ROI Analysis Makes Dollars and Cents

ROI is the bottom line many financial minds will look for in determining the overall value in the given use of money in any enterprise. The object is to determine the amount of profit or cost savings the investment achieved.

This type of calculation is often used to develop a business case for a given proposal.

When you look at the pure numbers of an Site Build IT! Web site, you have to “charge off” a number of practical matters.

• Was the website started for an existing business or a new enterprise? The importance of this question relates to how beneficial is the advertising value compared to buying a TV spot easily costing 100 times more.
• What is the value of being able to provide online sales and customer support without an offsetting bricks and mortar investment.

• How do you value a list of 500-1,000 eager-to-buy prospects reading your newsletter?

Such is the world of statistics. I place very little faith in raw numbers. Numbers may not lie, but how we interpret them often does.

There is "anecdotal" evidence that says that nearly 1/3 of SBI sites make it to the top 1% of all sites. I also value the experience of people in the SBI forums who so generously share their routes to success -- well, all of that put together is more valuable to 99% of us than extensive marketing stats could possibly be.

That is not to say SBI doesn’t provide marketing stats. Traffic analysis is a major part of every SBIers day. Knowing how many visitors wondered the site the day before and what pages they spent their time on is of real value in planning for tomorrow’s action.

Going back to the first paragraph, ROI is not only determined by what kind of profit you end the day with, but what you have saved in running an online business that is generating income.

For any given use of money in any enterprise, the Return on Investment (ROI)is how much profit or cost saving is realized. An ROI calculation is sometimes used along with other approaches to develop a business case for a given proposal. The overall ROI for an enterprise is sometimes used as a way to grade how well a company is managed. If an enterprise has immediate objectives of getting market revenue share, building infrastructure, positioning itself for sale, or other objectives, a return on investment might be measured in terms of meeting one or more of these objectives rather than in immediate profit or cost saving.