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 measuring your marketing ROI, there are some key metrics that you should be aware of:
- Average Customer Lifetime Value (CLV)
- Visitor-to-MQL Conversion Rate: How many website visits do you need to generate a non-spam Marketing Qualified Lead (MQL)?
- MQL-to-SQL Conversion Rate: How many MQLs are you able to nurture and deliver to your sales team as Sales Qualified Leads (SQLs)?
- Close Rate: What percentage of SQLs do you close deals with?
Average Customer Lifetime Value (CLV)
Your CLV represents how much revenue a new customer will bring to your company over the course of your relationship with them.
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).
That would be a CLV of $144,000.
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.
Value of a Website Visitor
So let's continue with the same example and assume that your website generates 18,000 visits and a total of 12 new customers in a year for your company. I realize you get leads and sales from other sources, so you'll need to factor those out.
You can take the numbers that you've collected and calculate the value of a single website visitor by applying the following formula:
(CLV x New Customers) / Total Visits = Visitor Value
If we run our numbers from above, we see that a single website visitor is worth $96.
Improve Conversions, Improve Your Bottom Line
Through any sales funnel you may have several conversion rates that all affect your bottom line when it comes to ROI. Positively affecting any of these numbers can have a profound influence on your final calculation. It would be easy to put the entire burden of revenue growth on the shoulders of your marketing team, but it's important to remember that marketing and sales will only be successful when they are working together.
For more information on Marketing & Sales Alignment tactics, consider these articles:
- Five Best Practices for Marketing and Sales Alignment
- Establishing Common Goals for Marketing and Sales Alignment
- The Case for Sales Enablement
One Final Point: It's all about the ROI
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 a marketing agency that delivers a strong ROI.