The 4C’sof Web Failure: Part Two

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.

Cost Justification: 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.

Calculating ROI: 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.