustain profit with a 1% conversion rate then it’s profitable and therefore successful, my personal opinion would then be to re-invest that profit in to optimizing your online business and make it 3 or 4 or 10 conversion rate. Now we are getting closer to the most profitable small businesses
But the part of the 1% rule that really interested me was this other example
1% of people on the internet create content, 9% edit or modify content and 90% read or view it without contributing.
Is that true of real life? 1% builds and creates; houses, cars, products, 9% wrap that up in a service or modify it and then the remaining 90% of people are the end user.
Either way for me the 1% rule is about taking action. If you know that 1% of people are going to click through then what impact will it have on your small online business if you can have 2% or more?
About
James Debono is a small business owner and Internet entrepreneur. James dedicates his time to helping other small business owners leverage the power of the Internet to drive business growth and positive change. Click here Join James Debono on Google+
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