ROI stands for Return on Investment which is a popular profitability metric. This is a calculation works to try and calculate the amount of return of an investment versus it’s cost.
ROI is calculated by dividing the return of the investment by the cost. This is then normally expressed as a percentage.
For example, if you spend $10,000 on web analytics activities and generate $15,000 in benefits, your ROI is:
ROI = (Benefits / Costs)
ROI = ($15,000 / $10,000) = 1.5
Or you can also calculate it as:
ROI = (Benefits – Costs) / Costs x 100%
ROI = ($15,000 – $10,000) / $10,000 x 100% = 50%
This means that for every dollar you spend on web analytics, you get $1.5 back in benefits.
For websites, ROI can tricky since your website may only funnel leads as opposed to directly selling goods and services. In this case you may need to determine what results you are looking for and give each of these results a monetary value to be able to calculate your ROI.