Hi, Cody here from web-360. Today in this post I want to talk to you about conversion optimization and google adwords and why it’s so important to your business and why you should be doing it. So let’s start by looking at a typical funnel in google adwords.
Now obviously that’s going to start with an ad placed on google and hopefully people are going to click on that ad taking them to a landing page and on that landing page there’s hopefully going to be a code of action typically that’s going to be a contact request or request for consultation or something along those lines. Now in that consultation hopefully that’s obviously going to lead on to sale.
Now let’s do the math on this and let’s use an accountant in the accountant industry for example who’s average client is going to be worth let’s say approximately $4000 so in that particular industry you are going to be looking at a typical cost per click of probably somewhere in the range of $10 cost per click now that’s going to go to a landing page that the industry standard on that is going to be anywhere from 0.5%, a half a percent all the way up to 2% that’s going to lead into a consultation and a typical consultation conversion rate if it’s pretty decent, if you are pretty good at what you are doing, if you are okay at what you are doing it’s going to be around 1 in 4 probably you know hopefully as much as 1 in 2 but we will say 1 in 4, 25% for this particular example and that’s going to result in this case in a sale of $4000 value.
So in this particular example with a $10 cost per click average and a 2% conversion on the landing page that means that you are going to need 50 clicks at $10 cost per click to generate one inquiry so that produces a cost per inquirer of $500 so everybody inquiring about your services is costing you $500 to get that inquiry and then obviously at a 25% conversion rate you are going to be needing 4 inquiries to generate one sale at $4000 in that sale is costing you $2000 to generate that sale so in this particular example for every dollar that you spend on google adwords that means that you get $2 back in return so that’s a 100% ROI, that’s a 100% return on investment and 100% positive or 100% ROI by positive campaign is absolutely fantastic that’s what most people would shoot for and that’s where most people are going to stop.
But let’s now look at the optimized conversion funnel and compare the two so instead of having a $10 cost per click average we are going to optimize that down to an $8 cost per click average and the way we are going to do that is through using specifically generated lead pages to get the quality score much much higher that allows google to give us the cost per click much cheaper but also in doing that, in generating that specific landing page well a series of specific landing pages that also means that we are going to be able to optimize that landing page for conversion that’s going to give us a 5% conversion rate or say that’s very conservative.
Typically we would shoot for 10% to 15% conversion rate and we’ve had as high as 39% conversion rates before but we will say 5% conversion rate for this particular example to keep it believable and then we will keep everything else the same we will have a 25% conversion rate in the consultation and the sale value is still $4000, it’s still the same so if we look at this particular conversion funnel and now we are $8 click at a 5% conversion rate so we now only need 20 clicks to generate an inquiry instead of 50 and we are only paying $8 cost per click instead of $10 so what that means is now it’s costing us $160 to generate an inquiry instead of $500 that was required previously now everything else remains constant it still requires 4 inquiries to generate one sale but what this means is instead of it costing $2000 to generate one sale it’s now only costing $640 to generate one sale so in this particular case with this small amount of optimization taking place now for every $1 you spend instead of getting $2 back which, that was great, that’s fantastic now for every $1 you spend you are getting $6.25 back now that’s a 625% return on your investment versus the 100% return on investment that you were getting initially now what that means is that you can grow your business 600 times or 600% faster for the same budget or you can reinvest the additional savings back into the campaign and generate much much more more business much much faster now if you want some more information on this and you want to stay up to date on how to optimize your business then make sure you sign up for our latest blog post or give us a call and you can book a demo to see how this can work firsthand in your business and how you can start to generate returns on your investments like that for yourself