How to determine the monetary value of non-ecommerce conversions
When the conversion is a product order, it is easy to determine its value. Whatever is the price of the product, is the value of the conversion.
For example, if the price of the product is £500 then the value of your conversion is £500. But…
how you will calculate the value of conversions which are not orders but something like leads, downloads, newsletters signups, phone calls etc?
There are many websites on the web that don’t have any macro conversion (like placing an order) but only a lot of micro conversions (like downloading a brochure, watching a video, request for follow up, etc).
These are often the websites that either sell very high priced items like properties, cars, yacht, etc or sell consulting services.
Since people generally don’t buy such items online, you won’t find shopping cart set up on such websites.
If you are doing marketing of a non-ecommerce website then how you will report the value you have added to the business bottomline through SEO, PPC, Social media etc?
This is what many marketers do when it comes to reporting for non-ecommerce websites:
Marketer: we have increased the website traffic by 200%, We have built 100k backlinks, We have improved site engagement and video viewership, We……
Boss: You don’t fool me. You do lot of talking. ……I haven”t seen anything coming from you. You are fired.
Suddenly all the metrics we were so proud of, start collapsing like a house of cards in Lord Sugar’s boardroom.
What went wrong here?
Well, the marketer failed to convince, how his marketing efforts are impacting the business bottomline in monetary terms.
What is the impact of increasing the traffic by X in monetary terms?
What is the impact of improving the site engagement in monetary terms?
What is the impact of increasing the video viewership by X in monetary terms?
What is the impact of increasing the Facebook fan base by X in monetary terms?
Businesses want to hear this. Business Tycoons like ‘Lord Sugar’ want to hear this. This is what really matters to them. That is why they are big businesses and that is why they are run by business tycoons.
Businesses measure success in monetary terms.
If you don’t tie a monetary value to your conversions then you may have hard time convincing senior management, why they should not hire someone else.
Businesses understand the language of £££…$$$$… more than anything else, so speak in their language.
Senior management may not have the time to go through your ranking reports, link building reports, or other reports. But they are definitely interested in one thing and that is how your marketing activities are impacting the bottomline and whether they should continue with you.
Case Study – Meridien Modena
Let us understand the calculations involved in determining the monetary value of non-ecommerce goals through a case study.
Meridien Modena sells pre-owned cars in the UK. I picked up this company because one of their showrooms which sells Ferraris is close to my house and I am simply fascinated by the cars they sell.
Since people don’t buy a car without a test drive, without looking and physically touching it, you won’t find any ‘order now’ button on this website or such type of websites.
This website has no macro conversion as such but has got a lot of micro-conversions like:
- Viewing a vehicle detail
- Printing out the specifications/details of a car
- Filling out a contact form
- Making a call
Now how you will tie monetary value to these micro conversions?
Let us determine the monetary value of ‘printing out the details of a car’:
Step-1: Track the number of people who print out the details of a car each month.
You can track such people through event tracking in Google Analytics. Let us suppose 500 people took print outs in the last one month.
Step-2: Track the number of people who showed up at one of the car showrooms with the printouts.
Let us call the people who showed up with a print out as ‘Clients X’. You can track ‘client X’ by calling and asking the car dealer of each showroom. Let us suppose 100 people (of client X type) showed up at various car showrooms in a month.
Step-3: Track all the ‘clients X’ who made a purchase and also track the revenue generated as a result of such purchases. Again you can get these numbers through car dealers. Let us suppose 25 people made a purchase and the net sale was of £1.5 million.
Step-4: Ask your car dealers how many people on an average who showed up at their showroom eventually make a purchase and what the average value of a purchase is.
Here you are determining the conversion rate of your car dealers and the average order value. You can’t get such type of insight through any web analytics tool.
Let us suppose that one person out of 10 who showed up at a showroom makes a purchase on an average. Let us suppose that the average value of a purchase is £20000
Step-5: Calculate the monetary value added by a person who showed up at a car showroom:
If 1 person out of 10 who showed up a car showroom makes a purchase on an average and the average purchase value is £20000 then:
Monetary value added by a person who showed up at a car showroom = £20000 * (1/10) = £2000
100 people showed up at various car showrooms with a printout in a month. Out of these 100 people, 25 people made a purchase and generated a net sale of £1.5 million. The other 75 people didn’t make a purchase but they still showed up at the showroom. So they are still adding value to the business bottomline. The monetary value added to the business bottomline by these 75 people is:
75 * £2000 = £150000
So the total monetary value added to the business by 100 people
= £150000 + £1.5 million = £1.65 million
Step-6: Calculate the average value of ‘printing out the details of a car’
The average value of ‘printing out the details of a car’ = Revenue generated by ‘Clients X’ /number of print outs
= £1.65 million /500 = £3300
So the monetary value of ‘printing out the details of a car’ from the website = £3300
Who would have ever thought that a print out can be worth that much?
You can add this value as Goal value in your Google Analytics profile and show it to your client along with the conversion volumes.
Similarly, you need to find and report the monetary value of:
- Viewing a vehicle detail
- Filling out a contact form
- Making a call
Needless to say, it is not very easy to calculate the monetary value of non-ecommerce conversions.
But that’s the way it is for you esp. if you are into real estate or other very high priced items market where macro conversions don’t happen on the website but in the offline world.
Pro Tip
Never assign monetary value to ecommerce goals like ‘orders’. If you do that then you will inflate the revenue metrics.
Always tie a monetary value to whatever you report otherwise don’t report especially if you are reporting to senior management in a very big company.
Reporting visits, number of new rankings acquired, site engagement, facebook followers, twitter followers etc are all meaningless unless they don’t show the impact on the business bottomline in monetary terms.
