Guest blog: How to make sure your new ecommerce website is a commercially sound investment

Sure, it’s exciting to launch a new website. And it promises a number of benefits – better customer experience, a website you’re proud to show off, higher conversion rates and more sales, to name just a few. But what few people think about when planning a new ecommerce website is that often, the same benefits could be achieved for a lot less money, time and energy, simply by giving your existing site some TLC.

Of course, there are times where a new website is the only solution. If you have to install a new backend system, update to a new code base or create a responsive design then there may be no alternative to replatforming. For most however, designing and developing a new website is a nice-to-have that could turn out to be an expensive luxury.  The reliable and lucrative alternative is to put in place a structured Conversion Rate Optimization (CRO) program.

Evaluating whether you need a new website – the numbers

Once you’ve become open to the possibility of improving your current site, how do you decide if that’s a better option than starting from scratch? All you need is three numbers.

A – Cost of the new website

How much is it likely to cost to develop a new website?

Be sure to factor in all stages of website development – planning and requirement briefing; wireframing and visual design; coding, programming and development; quality assurance testing and training – even if the only cost is internal man hours.

B – Additional revenue from a new website

How much extra revenue do you forecast a new website will generate?

How much more money will a new website bring in? How many more visitors will convert on an easier to use website? Will improved cross and up-sells lead to higher average order value? Will visitors come back to buy from you more often?

Are there any other cost-savings? For example time savings and efficiencies, reduced reliance on development costs?

C – Additional revenue from optimizing the current site

How much extra revenue could your current website generate if it was optimized to achieve its full potential?

This number is a little harder to calculate, and doesn’t form part of most people’s business case planning, but it really is vital when evaluating whether a new ecommerce website is a commercially sound investment.

As a rule of thumb, when you implement a structured CRO methodology, you should expect to see gains of at least 20% uplift in revenue per visitor within 6-12 months.

Evaluating whether you need a new website – the maths

From here the calculation is easy. Take away (A) the cost of the new site from (B) the amount of additional revenue you expect a new website to deliver. Then compare it with (C) the additional revenue you could gain by optimizing your current website.

Is (B-A) greater or less than C?

If C (optimization) is lower than B-A (the new site revenue minus the cost) then developing a new website looks like a commercially sound investment.

However, if C is higher than A-B then you’d be best investing your time and money in optimizing your current website.

The grass isn’t always greener

It’s all too easy to see a new website as a panacea for all the problems of the current website. Often there is a tacit belief that the new site will magically make current limitations disappear and bring untold benefits. The idea quickly gains momentum and the whole team is excited.

However, whilst it’s true that sometimes a new website is the only solution, the fact is that nearly all new websites are beset with unexpected problems which take them over budget and launch late. One in three new websites perform worse than the old one at launch. Optimizing your existing site could well be a much more profitable route. And, call me biased, but I think that’s pretty exciting too.