Calculate the ROI of your CRO program

1. Calculate your direct cost of acquisition for each visitor.

For example, if you pay $1 per click on a Google Ad, your cost to acquire each visitor would be $1.

2. Add indirect costs, such as employee time, to run your PPC campaigns and other operating expenses. Estimate a total per month and divide that cost by the number of visitors.

This is hard to do and will probably involve a lot of guessing. However, make at least some attempt to consider indirect costs.

3. Add your direct and indirect costs together, and that will give you an approximate cost of acquisition for each visitor.

Don’t worry if your cost per visitor is not particularly accurate. Even a rough approximation is better than having no figure to work with at all. Measuring something is better than measuring nothing, as long as you are clear that the figures you are using are estimates.

4. From your total cost per visitor, calculate your cost per conversion.

For example, if your total cost per visitor is $1 and 1 in every 50 visitors convert, your cost per conversion is $50.

5. Calculate the average total lifetime value of a customer. This includes all the purchases they will make as a customer.

It is important to look at lifetime value, as conversion optimization will encourage repeat orders.

6. Calculate the return on each conversion by taking the customer's lifetime value and subtracting the cost of acquisition.

7. Monitor improvements in conversion from CRO activities and times any additional conversions by your return on each conversion.

If your site is about lead generation and not ecommerce, identifying a conversion can be harder. However, it is still possible. Start by monitoring the number of leads your changes generate. Next, talk to your sales team and discover how many of those leads turn into clients. Finally, you can calculate how many additional conversions the optimization has generated by taking the number of leads and dividing it by the percentage indicated by sales.

8. Calculate your direct and indirect costs of carrying out the CRO activities. Then subtract those costs from the return on conversion. This gives you the revenue on your CRO activities.