|
Pay Per Click just might be the most cost-effective lead generation vehicle in your arsenal ...and you can learn whether that’s the case with amazing precision. Budgeting for Pay Per Click could not be simpler ...assuming you have a fairly good handle on your present business, and how it flows from website hit to closed deal. So, if you know.. - your average Customer Lifetime Value;
- the percentage of initial customers who remain your customers;
- the percentage of (registered or converted) leads that eventually become customers;
- the percentage of “clicks” to your landing page that convert or register, thereby becoming leads;
...then you simply multiply those four items together, and the resulting number is the break-even value of a single PPC click to your business ...which equals the max you should bid for any keyword/phrase in your PPC program. To the extent that you bid less than that, or are charged less than your maximum bid, your PPC program will be generating positive ROI for your business. Let’s look at a fictional – but typical – example: Foobar Enterprise Software, whose typical initial sale is $300,000. Through upgrades/add-ons, training and consulting services, that typical customer eventually spends over $1M with Foobar. Customer retention is excellent: 95% of their customers remain with Foobar. Their marketing and selling results in 5% of converted leads ultimately becoming customers, and their compelling offers cause 20% of landing-page visitors to convert. Doing the math... $1,000,000 X .95 X .05 X .2 = $9,500 So, Foobar could bid – and spend – as much as $9,500 per keyword/click and still break even ...on direct fees to the search engine companies. But of course there are other costs to consider... Suppose that Foobar’s PPC program manager is 100% dedicated on only this task, and costs Foobar – fully loaded with benefits and overhead – $100,000 annually. But the program yields 10 click-throughs per day, every business day ...or about 2,500 clicks per year. Hence, Foobar’s PPC manager costs them $40/click ...which lowers their break-even available spend with the engines all the way down to $9,460 per click. Now of course, not every company has million-dollar lifetime customers, or 95% customer retention, or such effective marketing & selling. But every business can run these numbers; and on doing so, most will find that they can generate a positive ROI within the current bid structure of their relevant keyword environment. If you find this to be true, then you owe it to your company to see how good you can get with PPC ...or outsource the effort to a professional firm like eMagine. Anything less means you’re wasting money on less effective vehicles ...and giving potential customers to your competitors.
|