What is a Website Visitor Worth?

What is a Website Visitor Worth?

Recently, a meeting with a prospective client led to an interesting conversion about the value of a web design and a website.

What is a website visitor worth? What is the value of a website visitor and lead? We took a look at the numbers and came up with some pretty interesting answers to the question. 

Since that initial conversation, I've started to ask similar questions with all new prospects. Surprisingly, I've yet to meet anyone that really has a firm grasp of the value of a website visitor. Most business owners know the value of a customer, but I doubt very few have taken the time to figure out some additional key data as it relates to their web presence.

If you're serious about Inbound Marketing, there are some key metrics that you should be aware of:

  • Average Lifetime Value (LTV) of a Customer
  • Visitor-to-Lead Conversion Rate: How many website visits do you need to generate a lead?
  • Lead-to-Customer Conversion Rate, i.e. Your Close Rate. (Most people know this number)
  • Value of a Website Lead

If you're spending thousands of dollars each month on inbound marketing, don't you think it would be pretty important to know these metrics?

I put together a few example calculations to illustrate. You can use these same formulas and your data to see where you stand.

Average Lifetime Value of a Customer

The average LTV (lifetime value) tells you how much a new customer is worth to your company.

Let's assume every new customer you gain is worth $4,000 per month in recurring revenue, and the average customer stays with you for 3 years (36 months).

  • LTV = Average revenue per period * Average lifetime of a customer
  • Example: $4,000 per month * 36 months = $144,000 LTV per New Customer

This number should change your thinking a bit. In this case, you're no longer selling a $4,000 per month deal, you're selling to a $144,000 customer. 

Taking it a step further. If you acquire 12 new customers per year, you're generating $1,728,000 in new lifetime customer revenue. Not bad eh? 

Value of a Website Visitor

Next, let's assume that the 12 customers you obtained during that 12 month period all came from the internet (website, social media, email, etc.). I realize you get leads and sales from other sources, so you'll need to factor those out.

Here's how to calculate the value of that website visitor:

Determine the number of website visitors for your selected time period. In this case, we're using 12 months, and we'll assume the total visits to the website were 18,000.

  • Website Visitor Value = New Customer Revenue (LTV) / Website VIsitors
  • Example: $1,728,000 / 18,000 visits = $96 per visit

That's it. Every website visit in this example is worth $96. Surprised?

Improve Conversions, Improve Your Bottom Line

Let's take it a step further. You now know that every website visitor is worth $96, but what if you could improve that number to $150?

In order to do that we need to calculate a few more numbers. First, we need to determine your Visit-to-Lead Conversion rate, i.e. what percentage of website visitors turn into a lead?
  • Visit-to-Lead Conversion = Website Leads / Website Visits
  • Example: 450 leads (over 12 months) / 18,000 visits = 2.5% Visit-to-Lead Conversion Rate

A 2.5% Visit-to-Lead conversion rate is not bad, but what if you could make some improvements to your web design and landing pages to improve conversions? Start tailoring your content plan so that it embraces the Zero Moment of Truth (ZMOT). Embracing the ZMOT will guarantee that you're there for the consumers (read: potential contacts, leads, and customers) as they start searching for the answers to their problems — and trust us, they are searching!

If you're able to improve the Visit-to-Lead Conversion rate by 1%, you could increase the number of leads on that same traffic to 630 leads!

Now, let's look at the Lead-to Sales Conversion rate, the percentage of leads it takes to get a single sale. Using our same numbers, let's say those 450 leads resulted in 12 new customers.

  • Lead-to-Sales Conversion = New Customer Sales / Website Leads
  • Example: 12 new customers / 450 website leads = 2.67% Lead-to-Sales Conversion Rate

Now you can talk to your sales team about improving the rate they close those website leads you're working so hard to generate. Here are a few helpful articles that may help.

One Final Point: It's all about the ROI

Now that we know the true value of a customer (LTV), we can determine whether or not we're getting a good return on our investment in inbound marketing. For this example, let's assume your total Inbound Marketing monthly spend is $7,500, or $90,000 per year.

  • Inbound Marketing ROI = New Customer Revenue / Inbound Marketing Spend
  • Example: $1,728,000 / $90,000 = 19.2 ROI.  I'll take an ROI like that all day long and twice on Sunday!

Many businesses who haven't thought about the LTV of a customer will instantly balk at the idea of spending thousands of dollars on digital marketing. However, if you take the time to work the numbers, you can instantly see the value of investing in an inbound marketing program that delivers a strong ROI.encourage you to run some numbers on your own using a number of different time periods.

If you need help, feel free to give us a call at (864) 288-6162.

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Posted by Doug Fowler on April 18, 2018 | 0 Comments