## Estimating the true value of a web visitor

Marketers are still grappling with finding the real value of digital marketing efforts. At the end of a promotional campaign, marketers find even the most “trackable” of web visits difficult to value. If we didn’t know this already, a survey of chief marketing officers, conducted by Atlanta’s Heidrick & Struggles, clarified the problem.

Kevin Hillstrom, author of Multichannel Forensics, suggests a reasonable way to approach web campaign valuation. It works well for e-commerce site visits, and even sheds light on valuing other types of visitors.

### Placing value on non-buying visitors

Start the valuation process with the obvious: Visitors who immediately convert to a sale. But then keep going. Apply common sense numbers to those visitors who do not immediately buy. And why not? Visitors may come back two, three or more times before making a purchase. Like a fish that nibbles before biting, these “lost” visits aren’t so lost after all. They should be fairly depreciated, not totally ignored.

Here’s what Kevin says about ignoring all but the “one-visit” purchasers:

We try our hardest to allocate orders to the advertising vehicle that caused the order, seldom considering a series of events.

Take paid search as an example. Assume that a paid search campaign results in a 3% conversion rate and a \$100 AOV [Average Order Value]. We run a profit and loss statement on the 0.03 * 100 = \$3.00 demand generated by the campaign, factoring in the cost of the campaign.

### What about the 97% of visitors who did not purchase?

• Of those who are left [i.e., 97% of the base], 50% will visit the website again within one week, with 3% converting, spending \$100 each.
• Of those who are left, 50% will not visit again. Those who are left will visit again within three weeks, with 3% converting, spending \$100 each.
• Of those who are left, 50% will not visit again. Those who are left will visit again within one month, with 3% converting, spending \$100 each.
• Of those who are left, 50% will not visit again. Those who are left will visit again within four months, with 3% converting, spending \$100 each.
• Of those who are left, 50% will not visit again. Those who are left will visit again within six months, with 3% converting, spending \$100 each.

He goes on to explain:

There is value in each case, value that most of us choose not to measure.
When I iterate through the five cases above, I calculate an additional \$2.75 of future visitor value. [I get \$2.68 in my number-crunching, as the number in the lower right of the graphic shows. Here’s my math in a Google Spreadsheet.]

In other words, we measure the \$3.00 generated by short-term conversion. We don’t always measure the \$2.75 of future conversions.

Now there may be additional expenses associated with the \$2.75 number — that customer might require additional paid search expense or might use a shopping comparison site, whatever. So we need to run a true profit and loss statement on the additional \$2.75 generated by future visits.

If each first-time visitor (one that doesn’t convert immediately) is worth \$0.30 profit over the next twelve months, you think differently about attracting visitors, don’t you?

I agree. The BrandWeek article I linked to in the first paragraph said that the CMOs surveyed, “Expressed an awareness of digitalâ€™s potential, along with a recognition that they werenâ€™t close to tapping it.”

Building sales models that take into account the messy realities of online behavior is one way we can start.

## Watching Twitter sell things like pizza and beer

Most online marketers recognize Twitter’s power to connect people. This virtual network is great for many B2B marketing types. In some ways Twitter — and microblogging in general — is the new Power To Get In. But what about driving consumer business? And here I’m not talking about ephemeral branding. I’m talking about getting people to your business with money in hand.

Last night I got a few answers.

Among other marketing innovators, I had the pleasure of meeting Joe Woelfle, owner of Blatz Liquor. He was co-hosting a Tweetup in collaboration with JSOnline.com. He contends microblogging has produced tangible results.

Last month Journal Sentinel business writer Tannette Elie (@Telie) cited Woelfle as saying that Facebook is responsible for 10% of his sales. This, he explained, was primarily through the soft-sell of publicizing wine- and beer-tasting events.

One tenth of a “bricks-and-mortar” retailer’s business attributed to Facebook? It seemed a lofty claim, but when I asked Joe earlier today if he would revise that estimate, he said only to throw his newest tactic — Twitter — into that mix.

The wall-to-wall turnout at the event last night certainly suggested that Twitter was powerful at something. But what? Skeptics would say you could use plenty of other methods to spread the word about a free event at a beer, wine and liquor store — one that included plenty of liberally-poured product samples!

Time will tell how effective @BlatzLiquor‘s Twitter efforts are at growing real sales and loyalty. But in the meantime, someone else at the Tweetup has a Twitter-fueled business already road-tested by other entrepreneurs.

### Korean BBQ Tacos and Pizza By The Slice

Scott Baitinger is co-owner of Streetza Pizza (@StreetzaPizza). I was excited about connecting with him for two reasons:

1. His business just had its official launch this Memorial Day weekend and I was eager to find out how it went
2. Scott’s business is a glimpse at a promising future for retail — for everyone from food vendors to dry cleaners to banks

Streetza’s business model uses Twitter to tell hungry customers where its truck will be parked next. It even polls followers on questions such as future locations and product offerings. I wrote about this business model — this promising taste of the Web 3.0 world — last week. It was in a SOHOBizTube article. In that piece, I cited the wildly successful Zogi BBQ, a Los Angeles purveyor of “Korean tacos” that informs its tens of thousands of Twitter followers (@KogiBBQ) where it will be next.

