Cranial Interactive - Determining a Rate of Return
If you sell something online you can predict a good reference for ROI would be your sales. This is easy to track if you only sell online and you can track every single person who comes to your website and can find out which of them used the search engines using your newly optimized search terms. Then you can say exactly what the return is in cash…then again, if the world were this perfect we’d all be living on tropical islands and everything would be free…
The complexity of the internet and how it insinuates itself into our lives makes it very difficult to ascribe a single measurable value on the concept of return.
- People who shop on-line frequently buy in person
- Some people search, others who go online are driven by radio, television, print, referring sites, etc.
- Some searches lead to lateral purchases
- Some searches are forwarded and shared among friends
- Some searches serve to reinforce brand awareness
- Some searches serve to reinforce brand antagonism
As complex as all this seems, it is still possible to set parameters for a return on investment from an optimization process.
Define Conversion
the key point for defining a return on investment for a project is in determining the function of that project. In internet projects, this is usually associated with conversion - turning a shopper into a buyer, or a tire kicker into a prospect, or a user into a missionary, etc.. before pursuing a project it's best to determine who your are changing into what.
once you have the conversion defined, you can start to build a value associated with the conversion. What is each of these conversions worth to the company? This is a little more difficult than simply adding numbers together. Certainly a sale based conversion is a monetary event, but how do you quantify a person who has changed their opinion of your company. There a a number of ways of determining conversion values, we can help you explore a range of alternative methods to determine this.
Set a Goal
Now that you have determined what kind of conversion you are trying to accomplish with a project, your next step is to set an acheivable goal with respect to thenumber of conversions. there are ways of setting up your site to ensure a complete record of all conversions is taken, but for the most part you have to be happy with somewhat less than definitive data. the goal needs to be simply stated, and written down. "I want to increase traffic to our op-ed writings by 600%". "I want to increase online sales by $50,000". "I want to have 10,000 coupons downloaded". Set a timeline, and you now have a project goal.
Continue to Calculating the ROI
