Sunk Cost Fallacy: Is Your Website Worth What You Paid for It?
While running a business, you get to learn about the costs of every component of your business and the value of that component. You know your material cost down to a single roofing nail or gallon of cleaning chemical. And you most certainly know the value of having the appropriate inventory of products to get a job done without delay.
But do you know the cost versus value of your website? When it comes to your contractor marketing efforts, how do you determine the "worth" of your website?
Let's Talk About Cars for a Moment
Say you're in the market for a new vehicle. You visit the dealership, sign the financing agreement, get your keys, and drive off the lot.
The moment your tires hit city streets, the financial value of that vehicle is nowhere near what you just agreed to pay for it. You wouldn't be able to get that value in trade-in if you made a U-turn and came back onto the lot. You wouldn't be able to sell it on your own and get what you paid.
That's not to say that the vehicle doesn't still have value and worth to you. If you got the vehicle for work purposes, or for a family member learning to drive, or to hot rod around town, the vehicle's value to you isn't contingent on dollars and cents. Instead, it is worth the function of the job it gets done for you.
The Same Idea Applies to Your Website
If you spent $10k at a boutique marketing agency to get a website built, the moment they hand over those digital "car keys," the website is no longer worth $10k. It's worth what that website does for you – how it performs for the functions you need it to complete.
How Do You Measure the Worth of Your Website?
For other industries, there is a variety of reasons to have a website. For contractors and home service providers specifically, you want a website that 1) attracts and informs users 2) in a way that also is effective for search engines 3) that will convert visitors into leads.
Regardless of what you paid for your web design and code, the true value and worth of your website are in how it helps to build your business.
If it is a brand new website that you know was developed and is maintained with SEO in mind, you'll need to assess how effective your site is at those three criteria by reviewing the trend of your "impressions" (the number of users who can potentially interact with your website as it loads on search engine results pages) as well as clicks and leads over time.
If it is an older site, you'll need to evaluate if search engine optimization was even a consideration when you first had it built. Not every "web design" company develops sites with specific search engine optimization plans.
Back to the Car Analogy – What Happens When the Vehicle Isn't Working?
Whether it is a month or five years down the line, what happens to your previously new vehicle when it starts to act up. Most people look at the original price tag and say, "Well, I spent $XXXXXX on that vehicle, so I'm gonna get my value out of it" and drive it until the wheels fall off. But what happens when the vehicle doesn't work like it's supposed to. Say you first got the vehicle for work purposes, but now you can't rely on it to start up every morning, or you have to throw more money into constant repairs and fixes to keep the vehicle running poorly at best. All so that you can try to get "get your money's worth" out of the car.
This is called the "Sunk Cost Fallacy" – The idea that you are willing to suffer additional stress or taken on additional financial costs to try and salvage the original cost of the purpose. More people know this as "throwing good money after bad." We already know that the true financial cost that you originally paid for the vehicle is NOT the value of the vehicle today – and that its true value should be determined by how the vehicle completes its intended function.
Is Your Website a Clunker Now? Is Your Website Working Like Its Supposed to?
Just as before... We already know that the true financial cost that you originally paid for YOUR WEBSITE is NOT the value of the website today – and that its true value should be determined by how the website completes its intended function.
If your website isn't making positive steps toward attracting search engines and users with good information and converting visitors into leads, then where is the "value" to your business?
Make sure you are regularly contributing content like project content and reviews to properly fuel your website and track your success over time. Assess the worth of your website to your business based on the value it brings, not the original price tag.
About Chris Lonergan
Chris Lonergan has over 12 years of contractor marketing experience with Footbridge Media. With a background in web design, print design, content creation, and online marketing, Chris is focused on providing quality marketing and business solutions in the construction and service industries - helping small business owners to more efficiently manage their companies and grow their operations.
Chris Lonergan has previously contributed to and/or been featured in PM Magazine (Plumbing & Mechanical | Contractors x Engineers), theNEWS (ACHR - Air Conditioning | Heating | Refrigeration), Service Roundtable's blog, inPAINT Magazine, the SMB Marketing Agency Show, and the Green Industry Podcast. Chris is also a past SGI/CertainPath breakout session presenter.
