Take, for example, a retailer's Web site. The retailer can easily determine the value of a purchase online compared with the investment it takes to handle that sale. But it can also calculate the value of, say, the store-locator function, because a certain percentage of Web site visitors who use that feature will actually go to a brick-and-mortar store and spend money that they might not have spent otherwise.

"What ROI models allow you to do is run through the 'what if' scenarios so you know if it's falling on the positive or negative side and by how much," Burns says.

For instance, FedEx Corp. knows how much it costs to handle a package-tracking request online versus how much it costs to take that request at a call center. The shipping company also knows how much it costs to complete a supply request online versus processing the request through a paper order or phone call, and how much it costs to do an online invoice adjustment compared with what it costs to have an agent do it.

David Zanca, senior vice president of e-commerce technology at Memphis-based FedEx, wouldn't disclose figures, but he did confirm that online processing is generally the least costly method of handling transactions. Imagine what it would cost if the 4 million daily tracking requests on FedEx.com suddenly shifted to the company's call center.

"We have a tremendous amount of information about traffic and flow, and we watch very carefully about how we place things to drive activity," Zanca says.

Toward better decisions

Understanding such ROI dynamics is key to making better decisions about Web site functions, design and, ultimately, spending, says Forrester analyst Harley Manning. "The question isn't how much you're spending; it's, what kind of return are you getting for your investment?" he says. "If I say it's going to cost you US$3 million to redesign your Web site, you'll say, 'Wow, that's a lot of money.' But if I said, 'Our Web site generates $12 million in net profit, but we can increase the conversion rate and generate $37 million in net profit with a $3 million investment,' you'd take that deal any day."

That's something Bank of America Corp. understands. E-commerce and ATM executive Sanjay Gupta says the Charlotte, N.C.-based bank analyzed its online customers and found that they were not only more loyal but also had 15 percent higher deposit values and 20 percent higher loan balances than offline customers. With those figures in mind, the bank continually creates and improves online functions to bring and keep customers online. For example, Gupta says, the bank introduced online chats about two years ago, so customers can now access a specialist right away if they can't find what they want on the site.

"By doing the right thing for the customer," Gupta says, "we see financial benefits."