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PPC how to value ROI

1:35 am on Feb 14, 2006 (gmt 0)

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joined:Jan 14, 2006
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Can you value PPC & ROI on return customer.for example: each click is valued at 30 cents. i get 1000 visitors a month thats 300USD. out of a 1000 visitors 40 buy on an avarage of 10USD. emediate sales of 400usd. return customers 20% of 40 buyers thats 8 buyers. those 8 buyers are return cutomers at leat 3 time a year and an avarage of 10USD each time.so that's 240

so is it safe to say that the actual 300USD PPC has ROI of 400USD emediate sale and another 240 USD for return customers with a combined total of 700usd
6:48 pm on Feb 24, 2006 (gmt 0)

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joined:Feb 22, 2006
votes: 0

This is a lifetime value question, and a usefull one for online marketers. The unfortunate drawback with online advertising is that we are easily spoiled on detailed, up to the second reporting and can forget about the customer relationship, which is the most profitable stage in business.

The answer to your question is to determine what's called the average lifetime value of your customers, which it looks like you have already started doing. There are a variety of methods to calculate the value, but the easiest is to divide the total value ($700) by the number of uniqe customers (40) which give you a lifetime value of $17.50 per customer you convert through PPC. You can calculate ROI using this value. BUT do not use this value for your book keeping! Lifetime value can advise you how much your customers are worth and how important it is for you to keep them, but you still have to retain them through service, quality products, communication &c.


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