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Minnesota Technology Magazine - Winter 2004

Net Returns

As the Internet has become an integral part of day-to-day business,the construction and design process has become more complex.Howdo you make sure your company's site extends yourbusiness strategy and sets you apart? Can you measure return on investment for your site? What will ROI mean for you?

By: Sara Aase

Mick and Sandy Lee, husband-and-wife founders of St. Louis Park-based Plus Relocation Services, recognized the Internet as an integral part of their business when they first put up a Web site in late 1997.

As the owners of a firm that outsources employee moves for corporations, they understood that the medium could help track the hundreds of details involved in coast-to-coast and international relocations. "There are about 160 decisions the transferee and his or her family have to make during the transition," Mick Lee says. Large companies, in turn, might be dealing with 20 to more than 100 employees moving at one time, each receiving one of a dozen different benefit packages.

The Lees started with a focus on the employee or transferee, gathering all of the necessary forms, real estate and tax information, monthly and weekly checklists, and even information on the person's new city or country into a single customized, password-protected Web site for each employee. Over the years they've steadily invested more in the Web, adding realtime report generation for their 125 corporate clients, providing each with a snapshot of where individual employees are in the relocation process, for example, or the latest expense and reimbursement reports. A searchable database of relocation issues such as tax or immigration, complete with audio presentations and white papers, will debut later this year. By creating a one-stop information resource and document repository, the goal has been to take the stress and confusion out of a complicated process for employers and employees and even make it enjoyable, the Lees say.

This steady investment in Web-based technology has set Plus Relocation Services apart from its competitors. In 2002, it earned the top award in an industry survey of 40 U.S. relocation companies for service to employees, and the number two spot for service to corporations. "A lot of [relocation] companies now have intranet services that post company policies and connections to service providers, but they're not customized to each individual," says Sandy Lee. The differentiation hasn't come cheap, however. Mick Lee notes that in 2003 his company spent close to $100,000 on Web design and development, counting internal staff time as well as external technical and design help. He estimates he spent $7,000 to $10,000 more on outside design help last year than he did in 2002. But the investment has paid off: Plus Relocation Services has seen a return of approximately a 50 percent increase in productivity since 1997, he says. In the same time frame, revenue production per employee has increased from $99,000 to more than $150,000. The 35-person company generates about $5 million in annual sales. "With all of this customized information at our fingertips, technology has freed us up to be more engaged with the customer and build on that relationship," Sandy Lee says. "When information is out there in real time, we can't have any of our people being slow to react, and that makes us better at what we do and frees up energy to get more business."

For Plus Relocation Services, investing in its business strategy and its Web site have been synonymous. As Web site revision becomes an ongoing part of business, the process has become more complex. How do you make sure your company's site extends your business strategy and sets you apart? Can you measure return on investment for your site? What will ROI mean for you?

MEASURING VALUE

As the Internet matures, it's easier than ever today for companies to answer these questions and get more out of their Web sites for less. "ROI has become a much more considerable part of conversations," says Jan Hepola, an MTI Internet business consultant. "For a number of years Web sites were written off as a loss leader, but as newer technologies mature, companies are starting to realize they should be able to measure ROI from this. The question then becomes, 'How do we measure if we're successful or not?'"

There are a variety of ways to measure Web site value. Cutting costs, reaching new markets-including international markets- generating more bids, and closing more sales all qualify. But there are also some more intangible aspects. To wit, Ray Cox, owner of Northfield Construction, runs his company's Web site as a personal blog. Since Cox is well established in Northfield (he's also a Minnesota state representative), the site is mainly about conveying his company's personality and values. People moving to the area find it especially helpful in getting a feel for what it would be like to work with them, he says.

