If you read our blog, you know that we discuss a wide variety of tactics on how to get traffic using SEO and online marketing tactics. While this is great and all, traffic generation tactics like SEO are more or less useless without a proven monetization method because you will have nothing to do with the traffic you generate except maybe make a cent per visitor from display ads. But how do you find a proven monetization method? Well, you need to do what successful businesses have done for years and hypothesis a business concept and test it.
To come up with a business concept, all you need to do is the following steps, and then test it out using ads to make sure it works in the real world.
1. Find a problem that people are willing to spend money to solve
2. Figure out who has the problem (your target market/niche)
3. Decide want you are going to sell to help solve the problem (your offer)
4. Set up a system to reach your target market and present your offer in a compelling way (your funnel)
Finding a Problem and Target Market and Deciding What You Are Going to Sell to Solve It
With so many products and services you could possibly sell, it can be difficult to know what to choose. That being said, just remember that business is all about solving problems for people. The more severe and more wide-spread of a problem you solve, the more money you’ll make. So for example, most businesses have a problem where they can’t figure out how to get more customers on a predictable basis. If you solve this problem for them using online marketing for example, that is something that they would be willing to pay you a significant amount of money for because it would make them a lot of money and could possibly even save them from going out of business.
That being said, selling online marketing services is also very competitive unless you’re able to differentiate yourself in some way like niching down.
That’s why it’s also important that the problem you’re solving is not saturated already. For example, starting a rides-haring service would probably be a bad idea due to market saturation. In order to compete with companies like Uber and Lyft you’d need to have more coverage, a better app, better service, and a lower price which would be very difficult to do. So make sure you take a look at the competitors in your market and see how difficult it would be a top player in terms of the efficiency at which you solve the market’s problem. One way to find an unsaturated market is to think about a painful problem that you know well and have solved in your own life. Since your life is unique, it’s possible that you have come up with a solution to a problem that most people haven’t thought of before. For example, maybe you had bad back pain and you discovered a back stretching product that really helps your back without any side-effects. That could be a good place to start.
How to Test Your Hypothesis
Once you’ve decided on a product or service and target market, it’s time to test your hypothesis at a small scale with a minimum viable product (MVP). The best way to get an MVP is to find an affiliate product that offers a solution to the problem you’re solving. Trying to make a product or service of your own will just take too long to do, and will make this process more complicated than it needs to be when you’re just trying to prove the concept. Once you have found an affiliate product to sell, you can set up a funnel to and run some traffic to see how well it sells. This is where all of those marketing and sales tactics you’ve been researching for so long actually come in. The simplest effective way to test your hypothesis fast is to make an effective video sales letter (VSL) and funnel.
You can think of your VSL as your best salesman turned into a video. Its goal is to exacerbate the problem and explain to your target customers how your product or service is an effective solution to their problem. So for example, your VSL could be something like “How to Grow Your Restaurant Fast” or “How to Relieve Back Pain in Less Than 30 days Without Medication”. It should be informational to some extent, but it shouldn’t get into too many technical details. Just remember that its primary goal is to sell your product or service to your target customer and you should be using language that resonates with them.
How to Make A VSL
Making an effective VSL will require you to first understand your customers and what their pain points are. Once you know this, you can follow this basic layout to accurately convey the value of your product and/or service to them.
1. Explain the problem
2. Agitate the problem
3. Introduce the solution (your product or service)
4. Provide proof that it works
5. Present your offer
6. Explain why they should act now
7. Give a final call to action – This should be a special offer like book a free consultation/sales call (for high ticket products and services) or a free trail for a software for example.
If you want more information on how this works, check out this video:
How To Make A Funnel
A funnel is basically a sequence of pages that a user goes threw that takes them down the buying process. It can essentially take a complete stranger and turn them into a paying customer within minutes. Funnels can be powerful if you do them right, but they do take some knowhow to set up properly. There are many different funnels that people use based on what they are selling, but one of the most common funnels are VSL funnels which look like the following:
YouTube ad -> email opt-in landing page -> VSL watch page with call to action -> Buy page -> Email followup sequence for non-converters
Another possible one you could use for selling a physical product might look like this:
YouTube ad -> Product sales page with VSL -> Checkout page
How to Send Traffic to Your Funnel
Once you have a VSL and funnel made that you feel is truly convincing to your target market, all you need to do is to send your target market into your funnel. The simplest way to do this is by using YouTube in-stream ads with the proper targeting. These are the ads that interrupt people when they are watching YouTube videos and come with a skip ad option. We typically like to use placements targeting with these ads because they allow you to place you ad on highly targeted videos. This traffic is a good for the initial test because if you cannot convert this highly targeted traffic, it means that your funnel is not effective and/or you don’t have a good product market fit.
Reviewing Your Results and Making Adjustments Based on Data
Assuming that you made a good funnel and video sales letter, targeted your ads well, and your ads have been running for long enough to get statistically relevant data (about 100 opt-ins from your target audience or at least $1,000 in ad spend), it’s time to evaluate your initial hypothesis and make alterations based on the data.
If your campaign was successful which means that you ended up making money on your ad spend, you can move to the next step in the process which is scaling, but if you lost money, don’t worry too much about it as your business concept could still work particularly if you made at least some sales. In that case, the issue could be with how you ran your ads or how your funnel was set up instead of your product market fit. At this point all you need to do is optimize your advertising and/or negotiate a higher commission rate with your affiliate product manager to become profitable.
On the other hand, if your ads were not even close to being profitable, and you ran them decently, there could be a more serious issue with your business concept like a bad product market fit. The following infographic can help give you an idea of the common issues that cause businesses to fail. This graphic was created by evaluating tech startups, but it applies to pretty much any other type of business also.
After your evaluation, if you are sure that your issues are caused by factors that are unrelated to your marketing like product market fit, you should start over again with a new offer and target niche until you can get a combination that works. Chances are it will take you a few hypotheses and alterations before you find a combination that consistently works.
Once you have proven a product/service and market combo at a small scale, all you need to do is scale it up by sending more traffic into your funnel and optimizing it. This is where SEO and other online marketing tactics like conversion rate optimization (CRO) come in handy.
Making Your Own Product (Optional)
Now that you’ve proven the business concept fully, you can attempt to increase your profit margins by making your own product instead of promoting an affiliate product. Just keep in mind that this takes a lot of extra work to do, and could end up actually costing you more in development costs than just promoting an affiliate product. Also, affiliate marketing allows you to leverage trusted brands like Amazon for example that already have made a name for themselves. Trying to make your own brand from scratch will be considerably harder than promoting an already established brand.
While starting an online business can be super confusing at times, having a general understanding of how it works from a high level can help keep you on the right track. This guide should have given you an idea of how to start an online business by coming up with a basic business concept, proving that the concept works, and then scaling it.