New client the other day, but the same old problem: an underperforming Web site, a vague mandate from management to “make the site more effective,” and a small budget.
First question: What do you mean by “more effective”? I quickly learned the client is focusing on just a fraction of its Web channel value.
You’re not the only professional communicator battling constantly to justify your Web efforts. If you haven’t identified and quantified your Web site’s value in real dollars, it’s high time you did.
Value comes in two flavors: additional revenue and reduced costs. We typically look at two types of value behaviors: direct and indirect. First, the direct ones:
- Sales. How much revenue does the site generate through direct sales? Try looking at your gross online margin. How does it compare to offline sales?
Next, estimate the lifetime value of new customers finding you via the Web. Maybe they began the relationship with a small buy. But understanding and quantifying what that may lead to is a key exercise.
- Leads. Generating leads, not sales, may be your site’s primary goal. Rather than just look at the raw number of leads, try to quantify their value, too. Solid offline tracking can show you close rates as well as average sales values of the online leads. If your site generates an average 1,000 leads per month, and 200 of them end up in sales averaging $5,000 each, a Web lead’s value can be calculated at $1,000:
average leads closed / total leads x average revenue per sale = lead value
Be sure to get credit for that.
- Customer service. The Web channel can be an effective way to service customers at a much lower cost than offline options. Many of our client organizations want to calculate the impact of the Web channel on overall customer service costs.
First, you have to know your baseline costs. Average per-call call center costs, for example, can range from $3.50 to well over $10; answering an email can cost $1.50 to $3.50 or more. The cost of a site-based service transaction is usually well under $1.
As they say, do the math. Understand the volume of each correspondence type and the related cost. Then you can determine the efficiencies of the Web channel. For example:
- Call center: 100,000 calls x $5.00 per call = $500,000
- E-mail: 50,000 email messages x $3.00 per email = $150,000
- Web: 80,000 help visits x $0.30 per visit = $24,000
- Total support costs: $674,000
- Average cost per touch: $2.93 (total costs divided by total support touches)
These are just a few examples of direct values that are fairly easy to quantify for many sites. They’re also quick exercises to provide the ammunition you need when it’s Web channel defense time at your outfit.
Next time, indirect value measurements, such as the site’s value as a research tool in the buying process, customer satisfaction, and more.
In the meantime, consider all the different ways your Web site impacts your bottom line. Start calculating that impact in hard cash.
Let me know other ways you measure the value of your Web channel.
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