This post was a first draft and has been replaced by: "Website Financial Value Map".
Deloitte is a worldwide high-end consulting firm. They produced a diagram called the “Deloitte Enterprise Value Map TM” which shows how to create value for shareholders. Even when printed on 17x11 inch paper, the 800 actions that you can take to create value are too small to read. The top part of this pyramid of actions is readable and is the most interesting. According to Deloitte, shareholder value comes from four sources: revenue growth, operating margins, asset efficiency and expectations.
I like very much how Deloitte structured the value-creation actions and this is my humble attempt to apply it to websites.
Website Value Map
The “Website Value Map” summarizes how a website can create value for an organization. It only uses the first three sources of Deloitte because I cannot figure out what the last one is (expectations). If you do, please enlighten me.
Revenue Growth
Revenue growth comes either by increasing the volume of revenue or by improved pricing.
Revenue volume comes from:
Acquiring new customers with a better coverage of the current geographical area or by expansion into new areas;Retaining or growing current customers with better customer management, cross-selling or up-selling.
The pricing element of revenue growth comes from an improved understanding of demand stemming from web analytics (visits, conversions and searches). You may also increase prices by projecting with your website the image of a great organization even though you are only working from a basement. As they say, “On the Internet, nobody knows you’re a dog” ;-)
Process Efficiencies
I know that process efficiencies with customers and partners can reduce costs and increase sales but I thought it warranted a category in itself. There is of course the example of Dell where the customer orders online and where Dell manages its part inventory in just in time fashion. Simple organizations can also benefit. Last night, I ordered November school meals for my daughter using a website. It was great. I did not fear that my order would be lost, that payment would be misplaced or that a clerk would make a data entry error. As a customer, I was happy and so was the supplier who saved costs and received his money faster.
Cost Reductions
The two major cost reductions come from selling and support. Additionally, with the near zero cost of maintaining an inventory of digital assets, the cost of these goods is reduced.
ROPO or Research Online Purchase Offline is the name of the phenomena where customers visit websites to decide what they want and then go to the store to actually buy the goods or services. This dramatically reduces the time spent with the customer because he is already well informed. Of course, if the customer does the data entry and orders online, the cost of selling that way is minimal.
Self service support was probably the first source of value when websites started. It was easy technologically since it only requires entering text. Nowadays, support can be more sophisticated but the savings are still there.
Conclusion
Your website can create value by increasing revenue, reducing costs or improving overall efficiency with customers and partners. When preparing the strategy for your website, you should examine the Website Value Map and try to identify what could be done with the website to create value.
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