Measuring the Value of a New Website

Measuring the value of a new website.

The following will be helpful to both web designers trying to sell a customer on a website and those inside a company pushing for a new website and trying to get the correct amount in the budget.

We are approached to build a lot of websites and the cost expectations vary from a few hundred dollars to tens of thousands. There are many blog posts and articles that talk about what a website should cost to build and what factors affect costs but what about for the client? Is there a value to place on the website itself? How does a company decide whether it’s worth 50K to build a new website versus 10K or keeping their existing website?
Those aren’t easy questions to answer but let’s try:

First, what does your business get from the website? Does it get leads, sales, build your brand? All of these? At the very least, your business is probably getting leads from its website. Now, these could be cold leads or they could be people who Google your company name because they were referred to your company or saw some advertising. Many companies immediately start focusing on getting more leads by getting more people to their website but that’s not the place to start. Start with determining what your conversion rate is for your current website: do you get one lead for every 20 visitors? one lead for every 10? Anything below 100% means there is room for improvement.

But how do you improve that conversion rate? Some ideas include:

• The design of the current website
• The content of the current website
• The lack of relevant information on your current website
• Your competition has a better website

How many of those visitors end up going to a competitor of yours and using their product or service? What is your current website not providing or doing that would convince these visitors to buy or use your service? Once you start thinking about these questions, you can see the value of a website. Let’s look at a scenario

Company A
• one lead is worth $1,000
• current website gets 20 leads a month which equals $20K a month from the website
• current website converts visitors into leads at a rate of 10%

Why not start your cost analysis on that 10% conversion rate? If you invest in a new website with the goal of improving conversion rates to 15% within the first year, that is going to put a dollar figure on what that website is worth to your company just in terms of existing traffic. But don’t stop there.
How many of your customers come from referrals?

Company A
• 10% of new customers were referred by current customers

Ok, so it is safe to say that if your customer base increases then your company will get more referral customers. Now there are a lot of variables here and some overlap but this will help put some more value on the website.

What about the effect a new website will have on your competition? If you increase your conversion rates with a new website then one could assume that you will decrease the conversion rates of at least one of your competitors. What kind of effect could that have:

• Competitor must spend more on advertising
• Competitor must spend more on their current website

Both of these will cut into their margins. Let’s say, for example, there are 300 people everyday searching for Alarm Companies in San Diego and 40 people sign up each day with various companies. These numbers will remain the same whether you build a new website or not. If you invest in a new website and it results in your company signing up 5 more of these people a week..that is 5 less divided up between your competitors.

Finally, think about what other expenses your company currently has and how a new website could lower or eliminate those. Let’s look at some ideas:

• FAQ section could lower the number of customer service calls and the duration of them
• Providing marketing brochures to distributors could lower the number of calls and emails from distributors looking for these
• Putting Contact information in a clear and easy to read area of the website could lower inbound calls asking for this information
• Providing pricing parameters could eliminate leads from sources that a) cannot afford your product or b) are looking for a more expensive option
• Providing employment information and openings could eliminate or reduce referral fees to recruiters

See what others you can think of.

There are several other areas that we haven’t discussed including branding that should also be taken into consideration. In some cases, your company’s website is all that many know about your company and you may only get one shot at turning them into a customer or client. Also, your company should be tracking all of this information through a variety of resources (some free and some for a fee) look for more blog posts on how to do this or contact us.