Measuring ROI Costs and Benefits from Your Web Site

Calculating return in online investments can drive design and functionality decisions for your business.

Kia Motors America Inc. values its online customers; it just doesn't value them equally.

The company assigns different numeric rankings to Web site visitors who request contact from a dealer, download a brochure or ask for updates, says David Schoonover, online and CRM marketing manager at the Irvine, Calif.-based car manufacturer.

Kia gives higher scores to visitors who, based on market research, are the most likely to actually buy a car (those who request contact from a dealer) and lower values to those further away from a buying decision (the keep-me-updated group).

Schoonover says Kia uses those figures to calculate the return on its online investments and drive design and functionality decisions.

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"Whoever isn't measuring ROI on their Web site is crazy, because it is measurable," he adds.

IT has to justify every dollar it spends, so it's crucial to understand how technology investments drive business results. Yet analysts and IT leaders say many companies still don't calculate ROI on either individual online functions or their overall Web sites, leaving uncertainty about the sites' effectiveness and what could be improved.

But there are best practices for measuring Web site ROI -- even for sites like Kia that don't handle sales transactions. Those practices mirror the considerations and calculations used to rate the success and effectiveness of any other IT investment.

Defining ROI

ROI is really a measure of what a company cares about, says Michael Kogon, CEO of Definition 6 LLC, a consulting and IT services company in Atlanta. "If you measure everything but still don't know what's important, then you can't measure return," he says.

For a useful measure of ROI, Kogon says, understand the business objectives behind the site and then measure the site based on achievement of those goals. A professional services firm, for example, might have a Web site objective of attracting new customers. It could measure the number of white paper downloads, because experience shows that a certain percentage of potential customers who read a firm's white papers are likely to become actual customers.

But ROI needs to look at costs as well as benefits, says Megan Burns, an analyst at Forrester Research Inc. "What does it cost to build this functionality and to maintain it? What does it cost to be used? How many people use it? What's the alternative if we didn't have it on the Web site, and how much would that alternative cost us? That's the kind of thinking you have to have," she says.

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