When Money Is No Object: Value Calculations for Non-Profits
Website analytics, when used effectively, depends entirely upon choosing the right Key Effectiveness indicators for the website. What is the reason for the existence of the website, and how does it contribute to the business or organization? What actions on the website indicate a conversion? And finally, what is the value of each of these conversions?
Determining this value is not an easy task, but this is the step that makes everything else worthwhile. Without determining some kind of a value for the successful interactions that occur, how is it possible to determine the overall impact the site is having?
When the website is in support of a for-profit business, the task can be even more difficult. After all, if the website is part of a business designed to make money, we have an ultimate measure to start from – the profits of the company. It’s usually not trivial to then distill down the value of the website, and then the value of each conversion on the website, but at least there is a clear baseline from which to start.
In terms of optimization, for business, revenue is the objective. For non-profits, revenue is a constraint.
So how can we set a value for conversions for non-profits if we aren’t even trying to make a profit? The first step is to get out of the limiting mindset of equating value with money. Sometimes it makes sense to think in financial terms, but not always.
Remember that every website exists for a reason. Creating and maintaining a website is a drain on money and resources, so there has to be a reason for its existence. Exactly what that reason is forms the basis for the value calculation. But in general, the value of a conversion can be categorized in three ways.
- Economic value. Not everything for a non-profit revolves around the bottom line, but there is always a financial component. Sometimes that financial component can be grasped in one way or another. Some non-profits include raising money, for themselves or for others among their goals, so this activity can form the basis for conversion value. Alternatively, some websites are in place to save money, perhaps providing information on-line instead of through salaried staff. The amount of savings can be used as the basis for a value calculation. In these cases, money is the direct objective.
- Relative value. Not everything lends itself to a pure economic analysis. Particularly for non-profits, if your objective is not to make money, sometimes other measures work better. In this case, the value you attribute to each conversion is not designed to capture financial aspects, but rather to measure benefit. In these cases, the values are designed not to capture an absolute measurement, but instead to capture a relative measurement, showing how the value of the website changes. A relative measurement cannot exist in isolation – it requires context to have any real meaning, and is only good for comparisons. These comparisons are usually made over time, so improvements in value can be measured.
- Hybrid value. As was mentioned, for non-profits, money is a constraint, not an objective. So, although it is not the entire reason for existence, it does sometimes make sense to incorporate it into a measurement, but as a limiting variable. This leads to measures such as benefits accrued per dollar spent. There is still a relative aspect to these measures, since the benefits accrued are often relative. But at least they can be related to something a bit more substantive – the money that is input.
Depending on the organization and the objectives of the website, the mix of the different types of measures will vary, will always be customized, and will often change over time. But maximizing the use of analytics always involves giving a firm value to the conversions on the webiste.