In this Permission Marketing world, salespersons find difficulty in getting to see customers. An effective website is like a sales representative. It waits to welcome a prospect who is searching for a supplier such as you. The cost of a website should not only consider the initial cost of setting up the website. Funds should be allowed for continuing monitoring of the results of the website so that small adjustments can be made for maximum effectiveness. So how much should be in the website budget?
An effective website will generate sales much in excess of what a sales representative could develop. So if you look at what a sales representative might cost then this can be a point of comparison. One CEO this week in such a discussion said that a sales representative would cost him 10%. In other words the representative would work entirely on a sales commission basis. Suppose we consider a budget for the website on the same basis. In other words the budget for the website is set at 10% of the sales it generates. This would include sales made directly via a shopping cart (if one exists on the website) and sales that result from customers who contact the company as a result of seeing a web page.
Suppose the sales increase targeted for the first year is say $ 500,000. Then the website budget using the 10% rule would be $ 50,000. This high value points to the strong effectiveness of Internet Marketing using a website. In practice one third of this might be a lean but workable budget. Let’s examine how a budget of $ 16,500 or 3.3% of sales would be applied. Note that this includes not only outside cash expenditures, but also the salary cost of the company personnel involved. The budget could be split with say $ 11,000 for the initial launch of the website and $ 5,500 applied to the monitoring of performance and the improvement activities for the website. In future years, only the second category of budget expense should be necessary.
Some may find even these numbers slightly higher than they had contemplated. Using smaller budgets can be of some limited use provided they are very carefully invested. However if more money is available beyond the minimum, it is likely that the return will be much higher in Internet Marketing than in any other marketing activity or in hiring more Direct Sales people.