The website ROI is an important key figure and quantifies the return on investment of your website. The return on investment indicates how much profit your website generates per euro invested.
In a broader sense, the ROI of your website also provides information on how effective marketing measures are.
Keep an eye on the ROI to recognize early enough when it is time to renew your website or optimize parts of it.
Table of contents
Learn how to objectively assess the performance of your website with the help of ROI.
What does the website ROI state?
The ROI tells you whether your website is paying off. It is a metric to objectively assess the productivity of your website by measuring the return on investment in relation to the underlying investment.
The website ROI can be calculated using a simple formula:
Website ROI = (profit – investment costs) / investment costs x 100
Investment costs refer to the total amount spent on creating, managing and marketing your website over time. The profit is the net profit that your website generates.
To calculate the return on investment of your website, you need to calculate investment costs, turnover and know the profit of your website. For e-commerce websites and online stores, profit calculation is simple.
Things get complicated when your website itself does not generate any sales. As part of your marketing strategy, the profit from your website then consists of newsletter registrations, PDF downloads or booked consultation appointments.
A positive ROI over time shows that your website is generating added value for your company. A negative ROI indicates that improvements are needed.
Why is return on investment important?
The return on investment is the ideal key figure for assessing the success of your website.
Calculating the website ROI provides valuable insights that will benefit your company in the long term. The ROI helps you …
… improve your marketing strategy
By reviewing the profitability of your measures, you can continuously adapt your strategy.
… identify areas in which you should invest
The ongoing determination of ROI in combination with other key figures can provide valuable insights into necessary investments.
If the return on investment decreases while page loading times increas, this may be an indication that the performance of the website needs to be optimized.
… optimize your marketing budget
If you have a clear target for your return on investment, you can also align your marketing budget accordingly.
… use marketing tools in a more targeted way
For many marketing tools, ROI is an essential key figure for making further calculations.
What factors influence website ROI?
The ROI of your website is influenced by various key figures. These include website traffic, conversion rate and bounce rate.
First of all, you should use an analysis tool to measure essential key figures. These include page impressions, time on page, bounce rate and others.
A popular tool is Google Analytics. It is free, easy to integrate and provides numerous key figures. Of course, this data is also processed by Google itself. A cookie banner is therefore required for the integration of Google Analytics.
An alternative is the tool Fathom from Canada. For a small fee, you can use the analysis tool on several websites and analyze access anonymously. This means that no cookie banner is required for Fathom.
To calculate the website ROI as accurately as possible, you need to know the following key figures:
1. The total Costs
A website incurs both one-off and ongoing costs. The one-off costs include
- Planning
- Concept
- Design
- Technical Development
- Content (text, graphics, photography, video …)
The ongoing costs include:
- Domain & Hosting
- Maintenance
- Marketing
- Advertising
- Content (text, graphics, photography, video …)
2. The Objectives
A successful website pursues at least one goal. The more concretely you define your goals, the more precisely you can calculate the return on investment.
The common goals of a website include
- Generate sales (Onlione store)
- Increase sales (marketing website)
- Brand interaction (branding website)
- Arrange consultation appointments (marketing website)
- Increase brand awareness (branding website)
Depending on the objective, the return on investment cannot always be determined in monetary terms.
For example, in the case of a pure brand website, the return on investment can be quantified in the form of unique visitors or newsletter registrations.
3. The Access Figures
Common tools for analyzing the KPIs (Key Performance Indicators) of a website are Google Analytics and Fathom.
Key figures help to assess the performance of your website. They provide information about which elements should be optimized.
The most important key figures include
Website Traffic
Website traffic indicates how often your website has been visited in a defined period of time. A distinction can be made here between unique visitors, visits (total visits) and page views (total page views).
If Max is the only visitor and visits your website five times and views two pages each time, you have one unique visitor, five visits and ten page views.
The weekly analysis of your website traffic gives you a good overview of the development of your website. To calculate the average monthly traffic, proceed as follows:
Total number of visitors / total months = monthly traffic
Conversion Rate
The conversion rate indicates what percentage of your visitors achieve a goal you have set.
The conversion rate depends on the type of website you have. For an e-commerce website, you will count a completed sale as a conversion.
For a marketing website for IT solutions, it could be an agreed appointment, a PDF download or a registration for your newsletter.
Essentially, it’s about defining goals for your website and achieving them. The formula for the calculation is:
Conversion rate = monthly conversions / monthly visitors * 100
Bounce Rate
The bounce rate indicates the percentage of visitors who leave your website on the first page.
Visitors bounce if the website doesn’t appeal to them, if they were looking for something else or if the loading time is too long for their patience.
The lower the bounce rate, the higher the interest of your visitors in your site.
4. The Search Engine Ranking
Search Engine Optimization (SEO) can dramatically improve your website ROI. The higher your website ranks, the more traffic, leads and conversions you will generate.
Once you have created your website, you should consistently optimize your content to improve your search engine ranking.
5. The Sales Funnel
A sales funnel indicates the steps a prospective customer has to go through before they buy a product.
A sales funnel usually begins when a person comes across your offer. If they develop an interest in it, they are already one step further. If they develop the desire to take advantage of this offer, they will complete the purchase in the final step.
For each of these steps, you should have a plan for motivating the prospect to take the next step.
6. The Closing Ratio
An important key figure with regard to website ROI is the closing ratio. It provides information on the number of sales that you were able to convert from the leads generated.
Example: You run an advertising campaign on Facebook and reach 5000 people. Of these, 500 people click on your ad and are directed to your website. Of these 500 leads, 100 make a purchase in your online store.
The click-through rate (CTR) of your advertising campaign is 10% because one in ten people clicked on the ad.
You can calculate the closing ratio using the following formula:
Closing Ratio = (Closed Sales) / (Total Leads) x 100
In our example, the closing ratio is 20%.
7. Customer Lifetime Value
Customer lifetime value is the average revenue that a company can expect from a customer over time.
The assessment of customer lifetime value depends heavily on the industry and is best determined by personal experience.
There are also mathematical methods that can be used to calculate customer lifetime value. We will discuss these in a later blog post.
8. The Lifespan of your Website
Nothing lasts forever, and websites are no exception. A great website can last up to five years or more. The average lifespan of a website is around two to three years.
The lifespan of your website is also an essential key figure if you want to calculate the return on investment.
How to calculate the website ROI
Example Online Shop
A supplier of regional arts and crafts runs an online store alongside his retail store. After the first two and a half years, he takes stock and calculates the website ROI:
Lifespan of the website:
30 months
Development costs of the website:
€ 10.000,-
Running costs of the website:
€ 15.000,- (€500,- per month)
Aim of the website:
Generate sales via the online store
Unique visitors:
8,000 (in the last 30 months)
Number of customers:
500 (in the last 30 months)
Number of orders:
750 (in the last 30 months)
Turnover:
€ 90.000,-
Trading margin:
45%
Profit:
€ 40.500,-
ROI = (€ 40,500 – € 25,000) / € 25,000 x 100 = 62%
Example marketing website
An IT company uses its new website to generate presentation appointments for its software product.
Lifespan of the website:
24 months
Development costs for the website:
€ 25,000
Running costs of the website:
€ 24.000,- (€ 1.000,- per month)
Aim of your website:
Arrange presentation appointments
CLV (Customer Lifetime Value):
€ 15,000
Booked presentation dates:
240 (in the last 24 months)
Closing ratio:
15% (= 36 new customers)
Turnover:
€ 540,000 (CLV x new customers)
Profit margin:
28%
Profit:
€ 151.200,-
ROI = (€ 151,200 – € 49,000) / € 49,000 x 100 = 209%
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