Revenue Paralysis: The Cost of Website Ignorance

Many times as business owners and marketers we are so consumed with making the biggest impact on to the bottom line that we forget to take care of the very foundation our marketing is built upon. We want our website bigger and better than the competition and are in an endless race of producing content, link bait campaigns, acquiring high quality links, consolidating sections of the website, and keeping an eye on external changes or algorithms. All the while technical ignorance creeps in and clutter corrodes the website’s foundation resulting in lost revenue. If this clutter could be identified and fixed, the online revenue potential could be optimized. Taking a step by step approach we can calculate the potential ROI for fixing and maintaining website architecture.

The Expense of Dirty Website Architecture

I am not going to go in depth of the Anatomy of a Perfectly Optimized Page, but it is very important to build and maintain your online business with a solid foundation. There are a myriad of different architecture issues like duplicate content and poor title selection that can have an impact on driving traffic from search engines to your website. It is important to be thorough because there might only be one factor that hurts your website’s search engine performance. Some of the factors include.

• Crawlability of Robots
• Response Codes & Redirects
• Logical Structure
• Keyword Cannibalization
• Indexing
• Internal Linking & Site-wide Links
• Mobile Versions
• International SEO

A cluttered, unorganized website is rarely caused overnight. Months of neglecting your website has a cost, and it can be very expensive. To demonstrate, here is a slide deck on “A Website Architecture Story.” It shows common activities and how over time, the clutter they leave behind impacts the site’s performance viewed by Google, Yahoo, and Bing.

Doing the ROI Math

Business forecasting is needed on a keyword level to understand the revenue potential of fixing a website. To understand the full scope of the ROI multiple keywords must be calculated. The basic ROI formula can be used.

ROI = (Earnings – Cost of Investment) / Cost of Investment

We can break that formula down even further based on our needs.

Earnings = Exact Search Traffic * Google 1^st Page CTR * Value of a Visitor

An alternate formula below can be used if you know the Conversion Value. For our example I will be using the formula above. Earnings = Exact Search Traffic * Google 1^st Page CTR * Conversion Rate * Value of a Conversion

Cost = Hours to Complete * Cost Per Hour

Exact Search Traffic = The exact amount of people searching for a particular keyword from Google Adwords Keyword Planner.

Google 1^st Page CTR = The Click Through Rate on the 1^st page of Google for rankings 1 – 10. You can fill it in with your own percentages, but I will be using the data from this study.

Courtesy of Chitka

Value of a Visitor = There has to be a monetary value placed on a visitor to get the proper calculation. It is best if you have the data from your conversions already, but if you don’t you can use the Average CPC in the Keyword Planner. Businesses will not be consistently spending more money on a keyword than they are making. Since the businesses are paying for the ppc data they see the exact conversion data on the backend, so it is safe to assume there is profit above the Average CPC listed.

Conversion Rate = (This is in the alternate formula) This is your conversion rate for a keyword. It is better to use exact data if you have it, but I will be using a conservative 2%.

Value of a Conversion = (This is in the alternate formula) This is the average revenue made per conversion.

Just as an example I will be using “jewelry” as the keyword we will be targeting.

Plugging the numbers in we get (246,000 * 6.1%* $3.62) = $54,321.72 which is the approximate amount of monthly revenue for the individual keyword if they were in the 5^th position. This is still a conservative forecasting, because we are using the 5^th position CTR and not 1^st position.

Calculating the Cost

Now that we know potential monthly revenue for “jewelry” we need to find actionable steps, associate a time to fix each issue, and then calculate the total cost. Below is a screenshot of a spreadsheet of hypothetical problems.

We will use $100 as our cost per hour.

Cost = Hours to Complete * Cost Per Hour
Cost = 16 * $100
Cost = $1,600

Disclaimer: This is just an example cost. To rank for jewelry could cost much more than $1,600.

Now are these problems worth the $1600 to fix? It is time to finish the ROI formula to find out. Again to do revenue forecasting we will calculate the ROI over 1 year, so 12 will be multiplied to the monthly revenue.

The 12 month projected revenue for the keyword “jewelry” at the 5^th position will be $54,321.72 X 12 = $651,860.64.

ROI = ($651,860.64- $1600) / $1600

Our projected ROI is 406.41% over the first year.

The Money Making Approach

This business forecasting example was based on a few architecture issues, but it could easily be scaled to include other factors and processes like inbound link generation, content creation, guest posting, etc. It is also important to understand fixing architecture issues will have a domino effect to multiple keywords, so the potential monthly revenue could be much higher. The keyword formula can be adjusted if you are in a seasonal industry since most of the revenue will be made within a couple of months.

Here are key takeaways to begin your own online business forecasting.

1. Identify keywords that can be improved in organic rankings.
2. Calculate the potential revenue for each keyword. You can be aggressive or conservative in your calculations.
3. Determine steps to improve the rankings of a keyword.
4. Calculate the cost of each step.
5. Calculate the potential ROI
6. Correct issues and continually test the results.

Again this is revenue forecasting so all of these variables can be changed as needed. This will allow you to see effects that different variables can have on your bottom line.

We have created a basic ROI spreadsheet for our clients at our inbound marketing agency, Find and Convert. We have included a few automated features. These include:

1. Calculations of a single keyword that is not ranked in the top 10 of Google.
2. Calculations of a single keyword that is ranked in the top 10 of Google and the ROI improvement.
3. Calculations of multiple keywords that are ranked in the top 10 of Google and the ROI improvement.
4. Easily adjusted variables like Google’s 1st Page CTR so you can use your own data.

You can download it here to use for your clients or personal use.

If you would like another resource you can check out John Doherty’s Technical Debt.