How to calculate your website ROI

eCommerce ROI doesn't start, or end, with a simple eCommerce transaction and the shipment of goods. Equally, a website that is not "selling" in the traditional sense of the word can still have a measurable, and vital, ROI and still be part of your "eCommerce" strategy.

As an eCommerce Solutions Provider, many of our projects start with a simple question - Is your website giving a Return on Investment?

In this blog post, we will explain how we measure website and eCommerce ROI and the five questions we would recommend you ask your eCommerce Solutions Provider today.

Question 1: What are your eCommerce Goals?

The first step in measuring ROI is to establish what has value.

Here are a list of things that your website could be doing for you that can have a real, or attributable, value.

1. Selling Products
2. Generating inbound email enquiries
3. Generating inbound telephone enquiries
4. Capturing website visitor demographics
5. Capturing newsletter sign ups
6. Capturing event bookings for seminars, customer days, or web casts
7. Capturing new Facebook and Twitter followers

The first of these is obvious - if your website is a trading eCommerce website, its primary goal must be to sell product.

However, it is surprising how few eCommerce managers and website owners attribute any value to the other goals that the website can have, despite the fact that other parts of the business would be paying for this activity (buying mailing list and customer profile data, for example) and that it has clear value to the business.

The key in establishing website goals is to ensure that each goal can be linked to a clear and distinct action taking place on your website. Adding a broad goal such as "Promote our Brand" to your list of goals is counter productive, unless you have a very clear metric by which you want to measure this (in which case, that metric is what should be on your list).

As a rule of thumb, if you can't count it ... it doesn't count, and you can't use it as a KPI with your eCommerce Solutions Provider or your business.

Question 2: What are your eCommerce goals worth?

Once you've identified the list of eCommerce goals that your website should be fulfilling, you need to attribute a value to each goal.

Attributing a value to an eCommerce transaction is relatively simple (see [The Real Value of an eCommerce Transaction], coming soon). For other goals, a simple way to attribute value is to work backwards from costs. What would you (or what do you) pay for a lead by email, or an inbound call? What did it cost to promote your last webcast, and how many people did it attract? How many outbound calls do you make to get a single solid lead, and what do they cost?

If you have sales data to add to this mix, the calculation can become more meaningful. For example:

Value of eMail Enquiry = Average Value of Sales resulting from eMail Enquiry / eMail Enquiry Conversion Rate

In this example, we only attribute a value to the eMail Enquiry equal to the average value that it might generate, if it converts.

It is not vital that these attributed values are accurate to the nearest penny or cent; you will be working with averages and, hopefully, a large number of completed goals. The key is to review the values that you are attributing to your eCommerce goals on a scheduled and regular basis, and adjust your calculations accordingly.

Question 3: Are you measuring your eCommerce goals?

Google Analytics provides goal tracking as part of its standard suite of tools, including the ability to attribute a monetary value to non-eCommerce goal conversions. Analytics, however, is a heavy weight tool and requires an understanding of the web, and its terminology, to leverage effectively. It's perfect for making sure you keep track of what has happened, but its not always the best tool for presenting that data back to a business.

Instead, consider putting together a simple spreadsheet that keeps a track of your website costs and the cumulative values of your completed eCommerce goals. This is the simplest way of working out if you are getting value from your eCommerce website, and from your eCommerce Solution Provider, and communicating this value within your business.

For a great example of this, have a look at this website ROI calculator from Google

Question 4: What are you doing to make sure your goals are achieved?

The most difficult part of taking an ROI driven approach to evaluating your eCommerce website is deciding what to do if the ROI falls short of your targets, especially if the costs for the eCommerce website are perceived as being high.

Like any business goal, your eCommerce goals will not be achieved without effort and focus. If a particular goal is not generating a return on investment, the first question you should be asking is ... why?

Try checking the following things:

1. Does the call to action actually work?
2. Is it simple for the customer to complete the action?
3. Is the call to action for the eCommerce goal clear?
4. Is the call to action for the eCommerce goal prominent?
5. Is the call to action for the eCommerce goal featured on enough pages?
6. Is the call to action incentivised?

Once you've taken a look at the checklist above, agree some actions, and make sure they are completed in plenty of time for you to assess whether they have improved the ROI of your website. Remember, this is not a one-off process, but a cycle of measurement and improvement that should continue for the lifespan of your website.

Question 5: Does your eCommerce website do your business justice?

In our opinion, this is a question to ask yourself every six to twelve months. Take a look at half year, or year's, worth of eCommerce activity and ROI. Was it worth it? Has the eCommerce strategy made you money?

Hopefully the answer to both these questions will be yes, but if not, it is time to take positive action and review questions 1-4 with your eCommerce Solutions Provider and make a plan for the next six months of eCommerce activity.

What to do next

If you would like us to take an impartial view on your eCommerce strategy, website or eCommerce goals, and help you work to improve your ROI, please contact us, and ask us if we think your website does your business justice.

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