Oct 14 2009
An effective website isn't a one-time deal. And contrary to the old saying, just because you build it, that doesn't mean people will come flocking. Even if they did, that doesn't mean you'll be making every sale and increasing your profits.
Sadly, some variation of the above is what many small business owners think and believe. Business may not be doing very well and they might figure that creating a new website or having their current one redesigned is going to solve the problem. The thing is, many of these businesses don't really know what the problem is to begin with. And, because they don't know what the problem really is, they can't communicate it to their web designer. So instead of addressing and solving the problem, they're back at square one.
The good news is that there's a very straightforward way to figure this all out from the get-go. It all boils down to three little letters: R. O. I.1
Just what is ROI?
Simply put, ROI (return on investment), is the ratio of money gained or lost on an investment relative to the amount of money invested.2 In plain English, it's how much money you're getting back from the amount you've spent. For your site, this means, taking the amount you've made as a direct result of your website and subtracting how much you spent having your site designed. Admittedly, that's a little black and white, especially when you consider that not every website has a product to sell.
That said, every site has something to sell, be it information, products, services, memberships, whatever. The point is, regardless of what you're effectively "selling", your site has some sort of a return (negative or positive). Bottom line here: any site can be measured for ROI.
Design directly impacts your ROI
To say that design is all fluff and doesn't impact a business' bottom line is a complete falsehood and flat out naive. While it's arguably difficult to measure design in and of itself, it can be measured by using ROI and various testing methods.
For example, the placement of an email newsletter sign up form can make a difference in the number of sign ups. The size, color and font used for a button or link can directly impact how often it gets clicked on. The design and functionality of a web form on a site can just as easily deter users from filling it out, as much as it can encourage them.
The part of all this that gets lost on both, clients and designers alike however, is that these decisions need to be made based on data. Companies spend hundreds to tens of thousands of dollars to have their website redesign based on nothing more than a gut feeling that something isn't working. While it may seem that designers get a good deal out of that (getting paid for redesign after redesign), the opposite may actually happen. A client will likely decide to hire another company because the designer didn't bring the results the client expected. So, the designer is left with one less client and the client is left finding themselves with the same under-performing site (albeit with some shiny new graphics) and just a gut feeling that something is not working. All of that can be avoided with one 4-letter word: data.
How to measure ROI
One of the keys to ROI is analytics, or web stats. Analytics does not mean the number of hits your website gets each day, week or month. In fact, you know that whole idea of page hits? Ditch it. Toss it. Throw it away. It's absolute garbage.
Analytics gives you much more interesting information than page hits; information that can actually help increase conversion and increase your sales. Analytics can easily help you identify any weak points that diminish your ROI, such as the number of visits your contact page gets, compared to say, the number of completed form submissions. This kind of information allows you to address and fix the problems so you can increase conversions and turn that red into black. There are a few areas that analytics can help shine a light on your ROI:
Penetration
[unique visitors to your home] ÷ [unique visitors]
The percentage of visitors that go beyond your organization's home page.
Bounce Rate
[visits to page] ÷ [site exits from that page]
This is the number of site visitor that leave your site from a specific page (although it can be measured for your entire site as well). While I show the "forumla" above, if you're using Google Analytics, this is automatically calculated for you.
Conversion
[unique visitors taking a specific/desired action] ÷ [unique visitors]
This is perhaps the most common of all and refers to the percentage of site visitors that actually take an action you wanted them to (such as submitting your contact form, making a purchase or signing up for you email newsletter). Using Google Analytics you can break this down even further to see where people are getting hung up and leaving in a particular process or path (such as a shopping cart).
Site objectives give your data a foundation for measurement
Of course, the data you can gather from analytics doesn't mean anything if you don't know what your site, marketing, or sales objectives are. Having quantifiable objectives is critical for any website. You need to know what it is you want your users to achieve by visiting your website. Are they supposed to read your blog? Learn more about your services? Buy your featured product? Fill out that contact form? A combination of steps?
Knowing the goal of your website gives you a foundation from which to build your data. For instance, if you know that you want to reduce the number of support calls your support team gets, then it's likely an FAQ page or support forum will help. The number of visits and interaction on those kinds of pages gives you a point from which to measure and compare to the number of calls. It's impossible to determine if your site is making things easier on your business, increasing your business or increasing your sales if you have nothing to compare or measure against.
Just a starting point
All of this is fine and dandy, but it really is just a starting point. Once you're able to start measuring your website's ROI, it's important to continue to improve it. Look at where you are with your ROI, tweak some things, give it some time, then repeat. Doing so will also ultimately give you your threshold: the magnitude or intensity that must be exceeded for a certain reaction, phenomenon, result, or condition to occur or be manifested. When you've identified that, you can start thinking about a redesign or an innovative new way to further improve your ROI and really create a boom in sales.
1ROI can (and should) be measured for any part of a business and for the overall operations of a business. The scope of this article, however limits it to within the realm of websites and the impact they can make on business. 2Web Design for ROI, Lance Loveday & Sandra Niehaus