Conversions are the most important part of profitability for a very good reaon. That's because in order to be dealing with profit, you have to have a very good idea of your conversions and what they are worth. This is not typically where most users start when developing their strategy for Google SEM.
Clicks are expensive and serve no purpose for YOU - other than to create the conversions you have defined - even though they are definitely creating revenue for other people.
Your campaigns are there to get people who click on your ads to do things that you value. Of course, it would be nice if they just suddenly became lifetime customers. But you might also find it quite valuable if they talked to your sales people and got an estimate. Or signed up for your samples. Or whatever actiions to which you can assign a real dollar value.
There is no thinking about profit with SEM before you have defined your concept of conversions, figured out how to track them, and given them a dollar value so you can evaluate your profit.
Before we dive into our dissertation on all the cool ways you can think about conversions, let's be clear on our goal for this section. We want you to take a broad look at all the possible ways to use Google Ads search marketing to create value for your business.
Especially in the beginning. See what you can get visitors to your landing pages to do. See how you can create value from those actions. Think broadly and maybe even overvalue some conversions (initially) so that you can better understand what is possible. You are essentially growing a new business and this is the place you want to invest in R&D. New conversion types are very productive R&D.
We are not professing that all clicks have value. Or that conversions can be "ethereal" or "imaginative". Conversions have to create real, measurable value that you would pay real money to have. Or you don't go after them. Kidding yourself about the value of a site visitor is not going to help you achieve profitability.
Conversions are the value of the site visitors you have generated with SEM. Now you can take a pretty narrow, analytical view of that. For example: product sales. subscription revenue, new contracts, etc. Essentially count the hard cash when it comes in.
Or you can take a broader view. For example: lifetime customer value, lead valuation, sales process steps, etc. Essentially, look at everything that contributes to improving your business over time and assign a value to every step. This is not mutually exclusive with the "narrow" view, and in fact, should be combined with hard cash conversion thinking.
- What if a customer is willing to get on a sales call with one of your sales reps, but does not end up buying now? Is that a conversion? Does that have any value to you?
- What if a customer downloads your catalog and provides you their complete contact information. Is that a conversion? Does that have any value to you?
- What if a customer provides you a LinkedIn profile referral. Someone they believe will be interested in your business? Is that a conversion? Does that have any value to you?
There is a tendency to view the concept of a conversion as something that was performed on your website. There's some pretty good reasons for this. First and foremost is that makes them trackable directly in your Google Ads performance reports. And that makes your performance reporting easy.
But you should not think that only those actions taken by a customer on your website are possible conversions. There are many things your SEM site visitors will or can do that you might value, even if they are not contained in functions your website provides and monitors.
In other words, don't let the fact that some valuable customer actions can't be easily captured in your reporting cause you to ignore them as candidates for conversions. Maybe it's worth some manual tracking in the beginning (such as phone calls) of certain types of conversions. You can then go to work on capturing them systematically at a later point.
Pardon us for quoting Gordon Gekko (lead character from the 1987 movie "Wall Street"). But there is some truth and relevance to this statement.
Especially if you are in a business with long term customer relationships. Like law firms. Or marketing agencies. Or just about any B2B relationship - and many B2C as well.
The best example of this type of conversion is the account audit play. Where your potential new customer agrees to provide you with a lot of information about them in exchange for your analysis of their needs - and a big opportunity to sell your services as well. Even though this is not bringing in cash (in fact, it is costing you money), it can be a very valuable conversion type for your type of services.