When the conversion is a product order, it is easy to determine its value. Whatever is the price of the product, is the value of the conversion.
For example, if the price of the product is £500 then the value of your conversion is £500. But…
how you will calculate the value of conversions which are not orders but something like leads, downloads, newsletters signups, phone calls etc?
There are many websites on the web that don’t have any macro conversion (like placing an order) but only a lot of micro conversions (like downloading a brochure, watching a video, request for follow up, etc).
These are often the websites that either sell very high priced items like properties, cars, yacht, etc or sell consulting services.
Since people generally don’t buy such items online, you won’t find shopping cart set up on such websites.
If you are doing marketing of a non-ecommerce website then how you will report the value you have added to the business bottomline through SEO, PPC, Social media etc?
This is what many marketers do when it comes to reporting for non-ecommerce websites:
Marketer: we have increased the website traffic by 200%, We have built 100k backlinks, We have improved site engagement and video viewership, We……
Boss: You don’t fool me. You do lot of talking. ……I haven”t seen anything coming from you. You are fired.
Suddenly all the metrics we were so proud of, start collapsing like a house of cards in Lord Sugar’s boardroom.
What went wrong here?
Well, the marketer failed to convince, how his marketing efforts are impacting the business bottomline in monetary terms.
What is the impact of increasing the traffic by X in monetary terms?
What is the impact of improving the site engagement in monetary terms?
What is the impact of increasing the video viewership by X in monetary terms?
What is the impact of increasing the Facebook fan base by X in monetary terms?
Businesses want to hear this. Business Tycoons like ‘Lord Sugar’ want to hear this. This is what really matters to them. That is why they are big businesses and that is why they are run by business tycoons.
Businesses measure success in monetary terms.
If you don’t tie a monetary value to your conversions then you may have hard time convincing senior management, why they should not hire someone else.
Businesses understand the language of £££…$$$$… more than anything else, so speak in their language.
Senior management may not have the time to go through your ranking reports, link building reports, or other reports. But they are definitely interested in one thing and that is how your marketing activities are impacting the bottomline and whether they should continue with you.
Case Study – Meridien Modena
Let us understand the calculations involved in determining the monetary value of non-ecommerce goals through a case study.
Meridien Modena sells pre-owned cars in the UK. I picked up this company because one of their showrooms which sells Ferraris is close to my house and I am simply fascinated by the cars they sell.
Since people don’t buy a car without a test drive, without looking and physically touching it, you won’t find any ‘order now’ button on this website or such type of websites.
This website has no macro conversion as such but has got a lot of micro-conversions like:
- Viewing a vehicle detail
- Printing out the specifications/details of a car
- Filling out a contact form
- Making a call
Now how you will tie monetary value to these micro conversions?
Let us determine the monetary value of ‘printing out the details of a car’:
Step-1: Track the number of people who print out the details of a car each month.
You can track such people through event tracking in Google Analytics. Let us suppose 500 people took print outs in the last one month.
Step-2: Track the number of people who showed up at one of the car showrooms with the printouts.
Let us call the people who showed up with a print out as ‘Clients X’. You can track ‘client X’ by calling and asking the car dealer of each showroom. Let us suppose 100 people (of client X type) showed up at various car showrooms in a month.
Step-3: Track all the ‘clients X’ who made a purchase and also track the revenue generated as a result of such purchases. Again you can get these numbers through car dealers. Let us suppose 25 people made a purchase and the net sale was of £1.5 million.
Step-4: Ask your car dealers how many people on an average who showed up at their showroom eventually make a purchase and what the average value of a purchase is.
Here you are determining the conversion rate of your car dealers and the average order value. You can’t get such type of insight through any web analytics tool.
Let us suppose that one person out of 10 who showed up at a showroom makes a purchase on an average. Let us suppose that the average value of a purchase is £20000
Step-5: Calculate the monetary value added by a person who showed up at a car showroom:
If 1 person out of 10 who showed up a car showroom makes a purchase on an average and the average purchase value is £20000 then:
Monetary value added by a person who showed up at a car showroom = £20000 * (1/10) = £2000
100 people showed up at various car showrooms with a printout in a month. Out of these 100 people, 25 people made a purchase and generated a net sale of £1.5 million. The other 75 people didn’t make a purchase but they still showed up at the showroom. So they are still adding value to the business bottomline. The monetary value added to the business bottomline by these 75 people is:
75 * £2000 = £150000
So the total monetary value added to the business by 100 people
= £150000 + £1.5 million = £1.65 million
Step-6: Calculate the average value of ‘printing out the details of a car’
The average value of ‘printing out the details of a car’ = Revenue generated by ‘Clients X’ /number of print outs
= £1.65 million /500 = £3300
So the monetary value of ‘printing out the details of a car’ from the website = £3300
Who would have ever thought that a print out can be worth that much?
You can add this value as Goal value in your Google Analytics profile and show it to your client along with the conversion volumes.
Similarly, you need to find and report the monetary value of:
- Viewing a vehicle detail
- Filling out a contact form
- Making a call
Needless to say, it is not very easy to calculate the monetary value of non-ecommerce conversions.
But that’s the way it is for you esp. if you are into real estate or other very high priced items market where macro conversions don’t happen on the website but in the offline world.
Pro Tip
Never assign monetary value to ecommerce goals like ‘orders’. If you do that then you will inflate the revenue metrics.
Always tie a monetary value to whatever you report otherwise don’t report especially if you are reporting to senior management in a very big company.
Reporting visits, number of new rankings acquired, site engagement, facebook followers, twitter followers etc are all meaningless unless they don’t show the impact on the business bottomline in monetary terms.
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About the Author
Himanshu Sharma
