Well done to those who got past the headline. You obviously focussed on “put money in your pocket” rather than “maths lesson” right?

The Complete Sales Funnel

Whilst this article will zero in on a very small part of the sales funnel first we are going to define the complete online sales funnel.

In this case we will be focussing on a lead generation scenario rather than an ecommerce site although our model works just as well if we combine the conversion and sales aspect into one as on an ecommerce website.

First we generate targeted traffic to our website via various sources Then we convert that traffic into qualified leads on our website Finally we work those leads through our sales team to drive sales

web marketing ROIGenerating Targeted Traffic to Our Website

By targeted traffic I mean traffic that actually has an interest in what our company provides. There are multiple traffic sources and various methodologies of sourcing and qualifying that traffic which is not the “meat” of today’s article so suffice to say we have the following;-

  1. Organic search traffic from Google
  2. Organic search traffic from Bing
  3. Paid Web Marketing traffic from Google Adwords Search, Display & Re-marketing
  4. Paid Web Marketing traffic from Bing Search & Display
  5. Social Media traffic
  6. Direct traffic (people who know your website’s URL and click directly onto your site)
  7. Referral traffic from other websites, directories etc

Setting The Scene

So we have the ABC Company (not very original I know) selling widgets at $2000 per widget.

Based upon what they are spending each month for their entire online marketing outlay they have calculated that each site visitor that comes to their website costs them $4.

On average and based upon their history they expect to close 30% of sales leads generated from their website.

Their sales leads on their website come from a combination of form submissions and direct calls although direct calls outweigh form submissions by 4 to 1. In an “average” month historically they get 100 leads from their website from a traffic volume of 4000.

Calculating The ROI for an Average Sales Month

Please forgive the sloppiness here – I do know that there are other costs to factor in here and that the calcs should be a lot more complex, however, it wont make any real difference for our exercise today.

  • Sell price of a widget (SP) = 2000
  • Traffic Volume (TV) = 4000
  • Volume of Leads (VL) = 100
  • Cost Per Site Visitor Acquisition (CV) = $4
  • Sales Rate (SR) = 30%

Let’s calculate the conversion rate of their website;-

  • (VL / TV) * 100 = (100 / 4000) *100 = 2.5%

Therefore current Conversion Rate (CR) = 2.5% This is not an unusually bad number for a page on a website.

So based upon the above what is the volume of the sales they make in an average month?

  • (TV * CR) * SR = (4000 * 2.5%) * 30% = 30 sales per month (SM)

What is the revenue from those sales?

  • SM * SP = 30 * 2000 = $60,000 (RS)

What is the ROI from the online marketing?

  • RS – (TV * CV) = 60,000 – (4000 * 4) = $44,000

How Can We Change Our ROI?

conversion rate ROI calculatorThere are a number of ways we could theoretically change our ROI.

  • Increase the sell price of a widget – this may or not be commercially wise
  • Increase the traffic volume to our website – this may come with an increased cost per site visitor
  • Increase our sales rate on the qualified leads we are generating – not always the simplest thing to do consistently
  • Reduce our cost per site visitor – if you are working with a great Paid Marketing company then this can occur although external market forces also have an influence
  • Increase the conversion rate of the web page where the traffic is landing

The simplest and quickest in our experience is number 5 Increase the conversion rate of the web page where the traffic is landing.

Improving the Conversion Optimisation Rate of Your Website

First let’s look at the numbers again with an improvement in the conversion rate of our website. Let’s try a conversion rate of 3% – just 0.5% more than our average current rate of 2.5%. The new volume of the sales they make in an average month?

  • (TV * CR) * SR = (4000 * 3%) * 30% = 36 sales per month (SM)

What is the revenue from those sales?

  • SM * SP = 36 * 2000 = $72,000 (RS)

What is the ROI from the online marketing?

  • RS – (TV * CV) = 72,000 – (4000 * 4) = $56,000

By improving our web page’s conversion rate by 0.5% we have added $12,000 to our web marketing ROI.

So let’s try a very conservative 1.5% increase to 4% The new volume of the sales they make in an average month?

  • (TV * CR) * SR = (4000 * 4%) * 30% = 48 sales per month (SM)

What is the revenue from those sales?

  • SM * SP = 48 * 2000 = $96,000 (RS)

What is the ROI from the online marketing?

  • RS – (TV * CV) = 96,000 – (4000 * 4) = $80,000

By improving our web page’s conversion rate by 1.5% we have added $36,000 to our web marketing ROI.

And if we can double our web page’s conversion rate (still only a 5% conversion rate)… The new volume of the sales they make in an average month?

  • (TV * CR) * SR = (4000 * 5%) * 30% = 60 sales per month (SM)

What is the revenue from those sales?

  • SM * SP = 60 * 2000 = $120,000 (RS)

What is the ROI from the online marketing?

  • RS – (TV * CV) = 120,000 – (4000 * 4) = $104,000

By improving our web page’s conversion rate by 1.5% we have added $60,000 to our web marketing ROI.

The numbers should surely open your eyes as to the value of increasing the conversion rate on your main web pages.

Run The Numbers For Yourself

Have a try of our simple Conversion Rate calculators to see how much more revenue you could generate using your own numbers…

Try the Oracle Digital Conversion Rate Calculator

So How Can We Increase the Conversion Optimisation Rate on Our Web Pages?

Notice I am focussing very much here on the term “web page” versus “website”.

Certain pages on your site – there may be less than 5 of them – will get the vast majority of the traffic sent to your website.

Whilst every web page on your website should be optimised to drive sales leads it makes clear and simple common sense that the pages that get the majority of your traffic must be optimised as a matter of priority.

At Oracle Digital we also have an alternative strategy with regards to landing pages that greatly enhance conversion rates.

When targeted, configured and optimised carefully these landing pages consistently gain conversion improvements and yes, some have double the conversion rate of the initial pages.

To learn more about how we can help you get a much better ROI for your web marketing spend you should contact us for a no obligation chat about your specific circumstances.