If you are an entrepreneur starting an online business, money and costs are going to be a big factor. Since you are operating online, you need to have a good website that will do the sales and marketing for you. A good website is an investment and being price conscious, you want to make sure you get the most bang for your buck. The question then is, how do I measure the return on investment (ROI) of my website?
The first thing to consider are your goals. What is the purpose of your website at the current stage of your project? We all know that ideally your website should serve as your number one marketing and sales tool, but depending on what your business needs right now, the metrics for measuring its effectiveness can differ.
It is important to note that some metrics can be difficult to accurately measure the effectiveness of your site. Consider brand awareness. This is important for business big and small, but looking only at your website it can be difficult to measure just how big (or small) it is and how effective you are at communicating your brand.
Before we start calculating your website ROI, let’s first think about what your website’s purpose is. It will usually (but not always) be one of the following high-level goals:
- Generate Leads and Awareness
- Closing Customers
- Customer (Re)Engagement
Which one is most important depends on your company’s goals at the current stage it is in as well as the product or service you are offering. We are looking only at the website in this post, so we don’t care about likes, retweets, and other such efforts. Also, I am going to assume you are maintaining a blog, as search engines are still one of the top methods people use to find information. A blog lets you hit target keywords and keeps your site updated which search engines love.
Alright, now that that’s out of the way, let’s take a look at the metrics we can use to measure how well your website is performing in reaching the goals.
Metrics for Measuring Website ROI
Let’s take a look at some metrics that we can find using Google Analytics. I would recommend everyone to use Google Analytics. Despite being free and not terribly easy to use, it is widely available and can give you plenty of information to start. Third party tools offer more features and ease of use but let’s start somewhere.
Your website should be the attracting people through multiple channels but visitors aren’t enough. You also want them signing up, getting in contact with you, or otherwise demonstrating that they are interested in your company and service. You will, of course contact and nurture these leads to become customers.
To see how well your website is attracting visitors and getting leads, check the following numbers:
- Number of Unique New Visitors
- Landing Page Conversion Rate
- Sources and Referring URLs
First off, the number of visitors is nice to see high but if our goal is to raise awareness and lead generation, new visitors are more important. We also want unique visitors (Users in Google Analytics) because looking at just the Visits or Sessions will tell you every time someone visited a page, even if it was the same person.
The next metric is landing page Conversion Rate, which is measured by setting up goals in Google Analytics. This is the most important metric for lead generation because you are measuring how often your lead magnets are engaged with. If the ratio of visits-to-downloads are going up that means you are getting the right people who are interested in what you are offering. It also means you should have a good contact list with potential customers.
Lastly, the sources and referrals report will show you how people find your website. Now, while this is influenced by marketing - particularly if you look at social media sources - it also shows you how people are finding your site on Google and who is linking to your content.
There are other stats we can look at and use to improve our website - bounce rate, most/least visited pages, for example - but these will give you a quick snapshot of how well your website is performing.
Even though your goal might be to increase leads and awareness, to calculate ROI you need to look at how much money the website is bringing in. Otherwise, it is not providing a return. If you are going purely for leads at this stage, it might not be important to you quite yet but it should still be something to think about.
The next step covers that.
Depending on how your website handles sales, you might need something other than Google Analytics to measure closing customers. We can set up individual goals in Analytics, so we can have goals for lead magnets and we can have separate goals for customers. However, if you are closing customers on the phone or in-store, or going through a third-party service, it might get a little trickier. The important thing to do here is to measure and correlate a customer to a lead to a visit. You want to see the whole funnel and only count those which became customers solely through your website. We are measuring your website’s effectiveness so a referral you made in person to someone to go visit your website doesn’t count. Therefore it is important to map who the visitors and leads are and how they reached your website.
The metric we are looking at here is the number of customers that became customers solely through the website. This means they went through your entire website funnel organically. Not every customer will make only one purchase. It is the loyal customers who come back again and again that are the most profitable for your business so we need to take into account the sum of all of their purchases to properly calculate your business website ROI.
The very basic formula for ROI is:
ROI = (Gains – Cost)/Cost
For our website, we need to figure out what those gains and costs are though, such as the total development costs (how much it cost to design, develop, make, and then launch the site). We also need to take into account the monthly costs of operating the website, which includes costs like hosting and any monthly fees for 3rd-party tools you use (such as Moz or HubSpot) to either host or optimize your website. Once all this information is collected we can calculate your website’s ROI. This is a rough way of doing it - there are many more detailed methods to do it but our worksheet(.xlsx) should give you an idea of where you are with your website.
After completing this calculation you will see if your website has turned a profit yet or not, and if so, by how much. You will also see if any third party tools you use are worth the cost.
Why Do I Need to Know My Website’s ROI?
For some businesses, it is acceptable to make a website and then leave it running and do its thing. Usually, businesses that can afford this don’t rely on the Internet to be their main generator of sales. But an online business is different. It is important to know your website's ROI for a few reasons.
One, if you are thinking of launching a website business, you will need to make sure you have the budget available to do so. You don’t want to start something and find out halfway through that you can’t afford it. It will also allow you to do projections so you can get a ballpark figure of when the investment will get returned.
Second, if you are planning a website redesign, you can see how much it will cost and how long it will take you to recoup it. Website redesigns aren’t cheap and you want to make sure they are effective in reaching your goals. Knowing the ROI of your old website will allow you to compare the two as well as help you plan ahead.
Thirdly and probably the most important, you want to make sure your website and marketing efforts are paying off. Getting customers is great but it might not be the most ideal situation for your company to be in. Knowing the ROI for your marketing efforts and website will help you stay on top of what is efficient and what isn’t. Also, it will warn you if your company is losing money. When you have an effective but inefficient marketing strategy it can be hard to see that the company is actually losing money. Then, before you know it, things get really bad!
Avoid all this by keeping yourself updated on your marketing and website ROI. Give tactics a chance but know when to cut something that isn’t working. Checking in on your ROI every so often gives you the knowledge you need to make your business more efficient.
Do you know your website ROI?
Measure it and start increasing your efficiency!