E-commerce consulting firms have an easier time of it, with an actual dollar value created by the website to use as a yardstick. But what can you do if your website is designed as a brand-builder, a lead generator, or an information resource? You certainly don't need to resign yourself to ROI ignorance. We look at how to convert any website action into a dollar value.
One half of the ROI equation is easy to determine - the 'Investment' part. It is quite easy to use your accounting package to categorize spending on the website, measure and track it over time. This is the first part of the ROI puzzle. Online marketing agencies often recommend that you split up this part of the equation into separate parts.
For example, what ROI did your link building activities get you? What ROI did a specific campaign create? How much are your press release distribution and article distribution activities worth to the company? These are definitely measureable. The other simple, but often overlooked measurement, is the lifespan of the project, so that spending can be averaged over time.
Internet marketing services and web analytics firms also use several other variables to determine ROI. They (or you) will need to know the take-home profit for the company, when a lead converts into a sale. For many firms, the most useful method for calculating this is taking an average of all products and services.
Depending on the accuracy of the information you need, you could categorize your products or services into groups, and assign an average profit to each of those groups. Every time you ask your web analytics package for more specific information, though, you do complicate the process. Best to start simply, and work towards more detailed information.
You will also need to know the average conversion ratio on your website as a percentage, either of traffic, or of leads. Internet marketing experts define conversion activities in many ways- downloading a white paper, subscribing to an email newsletter, becoming a Twitter follower or 'Digg'ing an article, as well as the more standard measures like making an enquiry, asking for a call-back or actually purchasing online.
If your website sends you 100 measureable leads over the lifespan of a campaign, and 2 of them make a purchase, then your conversion ratio is 2%. Conversion ratios will change according to the particular activity.
You then simply need to:
Multiply the number of leads over the campaign
By the average conversion ratio
By the average profit for a sale
Then subtract the total investment in dollars
Some questions will certainly remain, and these will be different depending on what business you are in. Internet marketing services and web analytics providers can help you determine ratios and percentages, as well as tracking the number of leads. Brand building success can be measured with market share, as well as the help of viral marketing experts.
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