Are you getting enough?
This may not be the most startling statement you read today, but it’s still worth making:
The number of people who buy your product is mathematically
related to the number of people who visit your website.
More visitors = more sales.
Well maybe it’s not entirely that simple. You could drive junk traffic to your site all day long without getting a single new customer. So let’s say this:
More qualified or relevant visitors = more sales.
So how much traffic do you need?
That depends on a number of things specific to your site and your sales process. The bad news is I can’t tell you how much traffic you need. But fortunately I can give you an equation to figure it out for yourself.
Note: For those of you who could not be less interested in working an algebra equation, just plug your numbers into our Website Traffic Calculator.
Still with me? This equation weighs the number of new customers you need in order to meet your revenue goals (top of the equation) against how efficiently you currently turn website traffic into customers (bottom of the equation).
To complete the equation, follow these steps. (Warning: Serious thinking required. Are you sure you don’t want to just go to the Website Traffic Calculator?)
Step 1: Plug in the following numbers.
Numbers for B, F and P can be found within – or figured out from – your website analytics program.
R = your annual revenue goal
N = the percentage of revenue you expect to get from new customers
D = average customer value (over the same period as your revenue goal).
B = your website bounce rate
F = the percentage of non-bounce visitors who try a free version of your product (or request a demo)
P = the percentage of free trials (or demos) that become paying customers.
For example, let’s say your annual revenue goal is $5 million and you expect 60% of this to come from new contracts. Your average customer is worth about $25,000 a year. You check your web stats and find 45% of visitors to your website bounce (leave immediately), and 10% of those who stay on the site try a free version. Let’s also say you know that 6% of people who try a free version will become paying customers.
Your equation would look like this:
Step 2: Work the top of the equation.
Multiply your revenue goals by the percentage of revenue you expect from new customers and divide this number by your average customer value. If you are using an annual revenue goal, also use an annual customer value. Now you know how many new customers you need to hit your revenue target.
Our example equation looks like this:
Step 3: Next work the bottom of the equation.
Multiply your website bounce rate times the percentage of non-bouncing visitors who try your free version (or take a demo) and by the percentage of free versions (or demos) that become paying customers. Now you know what percentage of your website visitors become customers.
Step 4: Complete the equation.
Divide the number of new customers needed by the percentage of website visitors who become customers and you’ll know how much traffic you need.(Note: if you used annual figures in step 2, the number you get in step 4 will also be annual. Divided by 12 to get a monthly requirement).
Divide by 12 to get the monthly number:
Congratulations. You did it!
Whether you got your traffic requirement number from the Website Traffic Calculator or you actually worked through the equation, the final step is to compare the amount of traffic you need against the amount of traffic you’re actually getting. If the numbers are equal or the actual traffic is higher, you’re good and it’s time to work on improving your B, F and P.
If the amount of traffic you need is higher than what you’re getting, you’re not on track to make your revenue goals. But you have a choice. You can drive more traffic to your site or you can convert more visitors to customers. The trick is figuring out which is the most cost-effective for you. And that is the subject of a different article.
[tags] website, traffic, bounce rate, conversions [/tag]
Category: Traffic
This may not be the most startling statement you read today, but it’s still worth making:
The number of people who buy your product is mathematically
related to the number of people who visit your website.
More visitors = more sales.
Well maybe it’s not entirely that simple. You could drive junk traffic to your site all day long without getting a single new customer. So let’s say this:
More qualified or relevant visitors = more sales.
So how much traffic do you need?
That depends on a number of things specific to your site and your sales process. The bad news is I can’t tell you how much traffic you need. But fortunately I can give you an equation to figure it out for yourself.
Note: For those of you who could not be less interested in working an algebra equation, just plug your numbers into our Website Traffic Calculator.
Still with me? This equation weighs the number of new customers you need in order to meet your revenue goals (top of the equation) against how efficiently you currently turn website traffic into customers (bottom of the equation).
To complete the equation, follow these steps. (Warning: Serious thinking required. Are you sure you don’t want to just go to the Website Traffic Calculator?)
Step 1: Plug in the following numbers.
Numbers for B, F and P can be found within – or figured out from – your website analytics program.
R = your annual revenue goal
N = the percentage of revenue you expect to get from new customers
D = average customer value (over the same period as your revenue goal).
B = your website bounce rate
F = the percentage of non-bounce visitors who try a free version of your product (or request a demo)
P = the percentage of free trials (or demos) that become paying customers.
For example, let’s say your annual revenue goal is $5 million and you expect 60% of this to come from new contracts. Your average customer is worth about $25,000 a year. You check your web stats and find 45% of visitors to your website bounce (leave immediately), and 10% of those who stay on the site try a free version. Let’s also say you know that 6% of people who try a free version will become paying customers.
Your equation would look like this:
Step 2: Work the top of the equation.
Multiply your revenue goals by the percentage of revenue you expect from new customers and divide this number by your average customer value. If you are using an annual revenue goal, also use an annual customer value. Now you know how many new customers you need to hit your revenue target.
Our example equation looks like this:
Step 3: Next work the bottom of the equation.
Multiply your website bounce rate times the percentage of non-bouncing visitors who try your free version (or take a demo) and by the percentage of free versions (or demos) that become paying customers. Now you know what percentage of your website visitors become customers.
Step 4: Complete the equation.
Divide the number of new customers needed by the percentage of website visitors who become customers and you’ll know how much traffic you need.(Note: if you used annual figures in step 2, the number you get in step 4 will also be annual. Divided by 12 to get a monthly requirement).
Divide by 12 to get the monthly number:
Congratulations. You did it!
Whether you got your traffic requirement number from the Website Traffic Calculator or you actually worked through the equation, the final step is to compare the amount of traffic you need against the amount of traffic you’re actually getting. If the numbers are equal or the actual traffic is higher, you’re good and it’s time to work on improving your B, F and P.
If the amount of traffic you need is higher than what you’re getting, you’re not on track to make your revenue goals. But you have a choice. You can drive more traffic to your site or you can convert more visitors to customers. The trick is figuring out which is the most cost-effective for you. And that is the subject of a different article.
Thu, Dec 10, 2009
Traffic
Written by: Susan Tatum