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?