What is ROI?
Return On Investment. The amount of value received relative to the amount of money invested, in this case, in advertising. ROI is an excellent measure of the success of any campaign.
How to calculate and Measure ROI for a website promotion?
Before you decide to measure your ROI, ask yourself these five questions:
- How many visitors convert into sales?
- What keyword phrases generate your sales?
- From what search engines your sales originate?
- What is your customer post-click activity?
- Do you use tracking software to calculate the final conversion rates?
The calculation process:
Conversion Ratio: Divide your number of orders by your unique visitors to arrive at your sales closing rate. The sales closing rate is the bottom line metric out there. It’s a measure of how many of your visitors actually complete the transaction you led them.
Customer Acquisition Cost: Divide your marketing expenses by the total number of orders you receive from unique new buyers over a given time period. Your cost of acquiring a customer is critical to improving your profitability and also your cash flow. With regard to the marketing expenses component of the calculation, some companies include a monthly amortization of the cost of the website as well as the monthly cost of maintaining the site, while other companies only consider promotional expenses. Use the approach that works best for you.
Sales Per Visitor: Calculate the actual average amount purchased per visitor (not per order).
Cost Per Visitor: Simply divide your marketing expenses (or your marketing expenses plus your Web expenses) by the number of unique visitors. Cost per visitor measures the effectiveness of your marketing and your conversion processes. The objective is to minimize cost per visitor and increase sales per visitor.
No Sale Rate: All Pages Divide the number of one-page visits to the entire site over a period of time by the total number of visitors over the same period of time. While focusing on top entry pages is more important in the short term, because that is where the traffic is happening, this more global metric is likely to point to global design flaws in navigation or page layout. When you make global design changes, pay attention to this one — you want it to be forever falling.