What's your value per visitor? Find out with this easy equation!
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08 Nov How much are your website visitors worth? Determining Value per Visitor

Knowing your Value Per Visitor (VPV) empowers you to avoid marketing spend mishaps.

Math. What a four letter word. It’s one of those things I’d love to be awesome at but Season 9 of How I Met Your Mother just came on Netflix so I’ll have to put that goal, “Be gooder at math, yo” on pause.

Luckily my algebra teachers were wrong and I didn’t need to know half the junk they tested me on. What I do know is enough to make me marketing dangerous. By learning a few simple equations you can build out your Marketing Math Toolbox and make educated data based decision for you online business! Woot Woot!

So I’ve done my best to make this exciting. But it’s math. Nothing is exciting about math.

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Learning is best done with an example.

Let’s say you own Massage By Lindsey. People rant and rave over how amazing your massages are and you now have people searching for your information like crazy. They do a Google search, click on one of your ads and arrive at your website!

Awesome! Sweet! Tubular! You’re getting natural visitors through organic search links (the normal blue listing results that show up in Google). 

So how much is each visitor worth?

“Well I don’t know Pete, and what do I care? I’m getting some business because I’m awesome!”

True, you are awesome. But, let’s say one day you’re website is not doing so awesome at naturally bringing you clients and suddenly you’re saying to yourself, “Whoa, I have way to much time to play My Vegas, I should get some more customers.” So you dive into you marketing budget, assuming you have one, and then realize, how do I know how much to spend? And on what?

HA! This is where knowing what each visitor is worth pays off. And the value per channel.

“Channel- noun; refers to the medium by which visitors arrive at your website. Ei. E-mail, Google Search, Paid Search, Facebook, Twitter,etc.

In short, knowing how much a visitor is worth lets you know how much you need to spend to get that visitor and break even. If you have your visitors segmented by channel you can then rate how valuable each channel is.

Let’s break it down. Assuming you have a WordPress website, do the following.

Step one: Google Analytics –

Do you have tracking set correctly on your website? No? First…

yuno

Go check out Googles how-to, YouTube it, Google it, or just contact me and I’ll help you out. Make sure you have goal tracking set up! Again, google it or ask me for help and I’ll walk you through it.

Step Two –  Accumulate Visitors

Visitors, aka Traffic, is what the analytics will track. Now that we have a way of tracking what’s going on with your site, we need to let it be for about 30-60 days and let it accumulate some data. This is the hardest part!

But, Pete! I need business now! In 30-60 days I’ll probably have racked up enough Loyalty Points on My Vegas to get a free cruise but I won’t have money for airfare down to the port!

We’ll cover this later, right now let’s just focus on getting your baseline values.

Step Three: Establish a Baseline

Check your Google anlaytics to collect this information:

  • Number of Unique Visitors – this metric counts only original visitors, not repeat visits. We don’t want to count repeat visitors as it will dilute our visitor value significantly and just make you depressed about spending on marketing, which is counter productive to our objective here.
  • Goals: Leads: Number of Leads – If your goals are set up this will count how many appointments were set up online.
  • AOV – Avg order value – This you should already know – it’s the cost of the majority of your massages. Say you do a 60 minute massage at $60/hour – we know then your AOV is $60. If you give the occasional 90 minute massage then do the math, the total number of revenue from all massages divided by the total number of massages will get you your AOV
    • Total Revenue/Total Massages = AOV

OR copy and paste this dashboard into your Google Analytics account. It will put all the information you need in one place super easy. I recommend that you take a time frame, like 30-60 days for your baseline time frame in Google Analytics. 

Cool. Sweet. Rad. You now have the basic data you need to figure out everything.

The VPV Equation

Once you have the numbers all you need to do is plug them into the following equation:

V= leads/sales * AOV

  • V= Visitors you had in a year
  • Lead/Sales = this is your leads or sales you had in the time period. In this example appointments.
  • AOV = this is your average order value – this you already know as explained above.

Let’s say in the last 60 days you had 1000 visitors that resulting in 100 appointments which averaged out to $60 an order the equation would look like this:

1,000v=100 orders/sales *$60 (AOV)

1,000v=$6,000

Now divide.

$6,000/1,000v=$6/visitor

Whats this mean? This means we can spend up to $6 per visitor for visitor acquisition. Or in other words each visitor that comes to your site is worth about $6 dollars! So for every 10 visitors you would have one appointment made.

“Sweet! Awesome? Now how do I use this to make marketing decisions?”

Well I’m glad you asked.

Why the VPV is helpful!

Let’s say you are running Google Adwords to generate visitors to your site. Knowing that each visitor is worth $6 that means you can set your max cost per click bid to be $6. At $6 a click we are spending $60 for 10 visitors to make $60. That’s break even.

What if you set your max bid to $5? That means if you can get visitors to the site for $5 you can and they make you $6 each, you’re making $1 a visitor.

Now let’s say we can get them for $1. Then it’s $5 profit for every visitor and so on down the ladder we go. The basic concept is, the max amount of money you are willing to spend is $6 to get a visitor. So the cheaper the more profitable.

Pulling Levers to Make Money

At this point we dive into levers, or actions we take to make more money. What levers do we pull? Well in marketing, there are three pillars of internet marketing:

Traffic

If you value per visitor is positive and profitable, meaning you can get visitors for less than your VPV, then we increase traffic. We know that the website is fine, Adwords is fine, conversion rates are fine, so we just amp up the traffic. 

Conversion Rates

If you don’t like your VPV and can’t get traffic for less than that, we need to increase the conversion rate. This is art. This involves looking over the whole visitor journey from search engine to thank you page to figure out where your website/sales funnel is leaking visitors. Once we plug this leak, the ratio of visitors to sales should go down, meaning instead of 6:1 it should go down to at least 5:1 to increase profit.

Average Order Value

This is marketing art as well. How can we increase the order value for the same number of visitors? Can we up sell them with free shipping over $50, or add-ons, etc.

All decisions are based around which pillar needs our focus. All these topics will be covered in later post, in depth and with instructions. So check back later or subscribe at the top of the page to get new post weekly.

Now that you have your VPV how will this help you with your business or website? Sound off in the comments below?

illhaveyouknow

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