Just the other day, Dave McClure from Startonomics posed a question to me:
What is the most important metric for a new business to measure?
As you may already know, for any large company profit is the most important metric to measure. But for new companies, what is the most important metric to measure?
I personally think that engagement is the most important metric for a new company to measure because if your potential customers are engaged then there are multiple ways you can monetize them. For example John Chow’s readers have been highly engaged from day 1, so every time he tells his readers to buy or do something, they do. This is the main reason he is able to make $40,000 a month from his blog.
To take it one step further, if you happened to start a new business the most important thing you could do with each of your customers is to make sure they are engaged. For example, if I started a dance studio and had a few “engaged” customers, I could find out how to improve the business, ask them to help spread the word about my new dance studio, and get them to buy other dance products from me.
Now, you may disagree with me, which is fine. And I’ll be the first to say that I could be totally off. So I ask you: what do you think is the most important metric for a new business to measure?
Update 1: The guys at Startonomics graciously offered to give two commentors a free pass to their conference on October 2nd in San Francisco. (winners will be announced on this blog post on Friday)
Update 2: The winners will also receive $250 each, which should cover most of the expenses to travel to the conference if you aren’t located in San Francisco. If you are located in San Francisco and happen to be one of the two winners, you will still get the $250. 
Update 3: Startonomics selected Raymond and Deep as the winners. They will be contacted by email so that they can be given their free passes as well as $250.
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I agree. Engagement is important. Nice Neil!
Just some thoughts about how to engage customers… You can have incentives for customers to win prizes or free services to get them involved with your business.
Other types of promos might attract people to your business… by word of mouth.
Incentives can work, but I kind of hate them. I rather provide value through the service and create engagement from that.
I agree that it’s better to create a value for service…It makes your companies image/reputation better, but sometimes people are just straight out looking for free stuff… or incentives so it works.
Don’t get me wrong, they do work, but those aren’t the type of customers or visitors you want. You want people who care about a good product or service because they will be willing to spend the extra dollar for something that isn’t junk.
Im a wedding photographer so my business HAS to come from referralls. I don’t want repeat customers!!!! I have to get to know them and what they are interested in. What makes them tick. In short, I attempt to use the Harvey Mackey “Swim with the sharks without being eaten” questionaire. It asks everything from their habits to political view. I’m a republican b/c man is free to make as much money and happiness as he can. However, if there is a democratic rally going on and I can get some tickets then I would bring or just give them to a client of mine who was my politically polar equal. You have to offer value. that is, give them something that is meaningful to them. Experience, personal, worth, and just-for-kicks-just-to-say-i-did-it are of value you to people. At least in the business if you live by offering the lowest price then your business will die by the lowest price.
The cool thing about your business is that people’s decision to hire you is largely based on emotion. When you are getting married you don’t think about getting married again so you want things to be perfect. Due to this, you can jack up your prices as long as you know how to play on their emotions.
I think the number one metric is “Consistency.” Everything has to be consistent be it your identity, your advertising, your product or your service. A failed business if audited will always show a lack of consistency in at least one or all of those areas.
Sure no one is perfect but a habitual inconsistency in any of those areas will eventually kill or at best handicap a business if left unchecked.
Good point. When you tie your identity, advertising, and product with a consistent message you will create a much stronger impact than if everything didn’t fit together.
OK Neil I’m going to disagree on the dance studio. Different beast from online. Number one thing I would measure in the beginning would be new clients.
On day one you begin with zero clients. After doing your research set a realistic goal to incrementally grow that number.
Lets the your goal is five new clients by the end of week one. The goal for week two would not be 10, but rather six. That way you can plan to grow at a steady pace. If you see 10 that’s great, take the average of five and 10 (7.5) and that becomes your goal for week three. I’ve consistently brought ~40 new clients per month into a similar business using such methods.
The next thing I would focus on is referrals. How many of those dance students bring friends and family? That’s an important measurement since the ROI is huge. They are typically already presold on your services (from your existing evangelizing clients) and it’s easy to accommodate them amongst your existing clientele.
Now that your business is getting a steady flow of new clients and referrals you can begin incorporating additional products, packages and up selling. Don’t stop measuring new clients and referrals, and add the measurement of collections.
That’s how I’d do it.
Valid argument. For brick and mortar business measuring new clients seems to be more effective. Measuring engagement for a dance studio is useless if you only have one customer.
Not sure if its a metric but its important. How about relevance of your product to the audience?
