In the first installment of this two-part series, we reviewed
the 4 C’s of Web failure: Culture, Customers, Cost and Complexity
(Website Magazine, November, 2009).
Failure to understand the culture and customers a website’s intended
audience can sink any project, as can presenting users with
an overly-complex proposition. However, every website or project
must meet its financial requirements to even be considered. This
month we take a closer look at cost — notably, justifying the development
cost of websites and projects.
Your website development plans should be able to withstand
the same financial scrutiny as other capital expenditures of your
business. Before spending a nickel on a website project, you must
have a rational return on investment (ROI) and payback period
identified for the resources required to see the project through to
completion. If these measures do not match your standard thresholds
for approving expenditures, the project should be carefully reconsidered.
The real challenge is developing a financial rationale that will
be accepted by your company’s decision makers. There are widely
accepted accounting rules for measuring the financial viability of
expenditures for buildings, equipment, and other real goods. But a
website is much harder to pin down and the people holding the
purse strings are sometimes skeptical of attempts to quantify the
value of a website, apart from actual sales on an e-commerce site.
Fortunately, there are resources available to help determine the
ROI of your website. The better ones include value generation
through direct sales, lead generation, incremental sales, and cost
avoidance. But more important than the analytical tools you choose
is getting them endorsed by your financial team. Collaborate with
your finance department on the preferred method of justifying the
cost to build or redesign a site. Work to get this method standardized
within your organization to add credibility to your funding requests
and to smooth the road for future Web development work.
Every analytics software solution should provide ways to determine
the value of specific actions taken by your users. For example,
you produce a white paper for download — if a visitor fills
out that form, is it worth two dollars or twenty? The only way to
know for sure is to understand the true cost of your website.
When you understand what your time is worth, the cost of advertising,
Web hosting or software; then you can calculate your
ROI (return on investment).
There are many tools on the Web that make the process easier
but you will still need to know some benchmark data; including site
traffic, monthly website cost, conversion rate and the average profit
per sale, among others. The ROI calculators listed here will help
determine the impact of different advertising levels, traffic levels
and conversions rates versus time spent for marketing, design, social
media and e-mail.
• Website ROI Calculator from IndexTree.com
• Website Design ROI Calculator from SalesGrowthGroup.com
• Usability ROI Calculator from UserEffect.com
• Social Media ROI Calculator from DragonSearchMarketing.com
• E-mail Campaign ROI Calculator from WinningWare.com
Every project comes with a price tag. Be sure to take these important
considerations into account in the very early planning
stages. You will want to have some realistic expectations. And so
will your company’s decision makers.
About the Author: Michelle Kissinger is a marketing manager for EnerSys, the world’s
largest industrial battery manufacturer. She is a freelance writer and received
her Master of Business Administration form Alvernia University
in Reading, PA.