The Biggest Mistake Most People Make

We get asked all the about building websites.  I think everyone who asks wants to build a successful site, just as anyone going to the doctor wants to be treated successfully.  Same for eating in a restaurant, be it French, Italian or Indian; you want a good and healthy meal.  In court, it’s almost always beneficial to be represented by a competent lawyer.  You could treat yourself all kinds of ways with varying levels of success.  But I wouldn’t recommend self-surgery.  And the meal you enjoy in a nice restaurant might be accomplished at home or over a campfire, but the chef’s know-how, experience and resources likely add to the finished product.  But the successful doctor, lawyer and Indian chef also succeed because they have a plan, which usually is framed by a goal or series of goals to reach a successful outcome – often something that differentiates them from their peers.  The doctor orders tests and plans your treatments or rehabilitation over the proper course.  Sometimes the goal is to stabilize the patient before surgery, and if all goes well, eventually begin therapy or out-patient care.  The lawyer file briefs and motions in the proper order and at the right time, hoping to win key rulings which can lead to a favorable final judgment.  The chef plans his restaurant, sets up his kitchen and hires his staff before he ever serves a meal, and only then does he plan his menus, orders his ingredients, test his recipes and plates up some delicious meals.

So, planning is important in just about every undertaking, including building a successful web presence.  And a key part of planning is setting specific goals, just as pouring a good foundation is key to building a safe, comfortable home.  I think the biggest mistake people make when building a website is failing to set specific, measurable goals.  Not only for the success of the initial site, but also for effectively managing it and evolving based on market conditions or the response of your visitors.

When I ask our customers what their goals are, they often say that they need one because their competitor has one, they want to "sell stuff" or they come up short by building "brochure-ware", a list of features.  I don’t think many of them ask themselves when the site will provide an ROI within a reasonable time-frame or the steps that need to be taken along the way to have a chance at becoming profitable.

Tom Peters, the noted author and public speaker said, "You can only improve what you can measure."  Setting realistic, measurable goals at the very beginning is key to a successful launch, but evaluating your goals and adjusting your effort accordingly are key to staying competitive and reaching your potential.  Once you begin to view your website with this perspective, you have accomplished more than 90% of what other website owners have done.  And you will be infinitely more prepared to address all of the elements of a successful site.

So, where to begin? Probably at a very high level – it may help you decide whether to green-light the project or not.  Let’s say you sell widgets.  They’re very good widgets.  You have a loyal customer base and very few complaints.  And while I’m thinking about it, brick and mortar businesses looking to begin, re-create or refine their website strategy, need to make sure the existing product or service, and the process of creating those goods and services, is working as well as possible.  If not, you’re only going to compound the problem.  The same is true for online businesses.  If your product sucks, or your delivery, marketing or support don’t measure up, you face a very difficult challenge of succeeding, let alone reaching your potential.  Fix that first.

Anyhow, back to our regularly scheduled program.  So, let’s say these widgets net your company $50 for every one you sell, and your website is going to  cost $10,000 to design, implement and test.  And, let’s say your goal is to reach profitability in a year.  That means that you will have sell 200 widgets a year, or almost 17 a month to reach your goal.  Think you can do that?  Maybe.

But those 17 sales per month need to be to customers who would have not bought your widgets in your store, catalog, through your resellers or other traditional marketing efforts. 

You also need to factor in the hosting and marketing of your new website.  And what if you need to pay someone to manage your online sales?  Let’s not address that now.  But additional recurring costs like those will affect your margins.

Your plan and goals may need refinement.

You may not want to cannibalize your existing channels.  But you might want to make them more efficient or productive.  If you can help your affiliates or resellers sell more, even at a reduced margin to you, that may be a secondary goal for your online initiatives.  You may be able to do that by providing affiliate landing pages that fulfill their customer’s orders online, perhaps more efficiently.  There may also be a benefit in providing your affiliate network with better product support.

So, let’s get back to your diabolical plan to rule the widgets market.  Let’s say that you’ve decided that you can probably sell 10 widgets a month outside of your current channels, with a $50 profit on each.  That’s $500 a month flowing to the bottom line or $6,000 per year.  You now think that your 3 affiliates will each sell 3 widgets a month more than they do currently, but your profit on each is $25, instead of $50.  Those 9 additional widgets sold, at a profit of $25/ea bring $225 per month to the bottom line or $2,700 per year.  That $2,700 profit plus the $6,000 profit generated by your new online channel totals $8,700 in new profits per year.  You have not achieved your goal of becoming cash-flow positive in 12 months.

But wait, there’s more!
  Perhaps you have set another goal of growing your affiliate network to 10, and each of your 7 new partners will sell an average of 2 widgets per month with a net profit to you of $25/ea.  (14 * $25 = $350/mo or $4,200 per year)  Now, we’re talking!  $6,000 in annual new profits from sales in your new online channel + $2,700 in annual profits from improved sales from better affiliate support + $4,200 in new profits from increasing your affiliate network to 10 from 3 equals an annual boost the the bottom line of $12,900/yr.  We have achieved our goal!  The new website became profitable within 12 months and we pocketed nearly $3,000 in the process!

It’s useful to do models like this in an Excel spreadsheet.

But wait, there’s more!  Yeah, I know I said it before, but we have only scratched the surface.  We’ll have more on measurable goals in a future post.  So maybe you should subscribe to our feed or contribute by email.  This is a collaborative effort!

— Kurt Scholle

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