Why do Websites fail?
Business Basics
Every business on the planet follows a very simple formula which determines how much money the business generates. That formula is as follows:
Leads (Enquiries) X Conversion Rate = Number of Sales X Average Sale
= Revenue
This formula shows us that the money a business generates is directly determined by:
• The number of enquiries or leads that the business receives
• The rate at which it converts those enquiries (the conversion rate) to sales.
• The amount of money the customer spends each time they buy from the organisation (the average sale)
Common Types of Websites
Before we discuss how these fundamentals relate to a website lets take a look at the two most common types of business websites:
• Sales
This type of website is focused on generating sales for the company. You have probably seen many of these types of websites. The official name for them is an ‘E-Commerce’ website.
In this type of website you usually select products, add them to a shopping cart and pay via credit card etc. These types of websites are usually setup by retail stores or home-based businesses that are looking to generate more sales.
Sometimes the website is setup so that only a customer with an account can order or purchase off the website. Prior to ordering, the customer has to login to the website to confirm their identity. This type of website is usually setup by a wholesaler or distributor who is looking to automate the ordering process.
Some websites contain a mixture of both types of selling.
• Enquiries
This type of website is focused on generating enquiries for a company’s products or services.
Many companies have a product or service that cannot be sold online due to the complexity of selling it - the price of it - the complexity involved in delivery the product /service and so on. In this case, a company will often setup a website to simply drive enquiries for the product or service.
What Governs the Performance of a Website?
Let’s take a look at these two different types of website and the key “success metrics” that determine their success.
• ‘Sales’ Focused Website
The performance of a ‘sales’ focused website is governed by the following formula.
Website Visits X Conversion Rate = Number of Sales X Average Sale
= Revenue
As you can see from this diagram there are three key ‘success metrics’ that determine how successful a website focused on ‘sales’ will be – those three things are:
o The number of visits that the website receives
o The rate at which it converts those visits (the conversion rate) into sales.
o The amount of money the buyer spends each time they buy from the website (the average sale)
• ‘Enquiries’ Focused Website
The performance of an enquiries focused website is governed by an even simpler formula.
Website Visits X Conversion Rate = Number of Enquiries
As you can see from this formula, there are two key ‘success metrics’ that determine how successful a website focused on ‘enquiries’ will be – those two things are:
o The number of visits that the website receives
o The rate at which it converts those visits (the conversion rate) into enquiries.
So why do so many websites fail?
Most websites fail because people do not understand what drives a website’s results. Once you can grasp those basic elements that control the success of a website, you will be one of the few with a successful website.
Based on an article by David Kelly, CEO of Zeald.com
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