Entries Tagged 'Measurement' ↓

I’d like to walk you through a traffic calculator to help you understand some of the many factors that will contribute to the success of your inbound marketing efforts:

• How traffic from e-mail, blog, PPC, SEO and events converts in different ways
• How small increases in your opt-in and conversion rates can dramatically lower the amount of traffic you need to generate
• How to understand the full lifetime value of a single customer
• How to estimate the value of a qualified lead
• How to know if your traffic goals are too high or too low

Estimate Traffic from All Sources

The first thing I do when I start a social media campaign for a client is use a traffic calculator to estimate the amount of traffic I’m going to have to generate from all our online sources. A traffic calculator tells you how much traffic you need to hit to reach your inbound marketing goals. I started by using a free spreadsheet originally provided by HubSpot, but have since modified it to meet my needs and the way I work.

First, I look at all the ways I generate traffic to my website. Search Engine Optimization (SEO) is organic search traffic that comes from people typing “Big Island public relations” or “West Hawaii Social Media.” Blogging represents the amount of traffic my blog was generating in 2010 (hey, at least I’m honest; it wasn’t a primary area of focus then.) Social media is traffic I can legitimately trace from Twitter, Facebook, LinkedIn and other social sites. Pay-Per-Click is paid advertising. If I generate traffic from radio or display/print advertising, I would but that in the “Other Paid” column. I also count the amount of traffic my site receives after I attend a networking event, speak at a conference, or meet a group of people in person. At the end of December 2010, I was generating about 200 quality visits to my website.

This part of the worksheet also shows my desired number of visitors from each source, but I don’t actually know what that number will be until later in the process. Disregard the blue column for now. I’ll get back to it later.

Only Estimate Qualified Prospects

I don’t count random, miscellaneous traffic, such as those generated by bots, spiders or automated scripts. Don’t use the number that Google Analytics gives you. Look closely at your data to see if you can tease out the number of “real people” perusing your site each month. For my traffic calculator, I only want to count the number of qualified prospects—people that might possibly do business with me one day or refer someone else who might. The numbers in red reflect my best estimate of “potential prospects” that come to my site to check me out.

Make Sure Your Goals Are Realistic

The leads you get from social media will be of a different quality than the leads you get from blogging and events. Make sure you’re spreading yourself around in a realistic way, so that your sales funnel is full of the right types of prospects. Be clear about this. Know your customer and where they hang out. If they don’t use social media, then don’t expect to use social media to drive the bulk of your traffic. For example, I expect organic search to account for 20% of my traffic, blogging 30% and social media only 10%.

Stop to consider if your traffic goals are realistic. Make sure you’re not expecting too much from social media, blogging or just your e-mail campaign alone. Make sure to weigh your efforts accordingly.

Estimate Your Opt-In Rate

Now that you’re clear about which channels you’re using to reach people, look at the actions people will take to form a relationship with you.

Your first call-to-action is to “opt-in.” That means asking a visitor to either sign up to receive content via e-mail, asking them to submit a form, or simply call you. I average about 1 sign-up and 3 phone calls a month from all my efforts.  This is my first point of contact with people, or my “opt-ins.”

I can expect to generate 74 new leads each month if I meet my traffic goals in each area (e-mail, blogging, social media, events combined).

Estimate Your “Opt-In to Sales” Rate

Once you have a group of “leads,” you can then begin to estimate how many of them will become a customer. This is your “opt-in to sales” figure. If you’re selling to businesses and the cost of your item is rather large, say $1000 or more, use 5% as your opt-in rate and 2% as your opt-in to sales number. If you sell a small-priced item or sell directly online, your conversion rates will be higher.

In this example, I use an entry-level price point of $500 to estimate the amount of monthly revenue this might generate. If I reach my traffic goals, I can realistically expect to earn 3 new clients valued at about $1,468.

Note: Make sure the size of your market in real life matches up to your desired traffic goals. You may need to reach beyond your geographical area to attract the right traffic.

Look at the Lifetime Value of Each Customer

How many of your customers will continue to work with you long-term? If your sales funnel offers the ability to go from a small, entry-level package into a more complete and full-service offering, then you can plug those numbers into your traffic calculator as well.

Here, I estimate one in 10 customers will progress into larger and larger packages. I use an average price point of $1,000 and $3,000 to represent midrange and high-end packages.

At the end, I can get a reasonable, if not conservative, estimate for how much revenue I could generate from inbound marketing. This number is in addition to the revenue earned from repeat customers and other sources of new business not accounted for here.

