Nobody Would Want To Pay Twice! My Advice For Websites Revenue

There are a lot of articles on the internet right now that showcase predictions for the next year and the trends that will dominate web marketing.  I would say websites have increasingly become the primary channel for sales of goods and services. Many small and medium enterprises (SME) rely heavily on their websites for their revenue. However, it is surprising how little attention is paid to analysis and measurement of this vital sales channel.

In my previous articles, I have discussed the role of content and keywords as a tool to promote the service or product you offer in your website and then the way of evaluating a website performance based on many factors. Online advertising is one of these factors that could help to let people interact with your site and increase engagement, but at the end you should learn to hammer the nails, and if what you build is sturdy and serviceable, take satisfaction in its plain strength.

Therefore, without tracking your profits on any Ads you spend, that means you don’t know if you’re making money or not, this in turn will lead to only one fact; you’re not going to be in business very long!

In this article I’ll give you simple formulas to calculate your ROI and show you how to measure KPI’s for the top three advertising goals.

Measuring your Return on Investment (ROI)

For instance, when you have a small business, I believe you likely don’t have a big accounting department to track and analyze your ad budget spends. Which is true!

But as I mentioned above you still need to learn how to hammer the nails. Perhaps this still seems like a paradox. How can you think carefully about not losing your customers and still be carefree about their options? I assure you that they are separate process. 

It is too simple when you adopt the ROI technique, if you’re spending money and you’re not getting back more money than you’re spending - you’re wasting your hard earned cash and means you are losing customers (Audiences).  You’ve got to stop the leak. You also should know if one Ad is generating more profits than another - so you can put more money into the profitable one.

Measuring your ROI doesn’t have to be overly complicated. You do need to do a bit of math, but, hey, that’s part of business. Let’s take a look at how to calculate your ROI.

A Simple Calculation for your website ROI 

As you likely know, your Return on Investment is basically a ratio of your net profit over the costs you spend to get the profit.  To put it in an equation, your ROI looks something like this:

Your ROI is your revenue less your cost of the thing you sold divided by the cost of the goods sold.

So, for example, let’s say you sell necklace. The cost to produce one necklace is $10, and you sell them for $20. You sell 100 of them from advertising them for example on Google. Your revenue (as you can see) is $2,000. Your cost to produce them was $1,000. And you spent, let’s say, $500 in advertising.

Your ROI is:  2,000 - (1,000 + 500)/ (1,000 + 500).

Do the math. Your ROI ratio is .33, which is 33%.

Measuring your Key Performance Indicator (KPI)

Key performance indicators (or KPI) are metrics that measure the performance of a task against the objective that it was set out to do. In other words, it is finding out how you are doing to attain your business objectives. While KPIs can be applied in just about any working environment, in can be an effective method to measure the performance of your online business.

What I would like to say, you will never make your mark in your online business, unless you develop a respect for your content and quality of the service you offer. This is what I have pointed out in my previous articles

 

So, metrics can either be represented as a ratio or a number to measure certain tasks in relation to the objectives of your business. In the SEO field, Revenue, Visits and Page Views are measured through numbers while Conversion Rate, Bounce Rate and Average Sales are measured by ratios. These two forms of metric generally make up KPIs.

To find an effective KPI, you must first understand the objectives of your online business very well because this will be the basis for setting up your KPI. Outline your objectives into specific measurable goals. Then select a Key Performance Indicator for each goal.

To set an example as I gave you for ROI, let’s define a conversion as a completed sales transaction. To calculate a conversion, the basic formula can be: 

Conversion Rate= (Total Transactions/Total Number of Visits) * 100.

That is (6 transactions/50 visits) * 100 = 12% Conversion Rate. And so 12% is your Key Performance Indicator for your Sales Conversion Rate. In this example, it is obvious that having a score of 12% is below the expected performance of your goal for sales conversion. Having this sort of information will allow you to target which area to focus on as you try to improve the performance of your conversion rate. In this case you can try to optimize the functionality of your website.