Identifying the monetary value of your website visitors is an important step to evaluating and improving the effectiveness of your online presence. Creating goals and assigning values to those goals is how you connect the resources you put into creating your total online presence to your business goals. In the last post we touched briefly on assigning values to your goal conversions, this post provides some additional ideas on how to go about calculating your goal values.
You don’t have to sell products and services directly on your website in order to track the value of goal conversions on your website. Most professional service providers and B2B companies have several “mini conversions” that their customers complete before making a purchase – downloading brochures, attending webinars, scheduling a free consultation, etc. Since we don’t have a sale price to use for these conversions, we just need to calculate a value for the goal.
The “ideal” method for calculating the monetary value of a goal conversion on your website is to divide the lifetime value of your typical customer by the number of goal conversions it takes to land a new customer. For example lets say that:
- 1 out of every 800 people who download an eBook from your website ends up becoming a customer
- The lifetime value of that customer is $5,000
The value you would assign to the goal conversion of an eBook being downloaded would be $5,000/800 = $6.25
Now, as a small business owner, you may not have been collecting the data you need for this “ideal” calculation. Should you wait until you have the data before calculating values for your goals? No. There are many ways you can calculate the monetary values you assign to your goals. My recommendation is to assign a value, start tracking your data, and refine your estimates as you learn more from the data you collect.
If you don’t know the LTV of a customer you can use your average sale amount or the price of your typical sale. If you have a wide range of products and services, you may (over time) tie the value of the sale to the goal that is converted. For example, people who sign up for your webinar may typically purchase a $99 dollar workbook while those who request a free consultation may typically purchase a $10,000 coaching engagement. In this example, tying the value to the specific goal conversion will give you a better measure than using an average sale.
If you don’t know the percentage of visitors who become customers, you can find a starting point by Googling “average conversion rate by industry”. You will find conversion rates ranging from 2% to 10% and higher.
For many small business owners, it is easier to skip the formal calculation and assign a starting value based on experience and/or gut feel. You could assign a value based upon:
- Prices you have paid for purchasing mailing lists
- Prices you have paid for pay per click advertising
- Price you would be willing to pay for a qualified visitor
Don’t worry about assigning the perfect value to your goal conversion; assign a value, start measuring, and build the habit of reviewing the data, adjusting your estimates, and continuing to improve.
If you don’t have any data to begin with, start by assigning one value to your goal or goals. As you continue your reviewing and planning processes you can begin to refine your goals and goal values based on product types, traffic sources, keywords, and other factors.
Bill Brelsford Small Business Marketing Consultant