Visits to your site are like grapes to a vineyard: you likely have many but each one is of varying quality.
The grapes of wrath
Business KPI's dictate that you're to grow visits by a certain amount over the next few weeks. Rule number 1 of how to get fired is to blindly acquire more visits just to hit your targets.
A prudent marketer will funnel marketing budget towards visit cohorts that outperform all other possible acquisition means available to them. Easy. Making the decision as to which visits create the most value is a bit more difficult.
The monetary value of 1 visit
The primaryschool level formula for figuring out the value of a single visit to your site you could be written as follows: 1 visit value = total cohort value / total visits
Entire business models are defined by their interpretation of the word "value." Based on their definition and their conversion rates, they can afford varying costs of acquiring a visit.
For a typical SaaS or eCommerce business, when calculating value you'd consider the following:
- Primary conversion rate to 1st sale
- Average order value (AOV)
- Repeat purchase conversion rates
- Average customer lifetime duration
These are the basic building blocks of calculating your customer lifetime value. Now run the analysis for your entire cohort and divide by the total number of visits generated by your cohort. Voilà! You have a basic monetary representation of a single visit to your site.
The intangible value of 1 visit
To clarify, I believe that everything can be measured.
"Intangible" monetary value can be measured using other metrics that should ultimately justify your acquisition efforts. Considerations of intangible value-add such as "likes," "shares," or "pins" can often be backed into conversion metrics with longer lead times.
Once you pinpoint the incoming source of traffic, here are a few elements of "unmeasurable" value that should be considered. All of these are measurable.
- Value of virality: Measure your viral coefficient and bake it into your LTV calculation for these cohorts to justify marketing spend. Have a strategy in place for how to deal with cross-attribution so as to not double count visits, as future expected traffic may come from other channels.
- Value of brand awareness: In a digital world, you can measure post-campaign abnormal increases in brand-term organic and SEM traffic. Plug this into your LTV model to measure value.
- Value of X likes, shares, or follows: On an aggregate level (i.e. all facebook visits as a cohort) measure the total LTV. Next there are two primary schools of thought on how to constrain your target metric. Let's use the metric of "likes" as an example:
- Constrain analysis to the incremental likes you've gained from start to finish of your campaign. Divide your total cohort LTV by the incremental likes.
- Constrain analysis to all the likes your account had at the end of your campaign. Divide your total cohort LTV by all account likes.
While this measurement isn't a perfect science, it's a start to more considered analysis of marketing budget allocation. Once you choose a method, make sure to maintain consistency so as to not inflate your numbers.
How much should I pay for 1 site visit?
Ultimately, this is defined by your business model, marketing strategy, industry, and perhaps even your investors. Most important is for you to judge visit acquisition costs against the the value of 1 visit using whichever success metrics you choose. It's likely that your business depends on these visits paying off.
This principle can be applied to online and offline response type business models.
- Define your cohort constraints
- Find the value of 1 visit for each cohort
- Scale the most valuable cohort
May your visits be fruitful.
