Most websites don’t make money. Although it seems like everybody and his uncle has a website, very few of those sites are making any money for their owner. Most sites are put up without a clear idea of how the site will make money. For some, the idea that it should make money is revolutionary. Hopefully this doesn’t seem revolutionary to you. Most are simply unaware of how many different ways a website can be profitable. Let’s take a look at how your website should be making money for you.
My business is different
That may be fine for other businesses, but my business is different. This is a dangerous line of thinking that holds people back, and it is something that I hear all the time. The fact is that all websites should be able to turn a profit for their owner. This doesn’t just apply to e-commerce websites; this applies equally well to websites for traditional businesses and even non-profits. Although the application of them may be different, the principles are all the same.
The key thing to consider is how your website should turn a profit. Like everything else in business, what gets measured, gets done.
Leads and sales
Your website can make money by producing income OR by producing a cost savings for you. Obviously, doing both is ideal. Let’s begin by focusing on the former and look beyond the obvious e-commerce example to see how traditional businesses employ the use of a website to increase profitability.
Money can come through or as a result of your website in a variety of ways, depending on your business. For an online retailer this takes the form of online sales. For a brick and mortar retail store, this takes the form of leads and interest that is generated online and results in an increasing in-store foot traffic. For a local service business, the attention and interest generated online should show up in the form of an increase in phone calls from interested prospective new clients.
Beyond leads and sales
Raising the level of interest of your prospects is a key to increasing your business. For example, if one out of every four prospects becomes a customer, you can greatly increase your business without increasing expense by simply increasing the percentage of prospects that become customers. This is one of the areas that a website can really shine.
Your website should help people learn more about how you can help them so that they self-select and come to you pre-sold. This is how you increase the percentage of prospects that become customers. This doesn’t happen by blathering on about you and your company – it happens by engaging with people through your website about what is really on their mind – making it easy for them to get the information they are seeking, their questions answered, all the while increasing your position in their mind as a trusted authority. Done right, a website can be an extremely powerful tool to help properly setup the sales conversation so that by the time the conversation actually takes place, the prospect has already determined that your business is the one that they want to work with.
Another one of the key ways that your website can contribute directly to your net profit is by saving time for you and your staff. For some businesses, this means putting forms online to gather and process information from customers in an automated fashion. For others it means building out the customer service functionality of their website so that their customers can get the answers and information they want without having to call customer service.
If there are questions that you frequently answer by phone, email, or in person, then adding this kind of information to your website will save you time in the long-run. After this information is easily available on your site, you’ll still have to answer some of those same questions from people who didn’t read it online, but the volume of questions will drop because most will read it online.
Different paths to profits
The formula for profit is very simple: income – expense = profit. Your website can increase your profits by increasing your income directly (generating more sales, leads, increase closing rate), or by decreasing your expenses (time, electronic delivery, customer service), or by doing both. In other words, there are lots of different ways for your website to be profitable. For service businesses, one of the largest opportunities beyond generating leads is to increase the closing rate by using the website to properly setup the sales conversation. In other words, your website should be providing you with tangible results.
Quantifying your results
The key to maximizing the results from your website lies in quantifying those results. There is something very powerful about knowing exactly what results you’re getting. For starters, you’re in a position to make smarter decisions because you can rely on real numbers, not guesses and hunches when it comes to figuring out if something is working or not, or if it makes sense to try something new. Data driven decisions are better decisions. It all starts with calculating and keeping track of what your website has done for you. For maximum effectiveness, this is something that must be done on a regular basis.
Dollarizing your results
To see exactly what your website is doing for you with great clarity, you’ve got to convert your website results into dollars. Dollarizing your results makes it drop dead simple see the impact of what your website is currently doing and it also makes it super easy to evaluate opportunities and the effectiveness of changes.
For example to dollarize the impact that the website has on the sales conversation, the closing rate (# of new sales / # of sales conversations) is tracked closely. By comparing the closing rate before a change is made with the closing rate after changing the website content or the way it is used to setup the sales conversation, you’re able to see exactly how much impact the changes had on the business in terms of revenue.
Traffic alone won’t save you
Dollarizing your results makes it much easier to avoid some pretty common pitfalls online. For example, we all know that in order for a website to be profitable, it needs traffic – a steady stream of people coming to it. The pitfall that most make is to measure the effectiveness of marketing activities based on the impact that those activities have on the number of people visiting the website. The problem is that this is a gross over-simplification. The easiest way to avoid this common pitfall is to dollarize your website’s traffic. This is done by calculating the value (in dollars) of a visitor coming to your website. The formula for this is: amount of sales / # of website visits = visit value in $$$. With this formula it is easy to see whether or not increasing traffic is also increasing sales, or if the increase in traffic is from people who don’t buy.
Traffic alone won’t make a website more profitable – that takes targeted, interested, and engaged traffic.
All websites should turn a profit, but most don’t because their owner simply doesn’t know what is possible and / or isn’t measuring what it is doing. The key to increasing the profitability of your website is two-fold; first, you’ve got to have a good strategy for how the website is going to increase your profits and secondly, you’ve got to track, measure, and dollarize your website results.