If the total revenue figure from inbound marketing is too low, I can adjust my traffic goals accordingly. In this case, I carefully looked at the number of monthly leads I would need to process. If 74 qualified prospects “opt in” to engage with me, then I better have the support systems in place to nurture those relationships.

Estimate Average Revenue Per Customer and Per Lead

Another benefit from using this worksheet is the ability to estimate the average revenue per customer for each sale obtained via inbound marketing, and even the average revenue per lead! This is really handy for creating an advertising and marketing budget, because in this scenario you can see that each qualified lead is worth potentially $18-$45 in new revenue.

You can also estimate how much of your total website traffic will become a “lead” or “customer.”

Don’t let this spreadsheet intimidate you! There are easier ways to use a traffic calculator in your business. I just wanted to walk you through mine so you could see how all the different elements of your social media campaign add up to new business revenue.

For a simpler version, try the free, updated version that HubSpot provides at http://www.hubspot.com/partner-program–inbound-marketing-calculator/.

And if you’d like to get started using social media to drive more traffic to your website (or learn how to optimize your website for lead generation and conversion), contact me for a consultation. If you liked this article, please share it by clicking the Facebook or Tweet This buttons below. Thanks!

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Consider the number of people who are in your target demographic.

Look at the stores and brands and rank how relevant those brands are to yours. Do a large number of your customers shop at those stores? Small fraction? If your sign had an exceptionally compelling offer on it, how many of those 20,000 would “buy”? Is your business located nearby, and therefore convenient?

The value is a combination of how effective your sign is and the overall lifetime value of any customers that you may get as a part of a direct outcome of that sign.

Signage works best as part of an overall branding campaign

Will you be running any complimentary advertising while the sign is up? Direct mail to any of the customers that may see the sign? Do any customers of that center subscribe to your newsletter? A sign is most effective when part of an overall campaign, so that the sign become a reminder that they also saw your TV ad, or heard your radio spot, or just got an e-mail from you, and they’ve been meaningn to call you (or vote for you), but haven’t yet, and now they can because your number is on the sign (or they remembered its voting day).

Let’s Do an Example

Let’s presume you just want to estimate the value of one sign in a busy shopping center. So in that case, let’s also presume it’s going to be a great sign with a specific call to action on it. Like a phone number with instructions to call.

Budget about 1-2% “conversion” rate or more, depending on your unique area, market and industry.

For a shopping center with 20,000 people a day, assume that 200-400 people will be interested in your sign, and will want to take the next step.

Then consider how much a customer is worth. If 200 people are going into your sales funnel, and a small fraction of them end up buying a $20,000 product, that’s great value! But if your product sells for $10, then you’ll need more exposure to break even.

Finally, consider the cost of your sign.

Divide the cost of the sign by 200 (conservative) or 400 (optimistic) and see if the numbers make sense. How much are you willing to pay for each shopping center lead? $2? $14? $50?

Compare the cost of the sign, to what a lead from the shopping center is worth, and compare the effectiveness to other branding and marketing choices you may have.

Marketers have more choices than ever. You may find alternatives, such as inbound marketing, or spending one day at the shopping center talking to people and handing out coupons, may have a better value for your business.

Don Bartholomew wrote a fantastic article about the Dos and Don’ts of Public Relations Measurement in 2010. Don is the Principal of Acumentics Research,  a social media and public relations research and measurement consultancy.

In his article, Don explains that Ad Equivalency Value is OUT. This notion that PR firms can total up column inches, research the equivalent advertising cost (based on the rack rate) and then multiply that number by whatever multiplier they think is fair (usually between 3 and 5) has been shown to be misleading at best and fraudulent at worst.

David Michaelson, member of the Institute for Public Relations’ Commission on PR Measurement & Evaluation, says the reason for this “lack of understanding by practitioners of best practices or  fundamental research practices.” Michaelson and Dr. Don W. Stacks of the University of Miami Communications Department conducted a groundbreaking research project that found

“No statistically significant difference between ad and editorial in an experiment focused on key measures of credibility, knowledge, interest and purchase intent.”

 Thereby eliminating all justification for AVE in public relations!

Copyright (c) Don Bartholomew, Acumentics Research

Instead, PR practitioners must focus on the total value their efforts contribute to an entire organization. Don developed the concept of the Total Value Cube to help visualize these benefits, which include brand and reputation, engagement, influence and action. It also looks at cost savings and cost avoidance.

If you are still measuring results at the output-level only, realize that in these cost-saving times you will soon be responsible for measuring and validating levels of engagement, influence and action (changes in behavior).

If you fail to do these three things well, expect to have your department downsized or cut altogether.

“When they measure themselves by themselves and compare themselves with themselves, they are not wise.”  

(II Corinthians 10:12b)