Yea, I don’t think it is a metric. Your product should always be relevant and if it isn’t there is something wrong with it. A company usually has this problem when they create a product that they want instead of creating a product that their target audience is looking for.
After reading through your post again I realize I may not have been clear. I consider “engagement” an essential rather than a measurement. It goes without saying that it’s important, but for a dance studio model I would measure it by “repeat visits” or consistency.
Yea, by no means did I feel that you said engagement was bad. Repeat visitors just seems to be a better metric for dance studios.
I would love to hear what metric you feel is the most important for new companies and why.
Be convincing, honest, and show what you know. Nobody is going to take the new guy (or gal) at face value. We are all naturally born skeptical. Yes, engage your reader/client/customer, but also make them believe what you say when you’re engaging them.
It’s hard being the new kid on the block, but your best assets are going to be showing you know what your talking about, networking with others who’ve paved the way before you and developing an audience/clientele that can and will respect what you say.
Confidence is very important. Not sure if it is really a metric, but if you are confident (convincing, honest, and show what you know), you are more likely to do well.
good point. no one talks about confidence being a factor.
They don’t and in sales that is one of the biggest success factors.
What about overconfidence? Not sure if that is a hurt or harm. I mean, look at someone like Perez Hilton who is overconfident to the point of being hated by many. They hate him but he still gets millions of visitors.
I’d think for some though overconfidence would be a turn off. There is a time and a place for everything and sometimes people don’t know when not to say something. I know that insensitivity due to arrogance (overconfidence) has turned me off a blog before, and I’m probably not the only one.
On the other hand overconfidence probably turned 10 times more people onto Perez Hilton.
In the very early going, ‘Meaningful Activities’ are priority one. Milestones or goals really aren’t “metrics” per se, mainly because they vary so much from company to company due to natural sales or development cycles.
‘Meaningful Activities’ would be defined as any targeted activity that clearly contributes to the company’s early milestones or quantifiable goals.
I’ve used number of sales calls per week (with a human, not voicemail/one-way email), tangible marketing initiatives (notable press releases, endorsements, testimonials, mentions), product development feature betas, etc…
I’ve found that the bottom line is that Meaningful Activities, measured week by week, can’t help but lead to results.
I like the concept of using milestones. I use a project management system for my company and it has been very effective. At the end of the day at least you know you are closer to achieving your goal.
Milestones are essential, but they’re different for every business. I tend to think of ‘Metrics’ as things like ROI benchmarks, marketshare, etc…more like general principles that can be applied in any shop. Activities help you meet your milestones.
Same here, I think of metrics as thinks like ROI. Using milestones is just a method of accomplishing goals and in many cases these goals are metrics orientated.
I think it depends on your business first of all… but to give an answer, I’d say it’s the size of your
penistargeted audience ( targeted traffic). I think if you have an audience that’s looking for what you have, it’s easy to find a way to monetize them (sales, ads, leads, subscriptions, etc etc). I wouldn’t say they necessarily have to be engaged.Again, depending on your biz though, I could very well see engagement being the key metric.
Makes sense. If you have an non-targeted audience you may not be able to do much with them, but if you have a small targeted audience you are more likely to make money off of them.
I concur. I would like to add that engagement is a subsection of, what I call, User Quality. Quality users are inherently more engaging. Above all, I strongly believe in Quality Concentration, which can be defined as the amount of Quality users over the total amount of users. If one focuses on increasing the concentration of High-Quality users before expanding, one will encounter more success and less problems in the future!
Quality users are hard to come by these days. That is why I think this blog is successful. Quick Sprout isn’t the most popular blog, but you the readers, care about learning and sharing your knowledge.
For sales sites, I think its visitor value
Hey Neil,
Where do I get the “notify me of follow up comments via e-mail” plugin?
http://wordpress.org/extend/plugins/subscribe-to-comments/
Yea, for a sales site it the visitor value isn’t there, you won’t make much money.
I certainly agree with you there Jermaine, in my ecommerce site, I measure the amount of traffic to my site. That’s always the first thing I measure as well as the bounce rate.
I like looking at traffic numbers, but if the visitors don’t convert, what is the point?
Traffic is the oxygen, there is no one to convert without it.
But engagement will defintely help convert. Once you have the oxygen, then you can concentrate on the breathing (conversion). Actually, you should probably have a solid basis for conversion in the first place.
Yea but in some businesses it is hard to do that. For example what is a conversion for a new startup without a product?
