It is important to know the value of each individual visitor. You are spending money on ads of many kinds - newspaper, radio, tv, magazines ads, if your doing ads off line. On line the ads can be just as varied - pay per click, solo, ezines are a few places that you can use to place ads. You need to know if your money is spent in the right place? If the ads are pulling in visitors or not? Is that ads bringing in the people that are wanting your products? You also need to know what ad the visitors came from, to know how well that ad is pulling in visitors?
These are the formula's to determine the value of each individual visitor:
1. Visitor conversion rate ( this is the percentage of visitors who buy form you ). To get that information you take the number of sales divided by the number of visitors that came to your site = the conversion per visitor.
2. Net profit per sale. To get that information you take the gross revenue subtract total expenses, divide the number of sales = net profit per sale.
3. Value of each visitor to your site. To get that information take the net profit per sale times it by the visitor conversion rate = the individual visitor value. An example of this would be
$ 15.60 net profit per sale times it by 4.10% visitor conversion rate = $0.63 this is the individual visitor value.
So if you are paying more than $0.63 for your pay per click you are loosing money and you need to look for something different, so that you can make money. You will not be in business long if you keep that up. That is why you need to know these formula's. They help you stay on track with your ads.
To recap, you need to know what ad the visitor is coming from (so you will know the ads that are working from the ones that are not working - poll or tweek the ones that are not polling, keep the ones that are working and put them in more places). How many of those visitor are buying from you? That is the visitor conversion rate. Find out the net profit per sale and the value of each visitor to your site. These are very important numbers. They could make the difference between staying in business or going out of business.
How would it help you to know these numbers? Now you know how to get these important numbers. May your numbers be profitable.
copyright 2009 Dan and Deanna Finlinson "Marketing Unscrambled"
moonlight1458@gmail.com
Gold1.DDFINLINSON0729.COM
2 comments:
Thanks for those figures - they'll be useful to have, when I start advertising - Hilary
Hilary, thank you for your comments. I saw on facebook yesterday that it was your birthday, so I hope that you had a good birthday.
Dan and Deanna "Marketing Unscrambled"
Post a Comment