If you’re running a business, then you’ve probably got a solid idea of what exactly it is that you’re doing. After all, no one should understand your business and programs better than you do.
That being said, it’s not always easy to convey how well your program is doing and the products that you’re offering to new business partners and affiliates. Oftentimes it’s easy to get lost in a labyrinth of data that serves no other purpose but to leave your audience in a maze of confusion and opacity.
So out of all of the data and information that business owners can mull over for hours on end without ever reaching any significant conclusions, is there any one number that can explain the promise of what you’re offering your affiliate partners in a clear and concise manner?
Luckily, calculating earnings per click, or EPC, is a reliable method to answer a simple question for your affiliates: How much money is your product going to send my way?
The value that the Earnings Per Click calculation provides allows you to demonstrate to your affiliates just how profitable your product can be by giving them an easy-to-understand number that they can apply to their site traffic.
Now just because we’re focusing on the most important calculation in any marketing campaign doesn’t mean that we need to lose sight of the entire process. There is still a ton of data out there that your joint venture partners and affiliates will most likely want to mull over. But that being said, Earnings Per Click will give you one simple number that will clearly demonstrate how well your product can potentially get your partners and affiliates paid.
So How is Earnings Per Click (EPC) Calculated?
Coming up with an Earnings Per Click, or EPC figure, doesn’t require a specialized degree in mathematics, so you can relax a little bit. However, it’s very important that you calculate the numbers that are the most reflective of what your product’s true earnings are.
For example, it’s not uncommon for many marketing programs to hype up their Earnings Per Click data without taking out the proper deductions and expenses. These numbers can include product refunds and opt-outs that, when deducted from gross Earnings Per Click, would reflect a smaller number.
It’s crucial for you to maintain a sense of honesty and transparency with your partners and affiliates by presenting them with an EPC number that is most reflective of their true earning potential, after all of the program’s deductions are accounted for.
That being said, let’s look at the type of data that we need before determining an accurate Earnings Per Click number.
- First, you’ll need to write down the price of the product that you’re offering. This is the price that buyers will be held to when they purchase your product.
- Next, you’ll want to take note of your affiliate’s commission that he or she will get paid whenever your product is purchased through his or her website.
- Third, you’ll need to document the amount of sales that your affiliate has actually made after all of the refunds and chargebacks are accounted for. This should give you a net number that is more indicative of final value.
- And finally, you’ll need to tally up the amount of times that the link was clicked through your affiliate’s website.
After you’ve got all of the numbers that you need to get started, then it’s time to incorporate them into this simple formula:
Earnings After Refunds / Total # of Clicks = EPC
That’s it! And you thought you were going to have to sit through another thirteen pages of mathematical equations and complex arithmetic… That’s the beauty of utilizing the Earnings Per Click number in your marketing campaign: It’s a simplistic and straight-forward data point that everyone involved with your business can fully understand.
Let’s incorporate the EPC formula above into an example: Your company is selling a product online that costs $100.
During a 30-day sales campaign, your product was featured on one of your affiliate’s sites, and garnered 1,000 clicks while selling 200 programs. During this particular campaign, you’ve already agreed upon a 50% commission of each sale ($50 per sale) to go toward your affiliate.
After observing the totals from your 30-day campaign, you also discover that a total of 25 people asked for a purchase refund.
We’ll apply the formula for calculating EPC that we’ve learned above to generate a number that we can use:
Earnings After Refunds / Total # of Clicks = EPC
- Your program’s price = $100
- Your Affiliate’s commission per sale = $50
- Programs sold after refunds = 175
- Clicks through your affiliate’s link = 1,000
Then apply your net earnings to the formula:
($50 commission x 175 net sales) / 1,000 (total clicks) = $8.75 EPC
So for every click that your affiliate directed toward your product, your affiliate can count on making $8.75 per click. Even though this is just an example, one can easily see that the simple EPC number gives any affiliate and/or partner a clear data point to focus on when determining how profitable a marketing campaign can potentially be.
Why The Earnings Per Click Number Is Important: Using EPC Data To Strengthen Your Business
The Earnings Per Click number is an important part of any marketing campaign simply because it gives affiliates a precise number to focus on in regards to each individual click that they send to you. It’s a powerful tool that can help you drive home profitability when convincing affiliates to promote your product time and time again.
Think about an affiliate’s consideration of a new marketing campaign, for example. If similar marketing campaigns in the past have warranted minimal Earnings Per Click, then the affiliate is probably going to shy away from a new pitch about an old brand that didn’t quite make the cut last time.
But if a merchant comes along and offers a product similar to a successful promotion that an affiliate has pushed in the past, then the affiliate can observe the previous EPC from the last campaign to get a sense of the potential profitability for the next go-round.
Utilizing the Earnings Per Click is also an invaluable tool when affiliates are forced to decide which merchants to back and which merchants to drop. If an affiliate knows that a new 30-day campaign is going to cost them roughly $8 per click in expenses, then obviously working with a merchant touting $8.75 per click isn’t going to make fiscal sense.
However, if an affiliate can drive costs and business expenses down while ramping site traffic up, then $8.75 per click starts to look mighty enticing to any affiliate looking for a hefty return on their investment.
Earnings Per Click: How To Analyze And Improve Your Business Model With EPC
EPC can also be a helpful tool when it comes to tightening up your sales funnel. For example, if you’re seeing big numbers when it comes to potential customers signing up for your webinars, but you’re lacking in the EPC department, then this data could clue you in to the fact that there is a weak link somewhere in between that needs to be tweaked a little bit.
The beauty of focusing on Earnings Per Click is the fact that the number allows you and your affiliates to concentrate on a specific data point that gives all parties well-defined insight into the structure of your business.
We’re not saying that it’s unnecessary to spend time on analyzing numbers like how many people are signing up for a webinar, purchases after a webinar, or the number of emails that even get opened prior to; all of these numbers should be scrutinized and evaluated to have a thorough understanding of every aspect of your program.
But having a simple number like EPC will give you and your affiliates a clear-cut picture of just how strong your entire program is from start to finish. It’s a crucial data point to focus on when evaluating the strengths and weaknesses of your program as a whole, especially when it comes time to sell new clients on why exactly they should be marketing your program.
Consider The Following Approaches To Promoting Your Program: To Focus On, Or Not To Focus On, Earnings Per Click (EPC)
One approach would be to bore your affiliates and joint venture partners with hours of number crunching and data analysis. Sure, this is a more in-depth and detailed approach, but your numbers are more likely to get lost in the stale air surrounding a weary audience rather than paint a clear picture of why potential affiliates should be pushing your brand.
Or you could take advantage of this simple Earnings Per Click formula while simply stating that, “My program is going to net you $8.75 per click.”
Now, which method do you think is going to be more effective?