Why calculating the ROI of an analytics tool is likely putting the cart before the horse.
Recently, there have been a lot of conversations on Yahoo's Web Analytics Forum about the ROI (define) of Web analytics tools. Many people on the board offered suggestions; some were quite good, but nearly all were shot down as not applicable to most sites.
The reason it's a challenge is most companies don't act on analytics data to truly improve their sites, resulting in a zero ROI. Too many people spend a lot on analytics tools and supporting resources and little time acting on the data the tools provide. People struggle to quantify ROI for their Web analytics tool, but it just isn't possible without acting on the data.
Think of it this way: it's like calculating the ROI of your automobile if you're a traveling salesman who drives from sales call to sales call. There's really no direct ROI as the car costs money to operate. If it breaks down, you may miss the sale. But to be successful at the sales job, a reliable car is necessary. You may have a brand new BMW M5, but if you can't get to the appointments or close the deals when you have those appointments, the car doesn't matter. It really is a double-edged sword.
So can you quantify the ROI of a Web analytics tool? Yes! But this is part of overall site optimization ROI, not standalone analytics. You can optimize a site without analytics tools, but you're probably only scratching the surface and guessing at the best opportunities. You can analyze site behaviors without optimizing, but, again, you shouldn't.
It's amazing how many companies spit out masses of reports from their analytics tools and teams that merely look in the review mirror, asking: how did we do last month? The amount of time and effort put into many of these reports is wasted if people don't act on the information.
As in Web analytics, site optimization tools won't run themselves, either. When you look to make an investment in optimization (like analytics), be sure to factor in the significant resources -- internal, external or combined -- to help maximize the tools' value.
Stop trying to come up with the ROI, and start thinking about the bigger picture analytics supports. Analytics is just one small piece in the overall puzzle.
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As president of the Americas regions for the digital agency POSSIBLE, Jason is responsible for leading the long-term stability and growth of the region. Jason has 20-plus years experience in digital strategy. He is a long-time advocate of using data to inform digital strategies to help clients attract, convert, and retain customers. Jason supports our clients and employees in driving new engagements and delivering great work that works.
Jason speaks frequently about helping marketers take advantage of data to make smarter business decisions and improve the success of their organizations. He is the co-author of Actionable Web Analytics: Using Data to Make Smart Business Decisions.
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