Digging for Gold

This year we asked a panel of outside judges -- all experts in their fields -- to assess Web sites submitted by Inc. Technology readers.

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User's Guide

The third week in September was a long, hard, gray week at the Inc. offices. Too many of us had stayed up to the wee hours slavishly watching the Olympics. Like my colleagues, I couldn't tear myself away from the games, despite our many criticisms that this year's contest was overproduced. I had to keep watching as the Romanian women took the gold in gymnastics, pushing the Russians out of first place. I was alternately fascinated by Svetlana Khorkina's good hard sulk after she slipped off the uneven bars and cheered by the open smiles on the Chinese women's faces as their bronze medal was announced.

But through the next few tired days, struggling to concentrate through the dim fog of my Olympics-laden brain, I started to wonder: What are contests good for? Why do we care so much? Beyond the sheer joy of winning -- and the curiosity that grips most of us about who's first, best, strongest, fastest -- awards should be good at illuminating what works. At the extreme, the Olympics showcase world-class techniques for running, swimming, and swinging over parallel bars with grace, efficiency, speed, and creativity -- not to mention good sportsmanship. In business, by observing how the best operate, we should be able to glean how to run our own companies with more grace, efficiency, speed, and creativity. And amid some wincing, we should also learn a lot from the mistakes of the losers.

For the second year in a row, Inc. Technology readers submitted their companies' Web sites for rigorous evaluation. This year we asked a panel of outside judges -- all experts in their fields -- to assess how well the entrants' sites supported their businesses. We identified five broad but fundamental categories in which Web sites could help entrepreneurs grow their companies: customer service, marketing, return on investment, innovation, and community. What we learned -- with a few hurrahs and winces of our own -- were the following six invaluable lessons for creating a world-class bricks-and-clicks business:

You cannot succeed at what you do not measure. Entrants in the return-on-investment category had to show that their sites provided a significant bottom-line impact or that they allowed the company to introduce a profitable new product or service. But most entrants -- and even the winners -- were not nearly thorough enough in their measurement of ROI to satisfy accountants or potential investors, at least according to judge Nicholas DiGiacomo, former vice-president at Internet-strategy consulting firm Scient Corp. "Saying 'I got a lot of new business when I put up my Web site' is not the same as saying 'I measured a 23% yearly increase in my bottom-line profits after taking into consideration all the fixed and recurring costs of establishing my Web presence,'" he said. He counseled the need for the nominees to calculate the numerous ongoing costs of running their sites, including customer-service outlays, for one example. He stated sternly: "If they ignore the cost of their own time, they can't calculate their bottom line. Such businesses will not survive for long."

Most banner ads are like diamond-studded dog collars: expensive and useless. Raymond K. Lemire (a.k.a. the "Big Parmesan") spent a whopping $30,000 on banner ads for his pasta-club site, www.flyingnoodle.com (which took second place in marketing), only to discontinue them when he discovered they weren't producing any visitors.

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