I recon a good metric is simply whether the owner(s) are still sane! I’m getting to the end of my first year and I’m knackered because both mentally and emotionally I’ve been all but drained.
LOL! Never thought about that one. Don’t think it is much of a metric because whether you are sane or not, you can be doing well.
hahaha! welcome to the world of entrepreneurship , its a crazy lifestyle to live.
I believe that the most important metric for a new business to measure is simply their growth in relation to their goals. If a new business isn’t reaching their goals at the beginning of their efforts, then they are pretty doomed.
Whether their goals are in revenue, growth in online exposure, or in customer base and interaction; it depends on the type of business.
If you aren’t reaching your goals, you aren’t being successful. I mean, that’s what goals are for, right? To measure your success?
I think if you don’t hit your goals, you can be successful. Sometimes companies set unrealistic goals.
Its hard to set goals when you first start because there are so many unknowns, although when you pick steam its easier to set more realistic achievable goals.
So true, but companies that have been around for a long time set goals that are unrealistic too. I guess it is the nature of the beast, you always want what you can’t have.
No matter what start up business you’re in, it all boils down to revenue. That is why we’re in business in the first place, to make money. Conducting daily activities that contribute or get you closer to revenue should be priority of start ups. Although in reality many start up or rookie entrepreneurs forget the most important metric of all.
Revenue is a “super metric” because it shows that you are generating leads or web site hits and you are effectively converting those leads into customers, which proves customer validation. For every dollar of revenue you produce, you know you are doing something right with a portfolio of metrics to generate that dollar of revenue.
If you look at some of the failed dot com companies during the bust. Most of them had great plans of user acquisition although they did had idea now to monetize from the users. Only the businesses with the sound revenue models survived the dot-com shakeup.
So its pretty simple, everyday in a start up, as a founder focus on the core activities that get you closer to $ and you’ll soon have growth management, accounting, customer service…problems, heh.
You make a valid point because I don’t know anyone who went into business and did not want to make money. If a company doesn’t have revenue sooner or later, there is something wrong with it.
I recently read an article which suggested that the best predictor of growth for any company is the willingness of current users/customers to recommend your product to their friends, family, etc. The reasoning being that in doing so they are not only saying that they have have received great economic value, but they are also connecting themselves with your company and putting their reputation on the line which can be very powerful.
To some degree this is connected with engagement, that is, a customer is likely to recommend your company if they are actively engaged. The problem with engagement is that it doesn’t seem like it would be very easy to measure. Also, for some type of companies, say a soap company, engagement doesn’t seem like a very important metric (maybe I’m wrong here?).
Willingness to recommend on the other hand is very easy to measure “Would you recommend this company/product to a friend or relative?” and it seems like it would be meaningful no matter what kind of company you are looking at.
So would you consider this indicator to be viral growth or some sort of word of mouth marketing?
More than anything I would say that it is a good indicator that the company is providing true value to its customers. Call me idealistic, but I think that’s pretty important especially for newer companies.
That said, I believe the study found a high correlation between willingness to recommend and the growth of a company/product, which isn’t really to surprising. If you had a choice between two similar products and a friend of yours recommended one which would you choose?
here is a link to the article:
http://www.google.com/url?sa=t&ct=res&cd=1&url=http%3A%2F%2Fwww.bzzagent.com%2Fdownloads%2FHBR_OneNumberYouNeed.pdf&ei=8n2ZSJ61DIWipwSKvumxDg&usg=AFQjCNG9lAAaCaoD0aTWsXBHZVvT0sCEQw&sig2=Ae5tjk6_75j24OxQkRrBnQ
I also have seen the same thing. When we launched one of our software companies, Crazy Egg, it did well because people were not just willing to use it, but also recommend it to their friends. And right when we luanched it another competitor came about, but our growth was faster because friends were recommending it.
By the way, thanks for the link!
For web apps (not retail), I think it is sign up conversion X return visit. The first number tells your value prop and interface, the second number tells you engagement and probability of monetization.
If you’re at 5% x 5% you are dead, and that’s good to know.
Yea because if people sign up, you want them to keep coming back. If they don’t they will probably cancel their subscription or they may never buy from you again.
Someone else mentioned the number of new customers – one thing I want to start measuring is the percentage of sales from existing customers. After all selling to your existing customers is easier than finding new ones; if you can get enough people buying from you consistently you barely need to do any marketing. It’s also a great indication that you’re doing something right.
Engagement is good too, but what does it really mean?
