The ROI Of A New Website

July 3, 2020

Return on Investment (ROI) is an important term for businesses and anytime you make an investment, you expect to have a healthy return. Investing in your brand is no different, and investing in a new website to elevate your brand is a key place to see strong ROI for your business.

As the core of your business online, your website is one of the most important pieces of your marketing mix. Not only is it the only platform where you have complete control, it is also a tool to help you reach new customers, build trust with them, and most importantly increase your overall revenue.

For many brands, understanding the actual ROI of a new website can be tricky. In this article, you will learn how an improved website can benefit your business and how much of a ROI you can expect from a new site.

Why Your Business Needs A High-Performance Website

Improved SEO Capabilities

SEO, or search engine optimization, is the term used to determine the visibility of your website on search engines. By building and optimizing your SEO over time with a strong content strategy, your website will have a stronger and more relevant organic reach. Simply said, SEO translates into more web traffic. On average, 253 Media customers see 11% more organic website visitors each month than they had with their old websites.

Higher Conversion Rates

An improved conversion rate can have a massive impact on your brand. Conversion rates can include a wide range of objectives, from prospective customers filling out a lead form to actually closing the deal and making a purchase. By upgrading your website design and streamlining the buying process, your conversion rates will increase too. To put this in perspective, if your website averages 100 visitors per day and you increase your conversion rate by only 2%, you can expect to see an average of 60 additional orders every month. Now imagine scaling your advertising and driving 300 people to your website daily. That would translate into an additional 180 purchases per month!

Improved Branding and Trust

No matter how good your advertising or organic reach is, if a prospective customer lands on your website and it’s outdated, clunky, slow-loading or tricky to navigate, they will instantly lose trust in your business and begin searching for somewhere else to make their purchase. People need to find what they’re looking for quickly and they need to trust that once they do, you will protect their personal information. For DTC e-commerce brands, an ineffective website can mean that consumers don’t feel safe entering their credit card information and therefore, won’t make a purchase even if they find what they’re looking for. For B2B companies, a low-quality website can imply to prospective customers that your product/service offering is also low quality. First impressions are everything!

Understanding Website Costs

For many brands, even the thought of a new, high-performance website can be daunting. Designing, creating and optimizing a website can be time consuming and tedious, but if left untouched and neglected, your brand can suffer tremendously.

To understand how the cost of your website can play into the actual ROI of your website, it’s important to understand the following formula:

(Increase in revenue - cost) / cost = ROI

Let’s put that into website terms...

The greater the cost of the website, the higher the revenue generated should be (generally speaking). Also, keep in mind that unlike paid advertising, a website is mostly a one-time capital investment with only minimal ongoing costs for maintenance, optimization and expansion.

So how much should a website cost? 

That will vary a TON depending on your business need and future growth expectations. At 253 Media, we like to find the point of diminishing return on the performance-to-cost ratio. That is the point where the added cost won’t make much difference in overall performance and your overall ROI begins to decrease. That’s the sweet spot.

How To Calculate Your Improved ROI

Now that you understand what goes into the return on your website investment, let’s bring it all together with a couple of examples.

First, let’s calculate the ROI of a new e-commerce store.

Let’s say the company’s website is currently earning 500 sales per month with an average order value of $40 and a 3% average conversion rate (global website average). That’s $20,000 in revenue.

Now let’s say that a new website will increase their conversion rate by 10%, bumping it up from 3% to 3.3% of all website traffic. That’s 50 new orders and a total of $22,000 in monthly revenue.

If this brand were to invest $6,000 into a new e-commerce website, it would only take three months to pay off their investment! Let’s expand that to look at their ROI over the course of a year. Remember the formula: (Increase in revenue - cost) / cost = ROI

((12 months x $2,000) - $6,000) / $6,000 = 300% ROI

Not too bad right?

Now let’s look at a lead generation website and see how we can calculate overall ROI without a direct e-commerce attribution.

Let’s say the average conversion rate of leads on the existing website is 2.35% (global website average). And let’s say their sales team closes 5% of those leads, turning them into paying customers. Finally, let’s say that each closed deal has a lifetime value of $4,000 and the website sees an average of 10,000 visitors each month.

Going with the same 10% increase in conversions, this company will go from 11.75 deals to 12.9 deals per month, which is just about 1 extra deal per month, or an additional $4,000 in revenue.

Now if this brand were to invest $8,500 into a new website, their ROI over the course of a year would look like this:

((12 months x $4,000) - $8,500) / $8500 = 464% ROI.

Is 464% ROI worth it for your brand? We think so. And that’s just the beginning.

Obviously these numbers will vary heavily from brand to brand, but the same concepts apply to any business. To calculate the ROI of your new website, replace the variables in the ROI equation with your numbers and learn just how much a new website could benefit your brand.

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