It’s the time of the internet, no question. The majority of Germans buy or inform themselves online and the nice thing is that even small businesses and the self-employed can make a big impact with their internet presence.
Companies that could barely compete with “the big guys” in the real market find their customers on the Internet.
Do you also have an internet presence for your business? Well!
Just below us, I would be interested if this is worth it for you.
How, you do not know that?
You do not sell anything on the internet? But you do not have to, to still benefit from your Internet presence. There are many ways to take advantage of your own company website . To be honest, there are also many ways to throw money out of the virtual window of your own internet presence.
In this article, I’ll show you 6 steps to a profitable website. For this we use the online ROI.
Blind flight on the Internet
This raises a burning question. Why is it that so many entrepreneurs are not interested in whether they make money or waste their Internet presence? Actually incomprehensible, it is the same entrepreneurs who compare the prices when buying office supplies.
Is it due to the medium? Is the Internet simply so foreign to many entrepreneurs that they do not want to have more than necessary to do so. Quite possible. Anyone who prefers to do his bookkeeping by hand rather than turn on the “evil” computer will not voluntarily deal with his Internet presence.
But that does not have to be. You can easily measure the success of an online investment, the Internet ROI (Return of Investment). Step by step, I show below a way to make your own Internet site profitable.
In 6 steps to a profitable Internet appearance
The ROI was first used in 1919 by Donaldson Brown . It is measured in percentage terms and represents a return resulting from the comparison of a) ‘revenue or savings’ and b) ‘used costs’.
Even if one finds quite different formulas in the literature for the calculation of the ROI, the following is completely sufficient for our purposes:
ROI = ((revenue + savings) / cost) * 100
A ROI of 100% means that the revenue or savings are just as high as the costs incurred. An ROI of more than 100% is the goal. If the ROI is below 100%, there is an urgent need for action.
Is a ROI of 150% good? At first glance, but what if a competitor achieves a 250% ROI. Then 150% suddenly stop feeling so good.
Basically, the final assessment of the success of your own Internet presence is a target / actual comparison of individual ROI percentages. You compare a specific ROI at two different times. For example, before creating a new landing page on the company website and after 6 months. Only then can one judge how successful a company appearance is.
“I do not sell anything on the internet. How should I calculate the ROI? “
No fear. Here are the next steps to help. These lead quickly and easily to an evaluation of an Internet presence. And all without having to deal with technology.
Step 1 – Goals
Which goals can you define? Of course, one first thinks of the most obvious: “How much sales does my internet presence make?”
But there are many other goals that you can and should pursue:
- Increase the number of visitors
- Generate email or form requests
- Appointments via the website
- Guide visitors to specific product pages
- Download PDF catalogs / save regular catalogs
- Participation in sweepstakes
- Reduction of unnecessary service on-site appointments
- Win newsletter subscribers
There are many goals that you can pursue with your own internet presence. It is important that you are aware of it. A good online agency has already worked out these goals with the client during the creation of the website. If you create your own website yourself, then you have to develop these goals yourself.
Step 2 – Revenues and savings
In the next step you have to evaluate the goals and put the abstract goals with numbers.
This happens in 2 phases:
- 1) define quantitative target values (eg 1,000 new visitors through a raffle)
- 2) make it a financial target (5% of the raffle participants come into their own business and buy something.) Per buyer, you make an average of 30, – Euro profit.Thus, the profit increases the company’s profit by 1,500, – Euro .)
This will give you the expected revenue or savings to achieve.
It is certainly not always easy to deposit the goals with concrete values. In doing so, you should be realistic and try to follow the normal company goals. For example, on the goals and results of newspaper advertisements. Sometimes it is also possible to learn values from competing websites in order to set their own target values based on them.
Last but not least, you can of course use the historical values of your own Internet presence as a benchmark (should you already have an internet presence for a long time). Based on these known data, it is often easier to define target values.
Step 3 – Cost
The costs are a little simpler to define. Here you should try to be as accurate as possible. Especially if you have defined several goals, it is important to assign the costs exactly to the individual goals.
If you organize a raffle, this includes not only the costs of the raffle prizes, but also, for example, the costs of creating the raffle page, proportionate costs for the server, costs for the marketing of the raffle, costs for the notification and transfer of profits etc ..
If you advertise on the internet, for example, Google AdWords, it is very easy to define the cost.
Step 4 – Target ROI
Based on the revenue / savings and the cost you can now calculate the target ROI.
In the case of the raffle we come to a target ROI of:
((1.500, – Euro + 0, – Euro) / 800, – Euro) * 100 = 187,5%
Definitely a worthwhile investment. If the ROI is here at 100% or lower, the measure is not recommended.
Of course, if you plan different measures, it makes sense to compare the target ROIs of these measures in advance and to focus on the measure with the higher ROI.
Step 5 – Actual ROI
Now every entrepreneur knows that the real result rarely coincides exactly with the planning. Therefore, it is important to calculate the actual ROI.
Although our fictitious competition has attracted more participants (1,200 participants) than planned, these are not as enjoyable as the regular website visitors. Only 3% of the lottery participants then bought in the store.
The revenue due to the competition was therefore only 1,080, – €. (1,200 * 3% * 30 euros)
The actual ROI is therefore as follows:
((1080, – Euro + 0, – Euro) / 800, – Euro) * 100 = 135%
Step 6 – Evaluation
In the end, what matters most is which conclusions one draws from the target / actual comparison of the ROI values. The deviation between target and actual ROI should definitely be included in the planning of future measures.
The raffle was not quite as successful as planned. But it was still a success. But it only becomes really interesting when you look at the development of the actual ROI.
The lower ROI arose primarily through a modest conversion (turn visitors into customers) of the lottery participants. Here one would then have to further analyze what this was exactly. So you could further optimize the ROI for future measures.
Particularly with larger marketing campaigns, one should define milestones that allow the success of the measure to be assessed before the expiry.
For example, in a big 2-month sweepstake, every 2 weeks, you could check how the participants’ conversion rate and revenue are. This has the advantage that you can already make improvements during the current action. For example, you could do split tests to increase the conversion rate.
On the other hand, if you wait for the final result in such larger actions, then you can not make any improvements in between.
With the ROI for a profitable internet appearance
As you can see, in step 6 you can do very extensive analysis. But you do not have to. If you compare the target and actual ROI on your own and include it in future measures, you will do more for the profitability of your website than most other entrepreneurs and the self-employed. And with relatively little effort.
In any case, it is not always worth flying in blind flight, but to measure the success of your own measures, even if they are just a raffle.