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August 16, 2012

5 Tips on Measuring Your Websites Return

Author: Valerie Baker

We’ve practically built this company on being the experts when it comes to web design pricing. Years ago, our sales director at the time – Scott – wrote the post with my guidance and we’ve been enjoying the traffic, leads, and fame (and flames) ever since. From this came various media mentions and other great opportunities. But, I’m not going to talk about how much a website costs.

Because, although that’s one of the most searched things – by you a business owner, entrepreneur or simple researcher – it’s not the most important.

Instead this post is about how to measure your websites return.

Starting to Measure Your Websites Return

1) Measure Your People

I would start before you even dream of what your website looks like – with your people – start with you  – both what  everyone is paid, as well as everyone’s value to your company.

An Example: 

Let’s use an example of a situation I just experienced… a high up financial person at a company (with a tech background) opted to build out  a website for his firm.

I’m estimated he’s paid approximately $35/hour (let’s say the cost to the company is $50/hour with overhead) – and his hourly billable rate to the firm or opportunity cost to the company is (again estimated) at $150/hour.

To conclude he costs the company in salary/overhead: $8000/month and he makes (when working at 100% efficiency at his normal job): $24,000 in revenue, netting the company $16,000 each month.

He built a website for his company spending approximately $1000 on software, and a total of 2 months on the project. Not bad.

But, remembering his cost/value to the company A TON of money was just spent. Factoring in the opportunity cost of his time – if he spent the same time making the firm $150/hour he would have netted $32,000 (after expenses!).

The end result was a website that truly cost the company $16,000 worth of this employees time, $1000 in software they will rarely use, and a potential $32,000 in unrealized profits because he couldn’t concentrate on his job – all for a site that wasn’t any better than your average run of the mill site. A cost of nearly $50,000! – it’s going to take a ton of performance to reap the benefits from such a costly website. And marketing hasn’t even started!!!

The kind of site in question would typically run $7500 – $10,000 to outsource to a firm like ours, and I know it’s worth every penny… but we’ve just started learning how to measure your website’s return.

You have to start to measure ALL the costs in developing a web/Internet marketing plan – the personnel, equipment, marketing, etc.

2) Measure Your Marketing

The specifics of Internet marketing are outside the scope of this article, but it’s important that you measure your marketing. I’m assuming you’re going to be performing Internet marketing for your website/business here.

I’ve written about it time and again – that, although you can receive SOME benefit from building your website (traffic, sales, etc.) it is NOT to be expected – building a website is like building a building in a desert – it’s the steps you do after – the roads that you erect – that will truly impact your business.

But, it’s absolutely useless if you don’t measure your marketing. And this doesn’t just mean – how much is going in and how much is going out – it means, how much goes into each particular portion (how much money/time/personnel/resources) are spent on Facebook for example – and how much traffic (and business!) is that particular medium generating.

With new analytic tools & reporting this is simple for your website to track. For the softer things/businesses create processes IMMEDIATELY to track the origination of phone calls or walk ins.

I’ve seen successful businesses have lopsided marketing budgets – where the smallest $dollar amount$ was going to the most effective  form of marketing – once we flipped things around (or eliminated the poor performers completely) business exploded – WHILE LOWERING THE BUDGET!

Be Measuring!

3) Make Sure Analytics is Setup

eMore than any other thing, make sure you, your web team, etc. has analytics installed, with goals/conversion tracking setup (easy to read reports on what business came from what).

This then needs to be looked at on a regular basis and ties into the previous item and the next two…

4) Look at Softer Things

As I mentioned in #2 above – you MUST be measuring softer things, particularly if you are in a business where things are executed over the phone, or in person.

The Internet is how people find everything – even though they may not contact you via the web, that phone call or contact MUST be attributed to that space.

We have a client that has been struggling with this for years and, I believe they are misallocating a large portion of their marketing budget to more conventional marketing. Call-ins keep coming, but because clients aren’t being properly vetted, they’re being attributed to other marketing/sales initiatives and a lopsided marketing budget is in place.

5) Measure Over Time

Have perspective. A $7500 website that sells a product that costs $100 needs to sell 150 to break even (factoring in profit margins).

The day that website launches – technically the project is $7500 in the hole and the thing is a financial flop. But given time, and some Internet marketing sales will come in. Often, Internet marketing projects are very front loaded – with a large expenditure up front – curtailing quickly – but a similarly FLIPPED graph appears on performance/profitability – it can take a while to get traction – but once you do performance often accelerates exponentially.

Measuring over time is an important acquired skill. Measuring performance week-to-week for example, it’s important to choose similar days of the week (as we’ve noticed people’s surfing patterns are very much mated to a particular day of the week in certain industries). In a broader sense – determining when to look at performance and make a cut off on – did this work or didn’t it – is also important. Finally, understand with larger expanses of time that many more factors play into your website’s performance/Internet marketing: macro trends, industry shifts, new product launches/offerings, behavioral changes in users, etc. – not to mention it’s a culmination of all of the technics/tactics your team has executed over that period. In this sense larger trends are helpful when it comes to direction, but can sometimes muddy your ability to clearly see what specific things you did led to results.

If you’re curious about how to better measure your website’s return, feel free to leave a comment, ask a question, or contact me.

Valerie Baker

Valerie is the Senior Account Manager & Project Manager here at Atilus.

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