Visitor Lifetime Value as the PPC optimization tool

Visitor Lifetime Value (VLV) is the phrase derived from Customer Lifetime Value (CLV), and it was introduced in the very interesting article “Trade PPC for VLV: Visitor Lifetime Value Metric Makes Moneyby Greg Howlett.

VLV is the metric, according to Greg Howlett, “which refers to how much profit you can expect to generate from a visitor, not on just the first visit, but for all follow-up visits and orders.” The purpose of this metric is to determine the price per click you want to pay for some keywords (keyphrases), the group of keywords, or the keywords related to adequate products or services.

In the given example site conversion rate is 1 %, average profit per order is $50 and average number of orders placed per customer over his or her lifetime are 2. According to these parameters, CLV is $100 (2 x $50) and VLV is $1 ($100 x 1%). It means that in this example any price per visitor which is higher than $1 is too much. That is the price of maximum payment to get the qualified traffic to the Web site.

VLV is the evidence of competitive threats in PPC industry

It is clear (as it is written in the mentioned article) that online entrepreneurs, small business, and even medium sized companies cannot bid very often for all keywords, in these times. Those keywords are too expensive for them.

In this context, VLV represents the measure for the optimization of different keywords, as well as the optimization of different communication channels.

It has to be said that in very competitive online environment VLV starts to be important indicator to get more visitors with the same budget, not until one reach the efficiency limits with SEO strategy and general site conversion strategy (how to optimize a site for maximum sell capacity, including product’s/service’s level of definition).
Several times this year I was in the situation to communicate with the people who turned out from a PPC campaigns, as the main traffic generator, to other tactics how to get visitors to a Web site. The main reason is – some important keywords are way too expensive.

Often, these expensive keywords are with significantly lower prices on some other services, accept Google AdWords. The problem is to have enough time to experiment with other PPC programs, and to find the PPC alternatives to AdWords.

In  my opinion, it is very good strategy to focus on some other ways how to get traffic -  blog related promotion, publicity and other online PR tactics, affiliate programs optimization, etc.

In addition, I think that very soon PPC there will be more PPC programs to count about. Meanwhile, optimize your Web site traffic with VLV.

There are some interesting series of articles regarding the visitors management. I also recommend to read the sample Manage Lifetime Value Using the Visitor Segment Value from Matrix from O’Reilly book “Web Site Measurement Hacks“.

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