Why is return on investment important for a business?
Return on Investment (ROI) measures how effectively your website uses the resources you have invested in it. It tries to figure out how much a website is worth in terms of its cost.
Simply put, because businesses exist to make money, they have to look at their bottom line—their return on investment.
How do you calculate ROI?
The fundamental formula for determining website ROI is profit generated by the activity divided by cost of the activity. While it’s easy to calculate the cost of your website, marketing, and advertising, it can be more challenging to determine what constitutes profit.
The Following Factors Impact ROI:
How many people are visiting your website?
Website Traffic
Calculate by dividing the number of visitors to your website by the number of months the website has been active.
Get More TrafficHow many leads turn into customers?
Closing Rate
Calculate by dividing the number of visitors to your website by the number of months the website has been active.
Close More LeadsHow many people are reaching out as leads?
Conversion Rate
Calculate by dividing conversions per month by your monthly website visitors.
Convert MoreWhat is the lifetime value of each customer?
Customer Value
Companies should track revenue by user. Then, track trends, marketing to your preferred audience type.
Track Your Data5 ways to improve your website’s return on investment
Sometimes a business is so focused on the content today’s website visitors want to see, they forget about its ROI.
Here are five different ways you can increase your website’s ROI and ensure every single one of your visitors is making you as much money as possible.
1. Increase the number of unique visitors to your site
It may seem like an obvious one, but simply increasing the number of unique visitors to your website can dramatically increase its investment return.
How? Because every time someone visits your website, they have the opportunity for a ‘conversion’—whether that’s making a purchase from you, signing up to your mailing list, clicking through to another website, or just leaving their contact details in exchange for more information from you.
Analyzing historical data from Google Analytics is key here and will highlight what numbers you should be going for in terms of new unique visitors per month. Obviously, if your business is based around selling products online, this figure will be much higher than if you’re a local book shop or tradesman website, for example.
2. Improve your landing page conversion rate
This is where you can make or break a sale by tweaking, testing, and analyzing different elements of the first page people see when they come to your website—also known as your ‘landing’ page.
3. Drive more traffic to your site with paid marketing
Once you’ve mastered the art of increasing unique visitors organically (using search engine optimization [SEO] and social media, for example), you can start getting more visitors to your site by investing some money into paid marketing.
4. Focus on customer retention rather than acquisition
This is another tip that may seem obvious, but it’s all too easy when wanting to build a successful business just to focus on bringing new customers in through the door without considering how many repeat purchases they’re going to make over time. There are many reasons why people stop buying from a business, not least of which is being sold to by an unhelpful member of staff.
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5. Enhance website usability
In this age of being bombarded with content online, a major reason a website’s ROI can suffer is not having a user-friendly interface. All too often, businesses have great products but horrible websites, which result in visitors bouncing off before they’ve had the chance to convert into making a purchase or signing up to your mailing list.
Unless you can make your visitors fall in love with your website, their hard-earned cash will likely end up somewhere else.
So there you have it—five different factors that can increase the ROI of your website and therefore help improve your business’s profit margins too.
