Building a sales funnel is a popular way to create a passive income for online businesses with a service or product that answers their target market’s pain points.


Because when it’s done right, it works.

Also, because a lot of digital marketers are talking about them, like, all the time. My favourite is Ryan Deiss who shares a lot of information for how to get your funnel up and running.

Back to this post. When you know where to source your traffic from and you become a master of that traffic source then your prospects can be endless.

If you’re just joining this series of articles at this step, read up on my earlier articles here:

  1. 3 sure-fire ways to grow your online business
  2. Creating a passive income – Step 1: Product/market fit

If you’re short on time, this 40 second video will tell you everything you need to know for choosing your traffic source:


Let’s talk traffic

The thing about traffic is that it’s endless.

Think about it. There is literally an endless amount of web traffic available to online businesses. The whole wide world web is available to you.

If you find that you don’t have nearly enough traffic getting to your current website or landing pages, the problem isn’t the traffic, the problem lies in other areas.

Maybe your business model isn’t spot on. Maybe the product/service you’re offering doesn’t quite address your target market’s pain points. Maybe you’re measuring your traffic incorrectly.

Where can you source traffic from?

Where you target your campaign efforts will be influenced by where your market hangs out online.

Do they spend more time in business groups on Facebook or do they spend more time networking on LinkedIn? Do they spend more time working through their email inbox than they do scrolling through amazing inspiration on Pinterest or Instagram? Do they spend all their time browsing directories or get involved in online discussions forums?

You need to know where your target market hangs out before you start any form of paid advertising #onlinemarketing Click To Tweet

Here is a list of some areas where you can source your traffic from:

  • Email marketing
  • Social advertising (Facebook, Twitter, YouTube ads)
  • Banner advertising
  • Blogging
  • Organic search engine optimization (SE)
  • Social media (Pinterest, Instagram, Snapchat)

Organic SEO and social media followings can take some time to ramp up, but working in these spaces is always worth your time and effort.

If you want to see faster results, then focusing on paid advertising through social sites and on Google could be an option for you. However, you must still know that your product/service solves your target market’s problems, and what keywords to use for your adverts.

Working out your ad spend amount

Right, so we know where we’re going to source our traffic from. Now how much do you spend on your advertising?

There are some tried and tested formulas out there for determining what your spend amount should be on your paid advertising. I’ve done a Google search for you here.

Most newbies to sales funnels aren’t going to have the tracked data to make informed decisions about what to spend on their advertising, so my advice would be to just start.

Start at a low amount, like $5/day, and see how you go. Sometimes the only way to figure it out is to just start.

Using a formula to work out Facebook ad spend

But if you’re a bit anxious about throwing money at a marketing budget, and following formulas makes you feel more comfortable, and you fancy using Facebook paid advertising, then I suggest starting with a goal and working backwards.

Let’s work through an example.

The great thing about this formula that is that you can change the numbers around to get an ad spend budget that you’re comfortable with. And if you don’t have the data then you can use averages and still have a good estimate of what your ad spend should be to hit your targets.

Let’s say that your end goal after launching your funnel is to sell 25 courses.

So, what size does your list need to be to make 25 sales? To work this out you need to know what your average sales conversion is; but if you’re just starting out you may not have this information, so let’s go with averages.

The average sales conversion rate is usually anywhere from 2-10% and in the interests of easy maths (woo!), let’s go with a 2% conversion rate.

Here’s the formula to calculate your list size: [list size] = [courses to sell] x [conversion rate]

And plug in our numbers to get: 25 x 100 / 2 = 1,250

Of course, whether your list is warm or cold will also play a part in the overall conversion rate, but we’re just using averages here.

Let’s move to what your ad spend should be, which is essentially the average cost per lead.

Recent data from Wordstream has shown that the average cost of a lead on Facebook is $1.72, so let’s round up to $2, again, for easy maths!

So your ad spend formula is: [ad spend budget] =[average cost per lead] x [list size]

Add in our example numbers to get: 2 x 1,250 = $2,500

How does this number sit with you?

Moving from ad spend to your return on your investment

Yep, I’m guessing that if you’re a newbie to the sales funneling, that spending a cheeky $2.5k on your Facebook advertising campaign may not sit well…initially.

Let’s look at your ROI and see if this helps lift that feeling of despair so that you know what changes you might want to make.

We haven’t spoken about how much our course is in the example above. Let’s go with $1000.

Our ROI is going to be: [roi] = [sales] – [ad spend]

And now with actual numbers: 25,000 – 2,500 = a cool $22,500

All of a sudden, your ad spend doesn’t seem so bad!

But if it still doesn’t sit well with you, and that’s completely understandable, the really great thing about using a formula to work out your ad spend is that you can juggle around the numbers to find a budget that sits well with you.

Back to tapping into your traffic source

Once you’ve figured out where your target market hangs out online and you’ve implemented some paid advertising, you’re going to reap the rewards of driving these prospects to your funnel.

Which is fabulous, traffic is going to be flowing! Hurrah!

But, where are you sending them? And what are they going to do once they get there?

Getting those leads on to your list

The next step in creating your passive income is to build your list. And you do this by offering your site visitors something juicy and hard to pass up.

You’re going to give them the best of the best that you have to offer.

And you’re going to give it to them for free.

Well…maybe not exactly for free.

More on that next time.



Storm is a writer who likes to write by the rules. Finding and fixing errors makes her quite happy. So does chocolate, red wine and a good romcom. She also quite likes playing team sports. It brings out the best in her bossy nature. Read up on her here.


Creating a Passive Income - Step 2: Choose Your Traffic Source
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Creating a Passive Income - Step 2: Choose Your Traffic Source
Step two in creating a passive income is to understand how to focus your campaign efforts on driving a primary traffic source to your funnel
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Virtual Storm
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