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How To Calculate Goal Value And ROI With Analytics And AdWords

Website Analytics February 29th, 2008

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Website Analytics

Focus in on the KPIs that are in Google Analytics to get more actionable findings!

Here are two popular methods of revenue generation that have important performance indicators:

Calculate Goal Value

Lead Generation

  • Conversion rates (found in Google Analytics)
  • Conversions (found in Google Analytics)

ECommerce

  • ROI (found in Google Analytics and Adwords)
  • Revenue (found in Google Analytics)

Measuring Performance of CPC (pay per click) on your Lead Forms

To see how your CPC is really performing. I like to take the top-line approach. You can start by a comparison of CPC sources. Glance over reports and look for sore spots (poor performers). Use Google Analytics and AdWords in harmony to focus in on Ad group performances.

Measuring Performance Of CPC

Now we can focus in on CPC Only

Focus In CPC Only

We can see the statistics for Google, Yahoo, and FaceBook in this campaign. If we are going to zoom in on results that matter we will pay close attention to goal conversions.

Goal Conversions

The data that is not shown here can be easily calculated

1)      To calculate the total number of conversions, multiply the visits by the conversion rate. E.g. (above) Google Visits are 4694 X .023% (Goal Conversion Rate) = 10.79 conversions.

2)      To calculate the revenue you have generated multiply the number of visits by the per visit goal value. E.g. (above) Google Visits are 4694 X $0= $0

Google Analytics provides you the information you need to quickly implement actions. The three important areas to look at under the goal conversions tab are Visits, Goal Conversion rate and per visit Goal Value. In the example above the client has opted out of providing a goal value. It is critically important to your PPC efforts to have a goal value.

Here is where we can see if your CPC exceeds the cost of a goal. With a little bit of calculating on your part a realistic goal value can be assessed. In the case of a lead form let’s suppose it took out of 1000 lead conversions you got 100 leads. Out of those leads you closed 10 deals @ $200 ea. So your total gross revenue was $2000. Your cost to generate these sales was $1000. Are you with me?

Our gross profit was $1000/ 10 (conversions) = $100 per lead goal value

This is the simple formula but not always the most accurate. Let’s suppose the above formula applies to a closing conversion that has reoccurring billing. For example we have a client that does Liposuction (Lipoplasty) Cosmetic Surgery Procedures. We know that there will be 3 visits over 3 years @ $5000 each and we also know that the surgery is $14,000. The question here is what is the value of a long term relationship? Based on this case here’s how goal value is assessed.

Value of a Closing Conversion

(Based on 10 Sales)

 

DescriptionOne Client 10 Clients
Visit 1$5,000$50,000
Visit 25,00050,000
Visit 35,00050,000
Surgery14,000140,000
Sub Total39,000390,000
Cost15,000150,000
Profit14,000140,000/ 10 leads
Goal Value
$1,400

This formula is intended to illustrate the value of a long-term client relationship. Other, more distant data may also be considered such as word of mouth or client referrals.

Ecommerce

For ecommerce goal analysis the method of calculation is similar. The biggest difference in the Ecommerce data is that it’s real and accurate compared to a lead form’s estimated goal value.

In Adwords, we can look at the money we spent to reach our goals in the same time frame. Compare that with the purchases made through CPC and we have a precise number we can confidently call ROI.

ROI

How to Determine ROI from PPC Alone:

  1. Look at the date you started tracking Ecom Data.
  2. See the total revenue generated.
  3. Look at what the PPC costs were for that period.

So here is how we calculate ROI for PPC

Total revenue from PPC– $1794.66
Raw Cost– 850.00
CPC from Feb 11 to Feb 29, 2008– 250.00
Total Profit– $694.66

Fun stuff!

Post By Robert (29 Posts)

Robert can be found in the TechWyse experimentation lab mixing his 'Internet Marketing' potions every single day. Blessed with advanced level knowledge in the entire internet marketing sector dating back to 1998, Robert often contributes to the Rise To The Top blog with his analytics input through his in depth work experiences.In 2011 Robert moved up to Orillia on Lake Couchiching. Once settled in the Sunshine city, OrilliaBusiness.com was launched to help businesses tap into the awesome opportunities online. With a special knack for internet marketing and measurement, Robert is helping businesses in and around Orillia shine like fine cut diamonds.

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Robert can be found in the TechWyse experimentation lab mixing his 'Internet Marketing' potions every single day. Blessed with advanced level knowledge in the entire internet marketing sector dating back to 1998, Robert often contributes to the Rise To The Top blog with his analytics input through his in depth work experiences.In 2011 Robert moved up to Orillia on Lake Couchiching. Once settled in the Sunshine city, OrilliaBusiness.com was launched to help businesses tap into the awesome opportunities online. With a special knack for internet marketing and measurement, Robert is helping businesses in and around Orillia shine like fine cut diamonds.

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