But successful online marketers make calculations.
Then… they adjust based on data. Based on split testing. And then? They adjust based on math.
Let’s face it…
Your competition is just guessing.
Maybe you are too… but by the time you finish reading this blog post you’ll be guessing no more.
We’re not talking advanced math either. There are TWO simple formulas you can apply RIGHT NOW that will take all the guesswork out of your marketing.
Start calculating these and it’s game over for your competition.Successful online businesses in any market niche will always – and should – monitor these two key marketing metrics…
- Average Customer Value (ACV) – Tells you how much a customer is worth.
- Average Visitor Value (AVV) – Tells you how much you can pay for a click.
Customer Lifetime Value has its place but this isn’t it.
This is about IMMEDIATE Average Customer Value (ACV) … not Customer Lifetime Value.
ACV measures the IMMEDIATE impact that a so-called “marketing funnel” is having on the business.
Unless you’re sitting on endless cash you simply can’t afford to wait a “lifetime” to recoup acquisition costs.
NOTE: You can download an Excel Template that will calculate this for you at the end of this blog post.
Here’s how to apply this to your online business
In just a minute we’ll look at a concrete example…
But first… make sure you understand the system.
We use (and teach) a system called the Digital Revenue Engine.
We use this system for every business we start, acquire or consult…
Your goal is to be willing and able to spend more than your competitors to acquire new customers.
If you do that – you win!
Here’s an example in a solid niche…
A nutrition / fitness blogger has built the following offer structure into a campaign,
In the example above the info marketer has the following marketing funnel metrics tallied up…
- Tripwire Offer – The Tripwire is converting 5% of new leads to customers at less than $47 dollars (ideally, should be less than $10 in our experience).
- Core Product Offering – The $100 Core Offer is converting at 30%.
- Revenue Maximizer – The $300 Coaching offer is converting at 10%.
The smart marketer asks two questions after looking at these numbers…
- How much is a customer worth? (Average Customer Value or ACV)
- How much can I pay for traffic? (Average Visitor Value or AVV)
Calculating Average Customer Value (ACV)
Here’s the formula for calculating ACV…
Here’s what it looks like for an example value ladder (with 3-offering heirarchy)…
$7 + $100(.3) + $300(.1) = $67 Average Customer Value
In this example, every time you sell a $7 Tripwire Offer… you make $67 in revenue.
In other words, you can spend $67 to sell a $7 offer WITHOUT having to go negative!
Calculating Average Visitor Value (AVV)
Now that you know what a customer is worth… you can calculate how much you can pay for traffic.
This is how you dominate your market. Your competitors are guessing how much they can pay per click… you have data.
Here’s the formula for calculating Average Visitor Value…
Average Customer Value (ACV) * Tripwire Conversion Rate = Average Visitor Value (AVV)
Here’s what it looks like for the example above…
67 * .05 = $3.35 Average Visitor Value (AVV)
This means that you could spend as much as $3.35 per click without going negative.
Download the ACV Calculator Now … and use dynamic calculations to dominate ANY digital market or niche today!
So what do you think? Did you find this article helpful?
Post a comment below and let’s play some idea tennis on marketing ROI and success metrics…