What ROI You Should Expect From Your Web Site

Internet, on the other hand, has no limits. Everyday, search engines alone average over 300 million searches conducted by people looking for information, products, and services. Imagine if you could get ranked well in major search engines. The shear volume of "ready to buy" visitors coming to your web site would skyrocket your sales and profits.

By Joseph Zaritski, 5 May 2005

Is Your Web Site an Expense or an Investment?

Why don't you think of your web site as of an investment rather than of an expense? Having a web site is very similar to having an investment property.

Let me show you why.

When you are buying an investment property, you have to invest a certain amount of money at the first place and then pay trivial ongoing fees (property management, rates, maintenance, etc.).

From time to time you would spend some money on improvements and renovations.

You are receiving firm rental income and are enjoying the natural increase in property value.

The very same arrangement applies to your web site. At first you are paying for web design and search engine optimisation and then carrying out some ongoing expenses (web promotion, maintenance, support, monitoring, fine-tuning, etc.).

And from time to time you spend some money on enhancements and new marketing initiatives.

Your site is getting sound web traffic and your business is benefiting from new and returned clients and ultimately from more sales.

So far both, your investment property and your web site look very much alike, don't they?

There is a big difference though. Your rental income is limited by numerous factors that are beyond your control, for instance, area vacancy rate and market rental value.

Internet, on the other hand, has no limits. Everyday, search engines alone average over 300 million searches conducted by people looking for information, products, and services.

Imagine if you could get ranked well in major search engines. The shear volume of "ready to buy" visitors coming to your web site would skyrocket your sales and profits.

How to achieve 200% Return On Investment from Your Web Site

Now let's get back to your investment property. The market is growing and you have achieved an excellent ROI of 9%. Can it be better? Sure it can. With little luck it can be 13 or even 15%. But can your investment property acquire the ROI of 200%? It's highly unlikely.

But being applied to your web site, a ROI of 200% (and much higher) becomes very visible. And it's easy to calculate.

Pretend that you've spent $20,000 on setting-up and are paying $1,000 a month for maintenance resulting in an annual expenditure of $32,000. You want to not only get a 200% ROI but to also cover all your initial costs within the first year of online presence.

To achieve that you need to sell $96,000 worth of products online. If your average price per item is $100, then you need to sell 960 items in 12 months.

Let's be conservative and assume that your online purchasers will only buy one item at the time. So you need 960 buyers (80 buyers a month).

Many studies show that an average online conversion rate is between 1% and 5%.

Because since we are conservative, we expect our conversion rate would be 3%, meaning that you need to attract 32,000 visitors to your site during the year. This is just 88 visitors a day.

A typical well-optimised online store would have much greater traffic. In fact, one of our own clients gets 800+ visitors every day.

Now let's do some math.

32,000 visitors x 3% conversion rate x $100 average sale price = $96,000 in revenue and 200% ROI.

But there is more.

You Can Do Better! Is 1,000% ROI a Myth or a Reality?

Let's assume that every web page of your site, including online catalogue is optimised for a unique key phrase giving you an additional entry point for search engines.

In other words, if someone is looking for a particular product name listed in your online catalogue, the web page displaying this product will be highly ranked in search engines' results.

The more products you have to showcase, the more entry points you provide for search engines resulting in more online visitors.

With a comprehensive online catalogue of 2,000+ products you could easily double your estimated traffic and have not 88 but 176 visitors a day (64,000 a year). (Remember, we are very conservative.)

If we take into account that your market is a niche market and you can effectively reach your target audience, then we can expect that your conversion rate would be greater then average and you could convert 6% of your visitors into purchasers.

You've been innovative and have developed a pursuing after-sales strategy including multiple purchasing, special deals for more purchasing within a certain time frame, newsletters offering great discounts, etc. As a result your average sale price has increased by 10% and is now $110 per purchase.

Now our math looks quite differently.

64,000 x 6% x $110 = $422,400 in revenue and ... take a breath ... 1,320% ROI.

Over time your online performance can only be better simply because mature sites are ranked better in search engines, your online catalogue is getting bigger, your web traffic is growing and you have a steady income stream from returned customers.
Although the above scenario may not suit all business models, your web site can (and should) deliver outstanding return on investment.

So, if you like the picture and if you never thought of your web site as of an investment, think again.

About the Author: Joseph Zaritski is a Founder of Pro Internet Marketing (Australia) (http://www.pro-internet-marketing-australia.com.au/) - a Melbourne based Internet marketing company with main focus on "search engines-friendly" web design, Internet copywriting, search engine optimisation and positioning and web marketing.

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