Return on Investment (ROI)

Calculating the return on your online investment can be tricky. It is sometimes extremely difficult to determine how your customers came to find you, but fortunately the nature of websites makes it a little easier.

Where do Your Customers Come From?

In order to effectively determine which of your marketing efforts are effective, you must measure them. A website is no different. It is a given that whenever a potential customer contacts your business, you should be finding out how they found out about you.

A website can facilitate this process - if a customer fills out your online contact form or subscribes to your monthly newsletter online, you can determine that they came to you through your website. This should help you in determining how much of your revenue is derived either directly or indirectly through your website.

A Simple, Elegant Calculation

(We use this same calculation when discussing pay-per-click campaigns)

E.g. You receive 10,000 visitors to your site in June. You also figure that your website was responsible for bringing in about $10,000 of revenue. This formula would indicate that each visitor to your site is worth $1 to you.

This calculation is useful is determining whether or not marketing your site will be profitable. For example, if a particular marketing effort (like a listing in an industry directory) will bring in about 500 visitors a month then, using the same example from above, you should derive about $500 revenue per month from it. If the listing is costing you $200 per year (+ $75 per year to your web designer to maintain it), then you stand to net $5,675 - a good deal indeed.

But, if that same directory is only bringing in 20 extra visitors a month, then you'll lose $35 per year - not a good deal.