What does your conversion funnel look like?
Whenever I ask this question, I usually get two different responses. The first is, “I don’t have an conversion funnel.” And the second response is, “I’m not sure what it looks like, I haven’t thought about it in a long time.”
Here’s the thing, every business has a conversion funnel. That’s because a conversion funnel is simply the path your prospective clients go through in order for them to become customers. This includes how they become aware of your product, interested in your product, build a desire for your product, and ultimately take an action to purchase your product.
The question isn’t about whether you have one, but rather if your conversion funnel is optimized. Making sure that your conversion funnel doesn’t have any blockages along the way will help you convert prospects into clients on a more regular basis and at a much faster pace.
So, where do you start?
There are two numbers you should determine before beginning to optimize your conversion funnel: RPV and CPV. Below, I’ll talk explain what they are and why it’s worth you taking the time to figure them out.
Understanding RPV and CPV
What is RPV?
Your RPV is your revenue per visitor, or more specifically, your revenue per website visitor per marketing channel. It’s important to calculate this for each marketing channel you use because your RPV will vary depending on the source of your website traffic.
How do you calculate RPV?
In order to calculate your RPV you’ll need to have sales data from a given time period. For example, let’s say that last month you ran a Facebook Ad campaign that generated 4 customers for a total of $4,000 in sales.
Your next step is to see how many of your website visitors came from Facebook during the time you were running your campaign. So, if 4,000 visitors on your website came from Facebook last month, then that means your RPV from Facebook was $1 ($4,000 divided by 4,000 visitors).
But, what do you do with this number?
Your RPV tells you the maximum investment you can afford for that specific marketing channel. If you invest more than that, you’ll lose money. That brings us to the next critical number… your CPV.
What is CPV
You may have already guessed that CPV is your cost per visitor. Meaning, it’s how much it costs you to drive traffic from each marketing channel.
How do you calculate CPV?
To figure this out, you’ll divide your total monthly investment into the marketing channel by the total number of visitors.
So, if you spent $2,000 on your Facebook advertising that generated 4,000 visitors, then your CPV would be $0.50.
What does that tell me?
Your RPV and CPV tell you if your campaigns are worth investing in. If your RPV is higher than CPV, then your campaign is profitable. If not, you’re losing money on that particular marketing channel.
The equation we are focusing on is: Profit = RPV – CPV.
Where Should You Focus?
When you first run these numbers, you’ll probably feel like you need to find a way to lower your CPV. If your CPV is smaller, then you’ll generate more profit, right? While that is a totally logical way to think about this, it’s actually the wrong number to focus on!
It is possible that you could lower your CPV — and it’s worth a try — but, in the long term, the cost of website traffic is not going to go down. In fact, as more of your competitors start advertising, it will naturally drive up the costs.
It’s much more effective to focus your time and effort on increasing your RPV. By doing that, you create endless possibilities for growth and can gain a huge competitive advantage in your market.
How to Increase Your RPV
There are only two ways to increase your RPV:
1. Improve your website conversion rates.
If you’re able to convert more visitors into customers, then your RPV will go up. There are a variety of ways to do this, and it’s different for every business. But a few ideas to raise conversion rates are: improve the offer on your website, add a free lead magnet to collect visitor contact information, use email marketing to follow up with prospects, launch retargeting advertising to bring prospects back to your website.
2. Increase your customer value.
If the value of your customers increases, then your RPV will also increase. Some ideas to increase customer value are: raise your prices, offer additional products and services to help your customers, offer a subscription service so you get repeat sales automatically.
Take some time this month to calculate both your RPV and CPV for each of your marketing channels. This will give you your baseline numbers.
Next, review the ideas above to see how you can double your RPV. That may sound like a stretch goal, but if you can simultaneously increase conversion rates and your customer value, then you shouldn’t have a problem doubling your RPV!
Want More Conversion Advice?
On Thursday, October 20, we’re hosting a live training where I’ll be going into much more detail about how to improve your website conversion rates.
It’s called: “How to Turn Your Website Into A 24/7 Sales Machine“