Minneapolis law firm Faegre & Benson views its site as the ultimate marketing and customer care tool. After talking with a potential client, the firm immediately creates and sends out a secure, customized Web site that highlights the particular areas of practice in which he or she needs help, along with details on the firm's experts in that area and background information, such as archived seminars and articles. It saves the client time in sifting through the firm's larger Web site, says Brian Freeman, Faegre's director of marketing and public relations, and is much easier to distribute around a company than a 1- inch-thick binder of the same materials. But there's no doubt the site is also a differentiator that helps win more business, he notes. "Last summer a potential client approached us about representing them on a merger deal, and they wanted to set up a time to interview one of our lawyers," Freeman says, adding that within 20 minutes, the lawyer and other staffers pulled together and e-mailed a customized site detailing Faegre & Benson's mergers and acquisition experience. "An hour later the client called back and said, 'Skip the interview. Just send me an engagement letter.' That's the kind of feedback we get which reinforces the value of our investment."

STEPS TO SUCCESS

[1] ASSESS YOUR GOALS
Web sites can and should meet more than one goal, such as providing information about products and services, acting as an online store, or quickly answering common questions, Hepola says. Companies commonly put together a team of people from different departments to handle a Web site, and this is still a good approach, she adds. "Most of the time we find everyone at that table thinks there's a different goal, for branding, as a sales lead generator, as product support or as a customer self-service center," Hepola says. "Consumers expect that."

The trick is to make each of these goals specific enough to include only the most relevant functions, and to exclude extraneous material. "A goal to sell more stuff is not specific enough," she explains. "We start to clarify: Does that mean 10 qualified leads? Does that mean 15 people clicked through and offered their contact information? Does that mean you had 1,000 visitors to a white paper?"

These types of measurable goals are called "conversions" in the Web business, and are a key part of measuring value, says Nathan Almquist, general manager of Minneapolis Web site design firm Designstein. "Someone signed up for my e-mail list, or clicked on an offer in my most recent newsletter and came through to the Web site-whatever I wanted them to do, they did. That's considered a conversion."

Creating specific goals for a Web site also helps ensure that design doesn't get in the way, he adds. "With interactive mediums it's critical that you really consider the end goals. If you have customers clamoring for quick information and the first thing you do is put up a 1-minute, $10,000 Flash movie, you're doing a disservice to them."

[2] FIND WAYS TO STAND OUT
Hepola urges companies to look at what their competitors are doing well or poorly before building or revising a Web site. "Ask, 'Why would my customers do business with me versus these competitors? What is my value-add? How easy do I make it to start a relationship?'" she says. If your site already goes beyond what the competition is doing, then emulate other Web sites you admire. For example, Amazon.com or JCPenney.com might be a gold standard for an online retailer.

[3] ASSESS YOUR CUSTOMERS'GOALS
Are your customers' goals the same as yours? Are they even what you think they are? If a company's Web site functions at odds with customer goals, then it might be a barrier to ROI. Web experts say customers routinely surprise companies that take the time to ask them how they want to use a Web site, because of their "outsider" perspective. "It's often a wakeup call for companies, because each has its own insider language and culture that's often completely different from how a customer would talk about it or use it," Hepola says. But there are ways to get customer input beyond a formal focus group, she and other experts say. Web logs that track where customers come in and where they leave can offer clues, particularly if certain pages generate high abandonment rates. Companies then may want to e-mail their best customers demos of their new Web site as it's being built and ask for their feedback. Or they might get good responses from an e-mail newsletter survey. Hepola also suggests enlisting the help of front-line staff people who regularly talk to customers. They know the most commonly asked questions and the terminology customers use, and should have a good feel for how the corporate Web site can help them.

[4] SEEK TO BE FOUND
Speaking of terminology, smart companies know that the most user-friendly site in the world is useless if customers can't find it, so choosing the right search terms and having Web site builders craft your site so search engines can find it is crucial. Again, Hepola suggests an easy way to start is to enlist front-desk help. "For a week or more, have that person track exactly how questions are phrased when people call-those are the terms you know your customers are using," she says.

Organized, easy navigation also helps customers find and use your site. When planning a revision, have a librarian evaluate your site's navigation, Hepola suggests. Because they're trained in how to categorize information, they can make a site much more user-friendly for customers and search engines.

