If you’re investing in getting people to your website it’s important to know whether it’s worthwhile or not. Getting this value can be difficult as not all value will be shown directly in tracking you’ve set up. In this blog we look at some ways in which you can work this out, why you should split this down to different channels and how knowing this can benefit your business.
Working Out A Monetary Value
How you work out the monetary value will depend on the type of website you have. If you have an ecommerce website where purchases can only be made online it’s quite simple, all you have to do is use the following formula:
Revenue / Sessions = Value Per Session
To give an even better value you may want to use gross profit instead. This may not be available in all instances however. This is better as the value links directly to any advertising spend whereas with the initial formula you would still need to be considerate of the cost of goods.
However if you’re looking at a lead generation website the value can be harder to get to and there’s more considerations when working it out. The first thing to work out is what the average value of a customer is over their lifetime. This can be worked out using the following formula:
Average Order Value * Average No. Customer Orders = Customer Lifetime Value
Of course there’s some considerations to take into this which can make it more complicated, but as you’re using averages this should balance things out.
The next thing to work out is how many visitors it takes to get a lead. To work out how many sessions are required for one sale you can use the following formula.
Sessions Required = ( ( 1 / Lead Conv. Rate ) / Website Conv. Rate)
From here you can then work out how much each session should be worth using this formula:
Customer Lifetime Value / Sessions Required = Value Per Session
This is the basic way in which you can work out the value per session. There may be some considerations which can make this much harder to work out such as:
- Offline conversions – online action can lead to offline conversions which may be hard to track and therefore missed out. This can take some value away from online channels. Something to consider may be overall company growth and sales before and after using a channel, but can be hard with a multichannel approach.
Why You Might Want To Segment By Channel
When working out how much each visitor is worth, you may want to split this out by each channel too. Every channel will have slightly different results and knowing the values of different channels can influence the investment you put into each channel.
When looking at this and considering the value versus the investment it’s important to understand the full costs. For example email is often touted as the channel with the best return on investment. What’s often left out is the investment taken in order to build out the email list in order to get that.
How This Can Be Used To Benefit Your Business
As mentioned above you may want to find the value on a channel by channel basis. You can then look at which channel is performing the best and decide where budget is going as well as setting targets. Of course this should be looked at along with other elements such as the channel’s maximum potential and the cost in which it takes to get a new session onto your website from that channel.