The Profit Hacking Formula

Remember the movie Back To The Future? It’s one of my favorite movies (I actually love all 3 of them) and I vividly remember one part in particular.

Early in the film, Doc Brown explains to Marty how he was standing on his toilet trying to hang a clock in his bathroom. In his attempt, he slipped and knocked himself out by hitting his head on the sink.

When Doc came to, he had a revelation. A vision. A picture in his head of the flux capacitor, the very thing that makes time travel possible.

Fortunately I didn’t need to bang my head to have a similar experience.

The Profit Hacking Formula suddenly came to me (like Doc’s vision of the flux capacitor) while reading Perry Marshall’s book 80/20 Sales & Marketing.

When this realization hit, it became clear there are 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

That’s pretty much it.

Any tactic or strategy you can think of falls into one of those three categories.

These three leverage points compose the three pillars of the Profit Hacking Formula:

T     x       ( C           x               E )             =         R
Traffic  x  (Conversion  x  Economics)  =  Revenue

This formula is the very thing that makes Profit Hacking possible. I will be forever grateful to Perry Marshall for helping me to see it.

The relationship between the three pillars of the formula can be visualized in the same shape at Doc Brown’s flux capacitor:


Ask any martial arts master – –  they’ll tell you that the path to mastery isn’t doing 1,000 things once or twice each…..

….rather it is through the focusing on a small number of things, the fundamentals, and doing them thousands of times.

Bruce Lee himself said “I do not fear a man who has practiced 10,000 kicks. I fear a man who has practiced one kick 10,000 times.”

Profit Hackers don’t practice 10,000 marketing techniques.

Profit Hackers practice the three pillars of the Profit Hacking Formula 10,000 times.

And that’s why they are successful.

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You have been reading an excerpt from Profit Hacking. If you’d like to read a two-chapter preview of the book, click this link or the image below:

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The next few chapters will focus on each of these three points.

We’ll start at with hacking your Traffic, then we’ll go over hacking your Conversions, and lastly hacking your Economics. Your goal will be to strengthen all three of these leverage points regularly. The coming chapters will show you how.

But first, I want to prime you for what’s coming with a quick example. There’s some math involved, but bear with me – – it’s one of the most powerful lessons this book has for you.

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 to reach that desired goal?

Which of the three pillars has 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, Conversion tends to have the most leverage, then Economics, and then Traffic.

(it’s generally easier to double a small number than a large number)– – right?)

Don’t forget about this example. In later chapters we’re going to come back to it (in greater depth) as we explore the three pillars of the formula.

Now let’s get started!

The Profit Hack Recap:

  • There are only three ways to increase your profits: increasing your Traffic, dialing up your Conversions, and strengthening 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

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You have now read the first chapter of the book ‘Profit Hacking’.

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