ROI of requiring user registration online

I’d like to offer my two-cents on an article featured on Techmeme but displayed on Publishing 2.0 in regards to what’s the point of having user registration on a site? Does it ultimately lead to any real benefit for the users? At one point, when you had password protected sites/user registration, there was an aura of exclusivity. There’s an interesting point made in the article:

The theory goes that personal data collected from registered users enables sites to better target ads and charge premium rates. But I wonder whether the lost traffic from users who choose not to jump through the registration hoop — which I bet is particularly true of NYTimes’ large volume of visitors from search engines — outweighs the gain of higher ads rates (assuming NYTimes’com is consistently able to charge higher rates).

Obviously when you “register” on a site, you’re bound to know that your information is going to be used to help the company put together an assessment on who their audience is. You may be signing up to receive targeted email newsletters on a periodic basis or signing up for a sweepstakes or whatnot, but from the company’s perspective, your information will be used for several marketing reasons – segmentation, online advertising, and market research.

So let’s get back to the basic question – is there an ROI for having a registration system on your site? I don’t think so, but I think that people have been prone to signing up for these things anyways simply to receive newsletters. Now for sites like the New York Times where they may no longer offer exclusive sites, this may be entirely different. But the fact that people sign up to receive newsletters from places, like travel destinations, may be related to the desire for them to get “exclusive” deals like hotel package rates, tour ideas, etc. – or basically targeted emails.

Now obviously you don’t want to abuse this system since your customers will sign up for the user registration – a point that is extremely clear in the Publishing 2.0 article.

…NYTimes.com claims that registration only takes “a minute,â€� but it takes more than a minute to decide whether to share all of this required personal information…

Now this is a pretty bad thing to do. Users will want to receive targeted e-mails and are probably willing to give a little bit of information to your company, but at the same time, don’t abuse their trust and friendliness by having them fill out a registration form that consists of 30 fields when you can get enough information out of half that amount at most. Think usability when you put together a registration system. Does it truly make sense what you’re doing?

Oh and since privacy is a big thing, make sure that you list out clearly why you are collecting this information – besides sending them targeted e-mails – and let them know where your privacy policy is on the site and whether you will take the information that they provide them and sell them to third-party companies (which I strongly think should NOT happen).

So go ahead and have your registration system on your website – you’ll probably get a lot of people on your site register and have a targeted database for your e-mail marketing and online advertising efforts, but make sure you add some tracking to know whether your efforts are working. The ROI may vary by product and may not be as high as other marketing ploys, but at least it has some other benefit, albeit minimal…