New pay-per-click tools available through search engines such as Google also eliminate some of the guesswork of how your customers are finding you. The programs allow companies to bid on certain search terms and set a cap on the amount they're willing to spend per month. If a user types in "chocolate" on Google, for example, companies that paid for the term and which appear in the engine's right-hand margin pay only when a user clicks through to their site. They can then track which terms lead to the most sales-and get more value out of their online advertising budget. For Twin City EDM, a Fridley company that performs industrial tasks such as steel molding, milling, and hole-drilling, the general search term "EDM" may generate more traffic to its site, but a more specific phrase actually results in more requests for service quotes. "Just because you're driving more traffic to the site doesn't necessarily mean you'll get a quote to bid on," says Steve Lindell, vice president and general manager.

It's also important to note actual results and not get caught up in traffic numbers or where your company's name appears in a search engine, says Andrew Eklund, CEO of Minneapolis- based Web marketing firm Ciceron. "If you're paying $2 or $3 per click but it's not resulting in the desired action, you could be overspending in your search budget," he says. "We have metrics in place that can tell us, of the $10,000 you did in online sales last month, what three keyword phrases generated half of those sales and your best ROI, so cut back on the other 10 terms-save that money or reinvest it."

Also, don't forget the value of linking with virtual communities. Just as you advertise at the right trade shows and rely on customer referrals, make sure that customers or partners are linking to you online, and that your site shows up in important industry portal sites, directories, listservs, or chat rooms. The more connected you are, the easier it is to find you.

[5] INVEST ONE STEP AT A TIME
Almquist says companies have accepted the fact that their Web sites will need ongoing attention and tweaking, just like the rest of their business-particularly as Web technology matures. Accordingly, they're finding it easier to plan and budget for rollouts in stages, recognizing that they don't have to have everything they want all at once. "People are not spending 30 percent of their project costs on conference calls deciding how to move forward anymore," he says. "There's much more objective analysis of what they have, what they need, and what gets priority according to their budget."

Improving a Web site in response to customers' requests is often a natural evolution for companies. Lisa Paxton, for example, took over her mother's Brainerd-based outdoor business, Free Spirit Outfitter, about four years ago. Starting in 1972, her mother had made and sold sled-dog harness equipment, mostly to a few wholesalers. Paxton went online immediately, selling the products in part via a Web site. After six months, her five-person company had plenty of business-in retail sales, increased distribution by wholesalers, and even from wholesalers wanting to sell their products on her site. Paxton had also had enough of taking orders by fax and phone. So she put up her first retail site, gearfordogs.com, which she relaunched in mid-January after a major revision. "The site will respond to customer requests for more detail," she says, adding that it now includes more photographs, extensive charts that outline how to use products, measuring instructions, and customer testimonials. One day it also might include video demonstrations of products. The site also generates an automatic e-mail confirmation to a customer when an order ships, just like a large retail site. "That was a huge step for us," Paxton says. "We're trying to provide the services of a larger company, and one of the side benefits of that is we're getting a lot more testimonials by customers because it's an easy way for them to respond."

Over the past couple of years, Paxton says she's purchased sponsored listings in major search engines, which has increased her site traffic dramatically. This year, she intends to bolster that effort by making some of her Web pages static so search engines can find her more easily. She's also planning to start using the tracking tools available in Google to figure out how to convert more of her increased traffic to sales. She may also begin an e-mail marketing campaign for existing customers. Her most recent Web site overhaul, handled by herself, a Web designer, two public relations specialists, and an e-commerce programmer, took about six months-an impressive timeframe when you take into account that Paxton manages her business in her spare time, working full-time for the Brainerd Lakes Area Chambers of Commerce by day.

Paxton says she should be able to measure the return on her Web investment by sometime in the middle of 2004. While she didn't want to reveal current revenues or expenditures, she does say that sales for 2003 were 40 percent ahead of 2002, and that she expects even bigger returns this year from her current investment. And turning to the Web has certainly saved her money. "When I bought the business, one of the first things I did was print a catalog," she says. "I haven't printed another in three years-that's how important the Internet is to my business. It's saved me a couple thousand dollars a year."

—Sara Aase is a Minneapolis-based freelance writer.

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