Last week I posted 10 resons why your Traffic Exchange is failing, I really wanted to include credit management but I ended up rambling, so thought it would best be saved for it’s own post, which you can find below
Mismanaging Credits is a massive issue, it’s like people don’t even consider this when they have their TE. If you have 100 members who surf 100 pages a day, and free members are getting 0.5 credits per click, with 10% of them upgraded and getting 1:1 and 1,000 credits a month – you are generating 10,000 credits right off the back from the bonuses, you are also delivering 300,000 hits (100*100*30). Lets say you have a prize page every 15 pages, reducing that to 280,000 hits delivered. (300,000 / 15).
So now each month we’re delivering 280,000 hits, that’s 280,000 pages surfed, remember that 10% of those people are getting 1:1 so that’s 28,000 pro members surfed, and 252,000 free members surfed, giving you a total of (252k * .5 + 28k) That is 154k credits earned for 280k page views. Add on the monthly bonus of 1,000 credits for those 10 members, and that puts you at 155k for 280k views. that leaves you 125k credits left over.
Now this may seem like a lot, but if you give away 10 credits a day to each member, that’s 30,000 credits right there (100*10*30). Now you have 95k credits left, oh but let’s not forget that you are giving yourself and your admin free credits to advertise, and out of 100 members we were using, that’s 2 members who are getting unlimited free traffic, so that’s 5.6k credits (280k hits *.02 members) per month you are using yourself, now we’re down to 89k credits left. Now you trade 5,000 credits with another owner, which sure is a great deal, but now that’s 84k left for the month. This is before even considering referral credits, saavy owners will reward members by giving them credits for their referral surfing, on average 10%. So with 100 people surfing 100 pages, and an extra 10% going to sponsors (100*100*.1) that’s another 1,000 credits, leaving you with 83.
83k seems like a lot of credits, but when the average cost for 5k credits is $25, that’s only 16 of those credit packs that you can sell PER MONTH (16*5k = 80k). Now for the month you are only making $100 on upgrades (10% of 100 members, cost of $10 per month) + $400 from credit sales (16 $25 credit packs) putting you at only $500. If you are paying commissions you are obviously much lower, there are two big schools of thought on commissions, some argue 30% is the way to go, but from my business 50% is what I go with – members deserve that, and when you take out that free members earn less, and members without sponsors (for example my sites that are 50% commission are actually at a true commission rate of around 27%-30% because of these factors). I will go with 30% for the sake of conversation, and even that leaves you at $280 profit for the month, and this is with GOOD credit management!
Simply change it to 25 credits a day people are winning, instead of 10, and the whole dynamic changes. You go from 83k credits available to 39k (the difference of 15 credits * 100 members * 30 days). The credits you can sell went down by more than half, by simply giving away 15 more credits a day to each member, reducing the sales in this scenarion from $400 credit sales, to $200.
Now let’s give them 50 credits a day (difference of 25*100*30) now you’re at 75k credits used, leaving your sellable amount at only 9k a month, dropping your credit sales to less than $50 over an entire month.
Now every time you sell more credits, or have a special event to give away more credits, you are creating a surplus. And just like the economy of Supply and Demand, your Traffic Exchange works the same way – now that someone has more credits, that means they need to surf less – when they surf less, it means less credits are being used, slowing down credit delivery, and even further reducing the need for someone to surf. This can very quickly cripple your traffic exchange.
When launching a new TE, my recommendation is not even give away or sell credits for the first couple of months, so you can have some baseline activity to compare these things to – because if you start out giving out 25 credits a day, and drop it to 10, you will lose members. You won’t lose them because of a decrease in quality from your site, or because of poor service, but because a reduction from 25 to 10, even though they are free, is a perceived loss by the member, which brings me to my final thought. It isn’t about what is actually happening at your site that matters, it’s what your members perceive as happening. You don’t have to give a way a lot, for people to feel they are wining a lot, and you don’t have to have a ton of activity for people to feel like the site is active, and this point is where the Marketing part of your job comes in