Engagement is vague and can many different things to different people. I should have picked a better metric.
Measuring how many repeat customers you is a great way to tell how loyal your customer base is.
There are several inherent problems in trying to identify a single most important metric for a new company to measure.
First, (as stated by others) you have the arguement that all companies are different, have different goals, constraints, capital requirements, development times…..
This itself leads to a wide range of answers, & the conclusion that not one metric fits all as the most important.
Second, the metric has to be measureable. Now you have confined the question to items where data can be obtained / results quantified. Ideally you would want to utilize the results to better your company, so now you also have to be able to obtain the results in a timely manner.
Third, “new company” is a broad subjective identifier. The same metric that you measure on day 1 might not continue to be the best on day 672. Even though those 2 days are over 1.5 years apart, the company is still “new”.
Here is where I am going with this:
Geordie’s Meaningful Activities can solve all of those by
being any measureable item that is specific to a business at a given point in time and allows for evaluation of progression towards stated goals.
These activities can even be different w/in a company – IE the software development team defines it as X, the capital sourcing team defines it as Y, and the Sales team defines it as Z. All the departments are not only responsible for their Meaningful Activities, but also dependent on everyone elses. (Even if all the departments consist of a population of you and only you). In that sense, no “1″ is most important as they all rely on the others.
Any single metric needs a goal / target / context or you will end up with something like this:
I “Consistently” make 0 sales, and my identity, product & service are consistent w/ each other.
“Revenues” are through the roof, but my COGS are larger than my Revenues. — Making Revenue does not = making money.
Bottom line – Balance. Put the most weight on the metric(s) that you feel will allow your company to reach its goals and shift focus as needed.
If you are looking for an one-size fits all easy metric to watch to ensure success, then starting / investing in / running a “new company” might not be the best fit for your goals.
I agree that Revenue does not = making money in some cases. You have to consider revenue as an important metric for a STARTUP company, because from that point forward the startup company can figure out how to reduce their COGS and Expenses. Obviously there is not a one-size fits all metric, but I can tell you revenue is an important metric everyone pays attention has to pay attention to, especially in a startup.
The thing with startups is that if you can’t bring in revenue it can discourage the founders and employees. Sooner or later you have to bring in money some way or another.
I would agree revenue is an important metric; it simply needs context (associated w/ some goal), and will vary in terms of its importance just like all the other metrics.
The life cycle w/in the “startup” mode can vary drastically. I can say I wasn’t watching Revenue at all over the months of starting my company since I knew other pieces had to be developed before it would be significant enough to watch. During development any revenue certainly wasn’t shunned but it wasn’t even in the top 5 of metrics I was tracking. (Development of website, product, new idea generation, etc. compared to where they were yesterday were near the top). Of course all of those hopefully lead to increased revenues, but on any given day a new metric could be most important depending on where I want my company to be.
Never really thought of it from that perspective. For an application company development progress is all that matters when you don’t even have a product out. I guess there is no one important metric for all startup to go by.
I seen a lot of software companies stuck in “development mode” by working on features forever, working on development they may find later not to even meet the customers needs.
I’ve also seen startup development companies develop concepts for software with the feedback of their potential customers then secure “pre-orders” for the software. These companies seem to have revenue as a core metric.
So I suppose the most important metrics that matter to a company are what the founders / managers are interested in.
I would also add investors to that list if there are any.
Development progress is something you might want to track every day or every week, but for comparing one year to another revenue is still good – you just have to recognize that it can move a bit slower when you aren’t actively selling.
Exactly! With sales there are a lot of unforeseen circumstances, such as the economy can affect your sales in a negative way.
You are right, for each company the metric is going to be different. Even if you narrow it down to a new web startup, it will also be different because some companies could be a technology play while others maybe service orrianted.
right on, currently for my business the metric / goal I focus on is, “drive in more sales revenue then last month.” Its a small wins approach, which means I get to review the metric at the end of each month and its realistic & attainable.
After that most important metric, I analyze, how many unique visitors, how long they are staying, how many times they return, and how many customers have left feedback of their experience working with our company each month.
Good metric as long as your business isn’t seasonal. But even if it is, you can still do more than last year.
I think this is a very intelligent, thoughtful response. A company that can monetize a few highly engaged clients would certainly want to focus on engagement, whereas a company that requires a high volume of sales or visits to monetize should focus on audience acquisition. As each of the above companies mature, their focus will almost certainly evolve and change to meet the current challenges they face and the future goals they’ve set for themselves.
