Finding a Return On Internet Investment

1. Set Clear Business Goals

The business goals of Internet and Web initiatives should be rooted within your client's overall business goals and objectives, and should be clear to all participating parties prior to implementation. Suppose, for example, a company wants to save on operating costs in the upcoming fiscal year. One way to do so would be by building an extranet for it. More specifically, the business goal of the extranet could be to reduce costs by 15 percent by enabling its customers to obtain frequently requested information via the Web rather than contacting a live person at a call center, who then has to manually mail, e-mail or fax the requested information.

2. Choose the Right Measurements

Next, a measurement model must be constructed that monitors the initiative's progress toward achieving its goal. A measurement rule of thumb to follow is: If the progress toward its goals can't be measured, then an initiative probably shouldn't be built.

To measure whether the extranet example is reducing operating costs by 15 percent, feeder metrics,which would include a combination of e-metrics gathered from the extranet site log reporting as well as metrics that are external to the extranet application,need to be collected. The extranet logs would provide number and frequency of customer extranet visits, duration of customer extranet visits, amount and type of information accessed from the extranet, etc. Feeder metrics gathered external to the extranet include number of call-center customer calls, duration of calls, amount and type of information requested during call center calls, etc. Actually, the baseline for the call-center metrics could be established before the extranet launches, then compared to the ongoing numbers to determine changes in volume.

It's best to limit the number of metrics to include only those that directly correlate to a business benefit. Another rule of thumb is not to have more than 10. Metrics should be chosen wisely, and it may be necessary once an initiative gets going to revisit and adjust the metrics or to examine new metrics altogether.

3. Evaluate And Adjust

Metrics can instantly begin to reflect if an initiative's strategy is playing out. If they are chosen properly, they will show value quickly and allow for fast adjustment to the initiative. Suppose after six weeks of use, your client's extranet doesn't seem to be decreasing call-center volume and associated costs at a fast enough rate to realize the established goals. Upon exploring the call-center feeder metrics, it might be determined that two pieces of customer-service information were omitted from the extranet because of the cost to digitize them. But they happen to be the two most requested pieces of customer-service information. The company can immediately make the decision to digitize and post the information, and then begin monitoring the subsequent changes. Because metrics were being gathered from both the solution (the extranet) and the nonsolution (call center) side of the initiative, it was possible to make this change a short time after initial execution.

ROII analysis pays for itself most of the time. Spending the time to apply the technique can go a long way in deciding which Web and Internet initiatives to implement. Putting an ROII model in place can help a company answer the question, "How is your Web or Internet initiative doing?" with greater confidence and more business value.

Dean Rizzuto ([email protected]) is founder and president of New-Guard, a Boulder, Colo.-based e-business consultancy.