How To Determine The Value Of A Website Visitor 

One of the most important parts of a marketing strategy is the ability to measure the results of each initiative. If you are only able to measure the time and financial resources, and not the end result, then your marketing efforts will be inefficient and you will not be allocating your resources appropriately.

In the best case scenario, all of your revenue will be derived online. This will allow you to perfectly measure where your traffic is arriving from and from which traffic sources users are purchasing your products. This is so important because, if hypothetically it costs the company $.50 to bring in a user from Facebook and $1.00 from LinkedIn, if you are not measuring the results then you would put your resources into Facebook. However, if you were to find out that LinkedIn visitors are 4 times more likely to purchase your products, then you would have misallocated your marketing resources with Facebook.

Value Of A Website Visitor

For a company that derives all of its revenue online, to measure your marketing strategies we only need to implement an ecommerce section on Google analytics. The process is fairly easy to set up.

(Link: http://www.google.com/support/analytics/bin/answer.py?hl=en&answer=55528)

The harder of the two tasks is determining the value of each visitor for services that your company provides that are not directly purchased on your websites. The most common of these are consulting services.

To find the value of each user in this situation, you have to first make a number of assumptions. The assumption is that for every new customer, they will either:

a. Take some actionable step, whether this is sending an email or filling out report

b. The purchases from either an email request or report are on average the same

As an example, in the last year let us estimate that there was $1,000,000 in revenue from your company’s consulting services, with a $500,000 cost (salaries for employees, etc.). The profit is therefore $500,000. For this situation, let us also say that a user had to either send an email or fill out a consultant request.

Based on your numbers, we would determine from the past year how many “Consultant reports” occurred and how many individuals had emailed about the services.

Let’s assume there were:
500: Consultant reports
500: Emails requests to your company
=1000 total requests

Let’s say that you were able to monitor that the conversion rate for consultant reports was 50%, the email conversion rate was 50% (this would be based on past data and from your estimations.)

There would then be 250 customers from the free consultant reports and 250 from emails. The total number would be 500. Therefore:

1. The value of each new customer would on average be $1000
2. The value of each person that had either emailed or registered would on average be $500

To determine where people who are requesting a free consultant are visiting from:

1. You would need to set a goal using Google Analytics.

2. The way you would do this is by tracking the URL that a user is brought to after they submit a consultancy report. You would input this as the destination in Google Analytics

3. By creating a report on Google analytics, you would then be able to filter the results to this destination by individual sources. So for example, you would see a result of Google searches brought to that result, Facebook, etc.

To determine where people who are emailing requesting services:

We could use a similar strategy as the above point by creating a report on the goals to filter the visitors by their traffic source.

You would then add up the numbers and distribute the value to each source accordingly. Understanding these numbers, we would also be able to determine the value for consulting services for each traffic source.

I will create a future article about the next steps in determining the value. Understand though that if you have a business where you revenue comes completely online, it is very easy to implement Google Analytics and an ecommerce section. This is very critical. Even if you do not pay for advertising, you should still know where to spend your time and you will not know the best ways to do so if you do not know which locations are producing the highest results.

Additionally, determining the value of each visitor is much more difficult for businesses that do not derive all of their revenue online, however it is worth the time and effort to do so.