Web optimization and diminishing marginal returns

Professor Paul Samuelson stated the law of diminishing marginal returns is one of the most famous laws in all of Western economic theory. In simplest terms the law of diminishing returns means that you can throw twice as many resources at a problem, but you should not expect to necessarily get twice the results you want. This is one of the central messages of Seth Godin's book Permission Marketing.

Godin begins that book by observing in recent decades consumer oriented businesses have spent more and increasingly more money on mass-market advertising, but with decreasing effectiveness. In part this is explained by the economic principle of diminishing marginal returns. It's not the only factor in play, but it is an important one.

The idea of diminishing marginal returns is especially important for small business owners to consider when contemplating directing scarce resources toward web site optimization. Of course every small business web site owner wants more business, but the ever present questions are, how much does acquiring one more customer cost, and is it worth it?