For designing a powerful and effective marketing strategy, it is important for an online business person to calculate the number of visitors on the site and the visitors who eventually become customers. Don’t think that if you are not selling something expensive, this insight could not help you. The fact is that no matter if you are selling an e-book, a plug-in, or offering a course, this strategy will be helpful for you in any case.
Try to understand this with an example. Imagine you have a blog related to weight loss, and you sell an e-book there. You have set the price of the e-book at $49. to calculate your profit, you have to take out all the expenses from the price of the product. As it is a digital product, most probably all $49 would be your profit (if it is not, please deduct the charges like shipping cost etc from the price).
You also offer a personal counseling package to your customers who buy your e-book. In the package you offer assistance to them through emails and calls up to six months, and this package costs $199.
When you take a look on the stats of your blog, you find out that:
- 2 out of 100 visitors of your e-book sales page, buy your book.
- 5 out of every 100 buyers ask you to refund their money due to any reason.
- 9 out of every 100 buyers of your e-book, also purchase your personal counseling package.
Now we will let you know to calculate the value per customer. It is nothing difficult. The value per customer will be the price of the product, if you are selling a single product. Otherwise, you have to do some calculations, like, you have to calculate the percentage of the people who buy each product. In the above case study, the calculation would be:
$49 + 0.09* $199 = $66.91
The above calculated value is the average value of your each customer. The next step is to calculate the value of every visitor to your sales page. You know from your previous statistics that out of every 100 visitors, 1.9 buy your e-book (we have taken 1.9 instead of 2 because 5 out of 100 buyers ask for a refund, 2 * 0.95 = 1.9). It shows that for every 100 visitors, you get a profit of 1.9 * $66.91 = $127. To get the profit for every visitor, divide the value by 100.
$127 / 100 = $1.27
With the value of every visitor of your blog, you can now take better steps to market your product. If you want to advertise your product on a certain website, and the owner assures you that around 500 visitors would reach your blog through that ad and it will cost you $400. What will you decide about the ad? Will you want to go for it? Yes! You should. Why? The answer is simple. You will pay $400, and with 500 visitors, you’ll get a profit of $635 (500 * $1.27). It means that you’ll be benefited with $235 from that campaign.
Now take a look from a different perspective. Imagine you are selling ad for $500 and you commit to provide 600 clicks to the advertiser. It sounds good, but if you put your own ad there, you can get $726 (600*1.27). This amount is far more than the amount that you are getting from the advertiser. But you can increase the charges for the ad spot anytime you want.