The key is being able to correctly identify what your highest priority is at that point and time, getting your entire team on board with that priority and revisiting that on a regular basis to ensure that it remains your highest priority.
Good point! Not only will each company have a different metric, but it will also change as the company grows.
This is an excellent question and a very relevant one as well.
I’ll start with the caveat that all business are different, but for my particular business and having just launched publicly recently, I’d say that the answer is “Frequency of visit”.
I agree completely that “engagement” leads to the ability to monetize but “frequency” lends itself directly to whether or not the users find enough value to keep coming back for more.
It’s the metrics around “frequency” that show me that I’m providing real value.
I can see how frequency goes hand in hand with engagement. If people keep on coming back to your website, then they are engaged visitors.
It takes a lot of patience and a very strong work ethic to make a business a success. I think it is even more important with an online startup and in today’s marketplace. Nothing is as easy as it sounds like it should be and you have to keep at it every day for months and months.
Your business should be a passion and don’t make money the whole focus of your efforts.
Passion is important and you will be more likely to succeed if you have it, but without money how would you be able to continue to do what you love? People have to pay bills, buy food, and put a roof over their head.
You figure out a way to pay the bills until the passion becomes profitable. Plan to work both a physical job and the online business for awhile. I think I’ve always had more than one job.
It is a good solution, but that is a great way to burn yourself out. Plus if you spent all your time on your company, it would grow faster.
None-the-less, I get what you are saying. If there is a will, there is a way.
I think the most important metric are emerging trends that you can take advantage of. Example – all of a sudden I am getting traffic for purple socks when I used to only get traffic for purple shoes. Identifying the emerging opportunities and prioritizing them is a huge area that is often overlooked. Becoming a cornerstone early on, dominating a through identifying emerging trends, and even a chance to become eponymous with a subject or product is a huge value.
If you want a good way to take advantage of emerging trends, you should check out Google Trends. Anyone who writes about content on there within 30 minutes of it being popular, usually does well.
I think this goes along with consistency and engagement but I feel that the most important thing is commitment. That word pretty much sums it all up for me. When users become engaged with your services or product and if they consistently come back, because they see you as valuable – you’ve gotten them to commit an amount of time, which is really the key in this information age.
I read this in an Ad Age article – “”In a knowledge-based society in which knowledge is free, attention becomes the valued commodity.”
Essentially, if your readers/viewers/consumers start seeing you less as a business and more as “a being” that cares, they’re more willing to devote that time to helping see you grow.
Nice tip! I think this is the main reason people like mom and pop shops. When you walk into a mom and pop store you can tell that they care about you.
I guess with a standard web analytics utility (e.g. Google Analytics), this could be measured using the conversion goals. For example, you might have a goal be the submission of a comment on a blog, a new post being created on a forum, or a user creating a new profile on a members-only site. At least I assume this is what Neil is getting at.
Yep! It doesn’t have to be a sale, anything that is important to the business owner works. Like for this blog, I measure engagement through Feedburner click-throughs and the number of comments.
I think the the number one metric is “Solidity”, when you or your company look solid you are able to engage people no matter how small you may be, there is a lot of mistrust on the Internet and people are scared of being ripped off, so once they find a solid source of whatever they are looking for then they’ll be engaged.
Good point, but I am not sure how you can measure “solidity”. I see it more as that you need to know your shit or else you won’t succeed.
Hey Neil,
I would have to agree with you that engagement is extremely important for new businesses to measure and improve – especially in the Internet age when we are competing with so many other things to get the attention of potential customers. However, I don’t think engagement in itself is a metric. It’s not measurable. Engagement metrics might include things like blog comments, time on a page, subscription levels, downloads, etc.
Btw, I’d love to go to the Startonomics conference in SF!
Why isn’t it measurable? I understand that you may not be able to put a percentage around it, but I could compared a blog posts traffic VS number of comments. The more comments per visitor could mean high engagement.
Awesome article Neil! I agree about the readers being engaged in John’s blog but I also think that there are different levels of engagement for different types of businesses. True b2b businesses may have a different metric that they feel is more important. I hope I get to go to the conference and the best part is, that it is just a couple days shy of my birthday!
I can’t guarantee that you’ll win, but either way, have a happy early bday!
I am with you- engagement is the most important, and also probably the most difficult to measure.
The reason I think it is difficult is because for every business it means something different. Sooner or later someone will be able to measure it for a specific group of websites.
