Your website’s ROI (or Return On Investment) tells you exactly how much money you’re going to make from your website per year. Essentially, knowing your website’s ROI is knowing whether it’s a viable option for you to keep paying out money on the running costs of your website, or whether you’d be better off calling the project altogether and seeking clients in more old school and traditional ways. In order to understand your ROI, you need to know a few key things first.
1. How Much Is Your Website Costing You?
You’d be surprised by how many small business owners don’t actually know the answer to this first, and most vital question. If that’s you, then there are simple ways for you to work it out. Think about the initial setup fee you spent to get your website up and running to begin with, and then also think about your annual domain costs, monthly hosting & maintenance fees, SEO, marketing, etc. Once you know this, add them all up and you’ll have your running costs!
2. How Many Visitors Do You Get Per Year?
This is something you can use Google Analytics for, but it’s something you should monitor constantly too. You may have been getting 5,000+ average annual visitors in your first year or two, but that doesn’t mean the number is the same now. If you haven’t recalculated your average yearly visitor count for a while, then now is the time to do it – it’ll help you in working out your website’s ROI later.
3. How Many of These Visitors Become Clients or Customers?
Knowing this involves knowing something that we refer to as a conversion rate. Basically, how many of those annual visitors actually make inquires about signing up for services or becoming clients of yours because of your website? This is important because although some websites generate traffic in the thousands, they may be looking at annual visitors who consider signing up for services as being somewhere closer to the 100’s in terms of numbers. Working out your conversion rate is simple enough. Just divide the number of people who made inquires on your website last year by the number of visitors you had as a whole, and then multiply your answer by 100. The percentage you get is known as your conversion rate. Most businesses operate at around a 5%-20% conversion rate in terms of the number of visitors that are converted into potential customers or clients, so if you’re below that you might need to think about making some changes, but we’ll talk more about that towards the end of the post. Conversion rates can be different depending on the industry, some industries convert quicker than others.
*Remember, your conversion rate is not your close rate. Your close rate is the number of people who actually become clients or customers compared to the number of people that contacted you via your website. Again, divide actual clients or customers by the number of visitors who inquired and multiply by 100. This is your close rate, and it’s really important to know it so you can see if you’re in line with the average (which is around 20%-30% by the way).
4. How Much Are Your Clients Worth?
This is straight forward enough, you simply divide the amount of money generated from your site by the number of clients or customers you gained from there, and this will tell you the average ‘worth’ of each customer from a strictly monetary point of view. This is important because as you move forward with your website, you can be confident as a business owner about how much you can expect to make per year based on your clients’ worth.
Calculating Your ROI
So, now you know all the basics, you can finally work out your ROI. It’s another calculation unfortunately, but it is the last one! Multiply the average amount that you make per client or customer (the answer to question 4 above) by the annual number of clients or customers you have (that’s your clients or customer not your visitors). Once you have that answer, divide it by the cost of running your website (question 1), and you’ll have a ROI %. If the answer is less than 100%, you’re losing money. But fret not, you don’t need to scrap your website just yet!
Imagine your website’s ROI as a chain. Each of the four questions above is a link in the chain that ultimately makes up your ROI, and there could be a problem at any of these points. As a small business owner it may be difficult for you to see what needs to change, but website re-designers are wonderful at identifying the problem and fixing it for you.
They will be able to design your website in a more streamlined, effective way to generate a higher ROI for you. Whether it’s making inquires and CTA’s (call to actions) clearer for potential customers, streamlining the navigational tools on your website to encourage customers to the services you offer, or even simply working on search engine optimization to make your website more visible to attract more visitors. A professional website designer will redesign your website to make it work for you, and ultimately make you far more money than you’re making now. It’s a win-win!
Contact JPG Designs, to get started on your new website and ensure that you will get the best ROI for your website and online marketing.