Calculating the Value of Optimizing Your Web Site

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In many columns I've written over the past four years, I've discussed the many opportunities to improve a Web site. The real issue is determining where opportunities exist and what initiatives to pursue.

Resources and time have always been in short supply compared to the opportunities and initiatives people want to roll out for any Web site. In a slowing economy, this is more of an issue than ever.

How many ideas for improving your Web site have been tossed around? What percentage of those will get accomplished in the next 30, 80, or 180 days? Most likely, the number of opportunities greatly outweighs the number that can actually be accomplished over the coming months. If this isn't the case, you aren't looking hard enough!

In previous columns, my colleague Shane Atchison and I have outlined the power of assigning dollar values to different site behaviors and monetizing the Web channel to better understand the impact of different online interactions with your business.

The ClickZ/ZAAZ Optimization Calculator allows you to forecast a potential ROI (define) with just a few easy entry fields. After you read this column, you will want to click here and bookmark the calculator page. There are a lot of different ways to determine how to monetize visitor interactions, but this is one way that we use internally at our agency to help our clients prioritize opportunities. But the process can obviously get much more complex.

Now let's get into how to use the tool, which has three key sections:

• Current site behavior. In this section, enter some base-level information about your site and conversion goal. If you are making a change that will impact more than one key conversion or behavior, you fill the entire calculator out separately for each behavior that will be impacted.
  
  
  • Total average monthly site visits. This is pretty straightforward. Use numbers from last month or the average for the past few months.
    
    
  • Average monthly success events. Focus on the key behavior you are trying to change. Is it getting more checkouts, generating more signups for a Webcast, or getting more lead-generation forms filled out? Think about what you are trying to achieve from a site change and what your goal of that test or change is. If you are a lead-generation site and you want to increase one type of lead through a change or test, enter the average number of leads you get on a monthly basis in this field.
    
    
  • Success event conversion rate. This is calculated based on the previous two inputs.
    
    
  • Enter average value of a success event. This is one of the hard parts: what is the value of one additional behavior to your business? Continuing with the example from above, estimate the value of one additional lead to your business. Consider the closing rate of that lead offline and similar. I have examined how to identify that in past columns, such as "Increase Your Post-Online Conversions."
    
    
• Potential improvement. In this section of the tool, we look at scenarios of increasing performance and a given initiative's cost. With any site there are two key ways (yes, there are others) to increase the Web channel's monetization: increase the conversion rate or drive more traffic to the site. You can, of course, increase the value of each conversion, but we aren't looking to capture that in this view.
  
  
  • Increase site traffic by X%. Does the initiative or opportunity include driving more traffic to the site? If so, how much?
    
    
  • Increase site conversion by X%. How much do you estimate you'll be able to improve that conversion rate? This will be tough to quantify the first few times, so you might want to start with a conservative range for a few different opportunities, then take the average estimated value for each of them. This should be based on what you know about the problem you are trying to solve, understanding the data available to you, and so forth. Again, you will get better at this over time.
    
    
  • Estimated cost to improve performance. How much will the initiative cost? Consider internal costs as well as any external agency costs. Is it $10,000 or $200,000 or more?
    
    
• Estimated impact of site optimization. This is where the rubber meets the road and we can start to see what type of impact any given change will have financially. The information is displayed in a graph and a table. In the table, the tool shows both monthly and annual numbers for each category.
  
  
  • Current value. This is based on your current traffic, conversion rate you entered, and the value of those behaviors. This is the starting point you want to improve on.
    
    
  • Estimated future value. Based on increased traffic and/or improved conversion, this shows the estimated future value of the Web behavior you want to improve.
    
    
  • Incremental value. This simply shows the delta in value from the current to the estimated future value.
    
    
  • Incremental success events. This indicates the number of incremental success events or conversions based on the information you entered. For example, it might show an additional 1,000 leads per month through this opportunity if you were to act on it.
    
    
  • ROI. The initiatives ROI is based on the cost to address the opportunity. This should allow you to compare a few different opportunities. Enter different scenarios and see which ones rise to the top in terms of ROI.

Remember, you don't need to be exact on the values or percentage lift, but try to be consistent with your estimates. This is a tool to determine the estimated impact. You'll find that you sometimes estimate too high and sometimes too low. At least you're drawing a line in the sand and aiming for something.

Use this tool as a way to prioritize your opportunities, forecast the impact of initiatives, and of course measure the impact of actual tests or changes you make to your site. Share this with your team and commit to using it for all initiatives as they are being prioritized and after they launch.

Keep track of your wins and losses. Talk about the financial impact of initiatives you roll out rather than jumping to the next project, just happy you finished the previous one.

You can find the calculator here or through the main navigation under "Optimization Calculator." Let us know how you've used it to prioritize opportunities and give us your feedback.

Join us for a Consumers and the Influence of Blogs: What It Means for Your Marketing Mix on November 20 at 2 pm EST. Find out how online consumers discover blogs and navigate between them, what kind of opportunity blogs represent for advertisers, and much more!