Web revenue optimization model – The ultimate guide to maximize website profitability
How often are we posed with the question what more can be done to improve our website or drive more conversions? For most digital marketers, this is a perineal question that they encounter ever so often despite a site performing well year-on-year.
A model that we at Webentryx use to address this question is the Web Revenue Optimization model. Simple yet powerful, this model attempts to give perspective to driving continuous improvement to web based revenue.
The model is based on the premise that there are only 3 fundamental ways a site can strive to improve profitability and they are listed above. Theoretically, you either focus on one two or all three of these areas at the same time. However, a more practical approach will be to identify which of the areas are most relevant to your website first and pursue to address that first.
Fundamentally, usual search based activities such as SEO, Pay Per Click, Display and Social advertising essentially attempts to drive traffic from relevant audiences. Therefore, at given average conversion ratios and transaction values by increasing traffic, so that more revenue can be attained. However, if the numbers of users on a given website is already above the industry average and has seen traffic numbers growing year-on-year then looking at conversion rate optimization options first would be a more pragmatic approach. While many digital marketers pursue the options of driving traffic with search marketing, conversion rate optimization (CRO) often is overlooked or is put on the back burner.
Below we will look at some examples of the model with changes to CRO
| Traffic | Conversion Rate | Average Transaction Value | Revenue |
| 10,000 | 0.1% | US$ 500 | US$ 5,000 |
| 10,000 | 0.2% | US$ 1000 | US$ 10,000 |
Once a website reaches a certain level of maturity, doubling web traffic requires a large investment yet, in the above example increasing the conversion ratio by a 10th of a % point there has been a 100% growth in revenue.
In addition to the above, improving average transaction values (ATV) is more industry specific. As an example in the hospitality industry, it is observed that some hotels look at an overall rate increase across all room types and pricing seasons when looking at their yearly pricing models. Hotels may also look at improving the ratio of higher room categories room nights sold to drive the improvement of ATV.
As mentioned earlier, this model is applicable to a website at any stage of its lifecycle. While a more mature website might need to consider the Conversion Rate Optimization or the improving ATV route, a new website will most likely need to focus on ways of driving more traffic initially. The web revenue optimization model clearly demonstrates the potential of compounding and benefiting improvements, however miniscule they are, across each area mentioned in the model. Consistently measuring and keeping a tab of a websites’ average traffic, conversion ratio and transaction values and evaluating them periodically by applying them to the model will become a powerful system of maximizing the revenue potential of any website.