This online marketing conversion calculator is a tool that lets you analyze the whole process of internet marketing and sales, from ad views to actual sales and return on investment. You can use it to simulate your marketing funnel and decide whether the online business you just set up will be profitable. This article will take you through it step-by-step, explaining what all of the perplexing acronyms mean.
Even if you create the best ad in the whole Internet, most people will never even take a second look at it, but frantically search for an "X" in the corner. Only some will click on the ad, but that doesn't mean you have them in your pocket! Most of them will leave your website and never come again. Some will become potential customers, interested in your product. That's not the end of the funnel, though - not all them will decide to purchase your product and become factual customers.
Our calculator lets you determine the amount of people at each stage of the funnel. You need to make a few assumptions for it to work, though:
- Impressions: number of views of your ad. Every time a website with your ad is loaded, you get one impression.
- CTR (click-through-rate): percentage of impressions that lead to a click. For example, if your CTR is 5%, then that means that 1 of every 20 people who see this ad is intrigued enough to click it and visit your website.
- Visits: actual number of visits on your website (generated by impressions). This number will be calculated automatically.
- Visits to leads: percentage of visits that result in leads (potential sale contracts). For instance, visits to leads ratio of 10% means that every tenth person who visits your website is interested in your product.
- Leads: absolute number of leads. This number will be calculated automatically.
- Leads to customers: percentage of leads that result in purchasing your product, so that the lead becomes a customer.
- Customers: the very bottom of the marketing funnel - number of people who were so interested in your product that they decided to buy it. This number will be calculated automatically.
Costs of internet marketing
Advertising online doesn't come free. You probably pay a lot for your ads on multiple websites at once. Our calculator lets you find out how high is the price of your marketing at each stage - be it per click or per customer.
- Cost: total cost of your online marketing. You can use the website ad revenue calculator to calculate it if it depends on the number of pageviews.
- CPM: cost per thousand impressions. For more details on this statistic, take a look at the CPM calculator.
- CPC: cost per click, or per visit.
- Cost per lead: this one is self-explanatory - the investment you make to get one lead.
- Cost per customer: as you could expect, it is the total cost of advertisement required to get one customer.
Return on investment (ROI)
Was setting up the ads worth it in the first place? The third section of the online marketing conversion calculator helps you decide on that. Simply type in the revenue you made in total on your products, and this calculator will help you calculate all of the statistics.
- Revenue: money you made on your online sales. It is not equal to the income (net profit) - you don't have to subtract the costs of setting up the ad.
- ROI: return on investment, a percentage value that tells you how profitable your business is. The higher the ROI, the better. If it's a negative value... Well, it seems like you need to rethink your business, as currently you are losing money!
- Revenue per click / per lead / per customer: these values are self-explanatory. They are a good measure of how profitable this business is compared to others.
You can open the advanced mode to calculate your prospective revenue, basing on the assumption that each customer gets more than one sales contract.
- Number of orders per customer: this is the total number of orders that one customer makes over the whole time of making business for you.
- Customer LTV: Lifetime value of customer - how much he spends in your shop in total. It is simply the revenue per customer multiplied by the number of orders.
- Total revenue: total gain assuming that each of your customers will return to your shop multiple times to make the total number of orders as specified above.