What Is Conversion Value, and Why Is It Important For Your Business?

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What Is Conversion Value, and Why Is It Important For Your Business?

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Published by Today Testing Team

Last Updated on June 21, 2022 by Hanah Alexander

When it comes to online pay-per-click marketing, there are lots of different metrics you need to track to make sure your efforts are actually paying off. But arguably the most important metric — the one that drives everything you do — is conversion value.

In today’s competitive marketplace, simply acquiring new customers is not enough.

Companies must also focus on maximizing the value of each customer relationship, especially in paid advertising campaigns where every dollar matters. Whether you’re trying to market your new online course you created with Kajabi or you’re selling physical products or you’re looking for clients for your service business, it’s something you can’t ignore.

This is where conversion value comes in.

Conversion value is a measure of the total revenue generated any time a “conversion” takes place on your website or in your advertising campaign. Of course, a “conversion” can be defined in any number of ways, but typically, what a conversion value boils down to is the value of a customer over the course of their relationship with a company.

By focusing on conversion value, companies can make sure that they are not only acquiring new customers, but also growing the revenue from existing customers.

In addition, conversion value provides a useful metric for measuring the success of marketing campaigns.

By tracking the conversion value of leads generated by a particular campaign, companies can make sure that they are getting a good return on their investment.

Understanding your conversion value allows you to measure, optimize, and reflect on the return on ad spend.

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Why Conversion Value Matters

In order to track the effectiveness of an online advertising campaign, advertisers need to use conversion values.

Conversion values tell advertisers how many people who saw the ad clicked on it and then converted.

This helps advertisers to track how effective their ads are in terms of getting people to click on them and then convert.

Advertisers can then adjust their campaign accordingly to maximize the number of people who see their ad and click on it.

Without conversion values, advertisers would have no way of knowing how effective their ads are and would not be able to make necessary adjustments to their campaigns.

As a result, conversion values are essential for tracking the effectiveness of online advertising campaigns.

Things To Consider When Defining Conversion Value

When defining your conversion value, there are several different things you’ll want to consider, including:

  • Immediate conversion value–This is a short-term look at the immediate value generated when a visitor converts into a customer. Typically, it’s the profit margin on their first order.
  • Repeat business–With this metric, you’ll want to consider the value of a customer over the length of their relationship with your company. Typically, this will be based on the average order value and how often they purchase from you.
  • Lifetime value–This is a long-term view of the value generated by a customer. It includes not only repeat business, but also things like brand loyalty and customer referrals.

When defining your conversion value, it’s important to consider all three of these factors.

By doing so, you’ll be able to get a well-rounded view of how valuable each customer is to your business.

And the price is worth it considering you get a website and blog without investing in building one separately. 

The other additional features too make this plan quite a steal! You get: 

  • Discount codes and gift cards. These are great for increasing sales through upsells and for building customer loyalty 
  • Abandoned cart recovery. No need to lose a customer just because they didn’t check out. Engage them to come back and complete their purchase. 
  • 2 Staff accounts. While 2 team members aren’t many, it’s still significant help when you need to get your business from the ground. 
  • Inventory locations. Make your inventory accessible through your physical outlets. 
  • Sales channels. Sell on multiple social media channels and on different marketplaces. 

I think these are very impressive features for a software’s basic plan. That said, there are some missing features which I think would be really nice to have on this plan, for instance reports. But there are also other features that don’t come with the basic plan that aren’t necessarily a deal breaker. For instance, international pricing. This is only a deal breaker if you are targeting an international audience, in which case you should upgrade to a higher tier.

Final Thoughts On Conversion Value In Advertising

Any business that relies on Pay Per Click (PPC) advertising to generate leads or sales must understand conversion value.

It allows businesses to track their return on investment (ROI) from PPC campaigns.

Understanding conversion value can also help businesses to identify which keywords are most valuable and worth bidding on.

And finally, it can help businesses to allocate their PPC budgets more efficiently by focusing on campaigns that have a higher conversion value.

Tracking conversion value is essential for any business that wants to get the most out of its PPC campaigns.

Have any questions about conversion value? Let us know by commenting below.

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