As odd as it sounds, these customer-centric Tweets are truly a taste of things to come.

That’s because the next meaningful digital innovations won’t provide consumers with cooler web sites and more content. They will be mobile applications that provide exactly the content we crave, talking to us when we are physically in a place to scratch the itch.

The future of the web is about place. And like Kogi, Streetza Pizza, in sleepy little Milwaukee, will be leading us there one slice at a time.

## Is the 1-to-1 future here yet?

Fifteen years ago a single book changed the course of marketing. The 1-To-1 Future had been released by the consulting duo of Don Peppers and Martha Rogers. I was fortunate to hear Martha speak in 1994, as she toured heavily to promote the book’s revolutionary paradigm.

(Although we never met, I am to this day indebted to her for inspiring me to move my career from a direct response to a digital marketing focus. She also, during her talk, introduced me to the jargon-y word paradigm. For that I’m not so grateful, and do my best to use this MBA-scented doozy of a word only with heavy irony.)

The book, and the new “paradigm,” quickly generated its detractors. But much of the book has withstood the test of time.

Remember, 1994 was practically the digital stone ages. The year the book hit the marketing mainstream, was a time when frequent flier programs were still in their infancy, and the concept of “free, advertising-supported email” was one of the few internet developments worthy of mention in the first edition of the book (Hotmail was founded three years later — and went viral shortly thereafter — gobbling up market share until purchased by Microsoft).

Pioneers are often criticized for events beyond their control. I suspect that Peppers and Rogers felt more than a little queasy as they watched one corporation after another buy into large, expensive, and mostly doomed customer relationship management (CRM) initiatives. Most of the initiatives were predicated on grossly unrealistic expectations.

I predict that current and future investments in this type of marketing intelligence will deliver on the vision of this seminal book.

The truth will bear out, and we’ll see that the problem with the “one-to-one future” wasn’t the vision itself, but a dearth of analytical vigor coupled with poor training for the people actually expected to use the systems.

What will be different now? I see three things:

1. Post-boom sobriety — If Pepper and Rogers had been doing business in a less explosive business environment (read: abundant venture capital mixed with what Greenspan aptly called “irrational exuberance”), their message would not have been so quickly and rudely out of fashion.
2. The growth of small business — Good CRM must be wired into every part of an organization. That is nearly impossible in large, hide-bound companies. Expecially if they have two dozen databases that need to talk to each other. (Yes, two dozen. I wish I was kidding.) Thanks to the phenomena of SaaS (Software as a Service), cloud computing and good ‘ole Moore’s law, powerful business intelligence is now within reach of small and mid-market businesses. But that just the technology. Here’s the biggest difference:
3. A truly plugged-in workforce — By far the largest barrier to successful implementation of automated systems is getting the workforce to recognize them as their friends. This is happening more today, as a new generation is becoming more familiar with the vast world within their web browser. It’s an entirely new way that small organizations are growing into bigger ones that I wrote about in my post on networked leadership.

For these reasons I’m optimistic about a future that fulfills Peppers and Rogers’ promise.

No, it won’t exactly be “one-to-one.” Even Peppers and Rogers conceeded that economies of scale call for more of a mass-customization of contacts and segmentation than the portfolio-based management they first discussed. But this “future” will bring us to the same destination.

It will be a scalable way to extend a business into niches as narrow the miriad reasons we choose one brand over another. Fifteen years ago I thought this book might be on to something. In spite of the economic jolt we’re experiencing (or maybe even because of it! ), the last year has assured me I wasn’t wrong after all.

## Planning an event? Use online marketing as your hamburger helper

Once the event is over and the hall is cleaned up, the marketing and PR value of that event doesn’t have to fade. Chris Brogan wrote about how social media and internet marketing can act as hamburger helper for the event. It’s an apt metaphor for these two reasons:

1. It’s inexpensive to use online marketing
2. It stretches everything!

Chris’s post describes how online social network tools can improve event outcomes by helping with all five of its phases:

• Awareness
• Attention
• Engagement
• Execution
• Extension

Are social media efforts the meat? No way. But they can be used throughout to maximize effectiveness.

## Most “social media terrorists” just want to be acknowledged by a brand

When I give presentations about social media, a frequent question is, “What can we do when we see someone kicking up a fuss online?” I assure them that it is identical to any other customer service complaint. Most people with a beef want the problem fixed, but they also — short of that — want to be heard. Really heard.

Further evidence comes from iStrategyLabs’ post about monitoring positive and negative comments. They write the following:

Weâ€™ve found that 80% of the time we can easily turn a brand terrorist into a brand evangelist just by letting them know that theyâ€™ve been heard, or by directing them to a resource theyâ€™re looking for (you could call this customer service).

The other 15% of the time we need to talk internally with our team to see what can be done with more complex issues and the last 5% ends up being something client side teams need to handle directly (i.e. reaching out from senior leadership, or product features need to be changed etc.).

It’s a good post, and further validation for a technique that I’ve seen used countless times to good results. Here, by the way, is how iStrategyLabs measures share-of-voice, both for positive and negative comments: