White paper - Calculating website Return On Investment
– what is your website doing for your business? |
| Having a website for your business is one thing,
but is it working hard for the business, or just squatting in
cyberspace? The answer, surprisingly, is that many companies
do not know. You could be seriously underestimating its value
to the business. Or you might be failing to make the best use
of your website, or worse still, actually damaging your company’s
business and brand. It might look slick, but without measuring
website performance, you’ll never know what is going on
under the bonnet. |
| A majority of companies still do not carry out
any web analytics at all. We’ve seen any number of companies
over the years spend tens of thousands of pounds on a costly
re-design because of a vague feeling their website doesn’t
work – and then repeat the same mistakes because they
don’t carry out analytics first to find out what the problems
are. Some of the companies that do limited analytics do not
fully understand what they are looking at. Many people still
talk about the numbers of hits their website receives mistakenly
believing that these are the same as either page impressions,
or worse, website visitors. Sometimes a little knowledge is
a dangerous thing. |
| Carrying out proper web analytics is vital to
determining the true value of your website to your business.
There are many aspects to analytics in assessing website performance,
such as using Key Performance Indicators. The bottom line though
is to try and calculate its value to the business as a whole
– the website Return On Investment (ROI). |
| For an e-commerce website, this might look fairly
straightforward. Determining revenue through direct sales and
the lifetime value of repeat customers gives the income stream.
Whilst your website might not generate income directly, tracking
the conversion rate of enquiries made by email or telephone
calls to sales (and the average sale value) will give you a
cash value for those enquiries. |
| Similarly, whilst some websites are technically
information-only, they play a part in the sales process by referring
leads to partner websites that handle sales. Tracking those
leads by using redirect pages and then working with your partners
to determine leads to sales conversion rates and average sales
value also provides a monetary value attributable to your website.
|
| Cost avoidance is another area where your website
could be helping your business without you realising it. If
your website can reduce the number of enquiries made to a call
centre it could save you a fortune. IBM claim to save $2 billion
a year in call centre costs with their online support website.
Even for a small business, with limited human resources, key
personnel could by using their time more profitably than answering
questions that could be answered, for example, in a Frequently
Asked Questions section of the website. Calculating average
costs for a phone call, email and a help page request –
which will vary from company to company – should enable
you to calculate savings. A word of warning though – because
a customer reads a help page, doesn’t mean an issue is
resolved to their satisfaction. Making help resources available
that are both effective and cheaper is an art form. |
| For e-commerce and information-only websites alike,
there are also more imaginative ways of determining website
ROI. Take, for example making white papers, annual reports or
product catalogues available to download. The baseline cost
of printing and posting an annual report might be £5.
The cost of downloading the same document will be far less,
say 25p to reformat the document and server costs. 500 downloads
a month would equal an annual saving of £28,500. |
| So if you are still thinking in terms of the number
of hits your website attracts, then you are missing out on the
information that will help you calculate the true value of your
website to the business. But it is never too late to start;
your competitors probably don’t know the value of their
website either, so you can still gain a competitive advantage
by beginning a program of web analytics. |
Better website ROI |
| Calculating Return on Investment is the starting
point, not the final goal. Once you know what you have an initial
figure, you want to look at ways to better website ROI. |
| Web analytics can help you to identify any weak
points in your website offering that undermines your conversion
rates. Are people abandoning shopping carts? Are visitors emailing
you in appropriate numbers? Are visitors abandoning the website
at specific pages? Once you have that information you can address
the problems, and start to improve website ROI. |
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Related pages |
| better website
ROI from behaviour analysis |
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