I am very impressed, as i was running free blogspot network and doing promotions for that but now i am very very eager to have one blog like you or john chow, i can’t believe $ 40 k in a month? I am going to implement, i appreciate your effort and that encourage me for making my own blog.
You should also check out http://zacjohnson.com/. Both of those blogs will help you make more money.
Dear Patel, do you think their blog designs helps them to earn lots of money. I look forward to have a nice article which describe tips to generate more revenues from you and the most important thing how to get more subscribers?
It can, but that is not a subject I blog on. If you are interested in learning more about that subject you should check out johnchow.com, shoemoney.com, and uniqueblogdesigns.com.
Thank you buddy,
I often visits UBD and i got some nice tips to develop a blog which can be useful for earning revenues. I will soon check out shoemoney and johnchow for blog development.
No problem! You may also want to check out copyblogger.com and problogger.net.
I believe that for new business identify loophole of your competitors work on that always. This will give your business more credit than your competitors.
If you can provide something your competition isn’t, it is a good way to gain an upper hand.
If you put your customers first, and they realize that, then you will have their attention. Then, if you provide quality service, you will have them engaged. The profits will take care of themselves. FedEx lives by this slogan, PSP-People, Service, Profit. I have found that this works with my business as well.
I do agree with Fedex’s approach, but I feel you shouldn’t start a business unless your product or service is going to be great. Why have something that is mediocre.
Chris,
PSP! It works for our business also. You would be surprised how many people who start businesses never focus on customer service.
Ah, I thought he meant Fedex’s delivery service when he said “service”. Customer service makes more sense.
In addition to my earlier comment, I would like to point out an essential metric for all businesses. Let’s call it Business Health.
Every business should have a Business Health Meter. This meter may include qualities such as efficiency, goals, connections, customer service, products, research and development, etc. The point is every business must have a method in place to measure their health–to assess their situation during the past, in the present, or for the future.
Yea, overall you want to see how well or poorly you are doing. The easiest way to do this is to measure your main goals and compare them to the last few months.
I agree with that. As well as the focus on customer service. You can have hundreds of customers, but if you cannot and do not have repeat customers, and you constantly have to branch out and find new ways to attract new customers, then it is too bad.
I also like the idea of repeat customers. One time customers are ok, but I don’t like the idea of not being able to up sell.
If we are talking online and offline, I’d propose that the most important metric(s) for a new business to determine and (then) measure are their key ratios.
Depending on the business, these could be:
- Visits to lead
- leads to sale
- revenue/profit by line of business or product
- customers per rep or account manager
- avg sales cycle
If you need 1,000 visits to generate a single lead and getting new visitors is challenging or expensive, then a growth strategy might be to increase visitor engagement with the hope that you can lower your visit-to-lead ratio. However, in some cases it might be easier or cheaper to simply double the number of visitors visiting your site.
Same with cold calling for sales – For some people, it is easier to make more calls than to take a smarter approach!
A man’s got to know his limits
That makes sense. I always wondered why some people don’t concentrate on conversion before they try and get more visitors. But as you said, “a man’s got to know his limits”. I guess it is easier to do what you are good at compared to learning something new.
Why are you puting all links in comments into “external nofollow”? You think that it is honestly?..people making so much good unique content for your blog but you doing this…!
If I removed the nofollow attribute, I would get way too many spam comments. It is easier to reward commentors with the top commetors plugin in my sidebar.
I agree with ben, but what about customer satisfaction after the point of sale?
Customer satisfaction is important. If a customer isn’t satisfied they won’t refer other people to you or ever come back themselves.
I think the best metric to measure a new business would be your improvement in your business. This doesn’t mean that you are pulling in a profit or you didn’t make a million overnight etc. It means that you have seen improvements since you started. This just means that your customers for the most part like the service or product and your employees you hired all seem to be doing there job. So i think with a new business you can’t take anything for granted and you just have to hold on during launch to make no big mistakes and then from there start pulling a profit.
Improvements are great, but I personally prefer revenue. One of my goals is to create a business that makes 1 million dollars the day it launches. I think I can get to a few hundred grand in a day, but 1 million seems a bit hard.
Yes, I agree with you. Engagement is one of the most important part of starting up the company.
Yep! I just hope someone figures out how to measure engagement on the web. A lot of people feel it is important, but it isn’t always easy to measure.
For what it is worth, Forrester research has tried to identify engagement for some time now. I haven’t read their reports (as those things are pricey), but they basically think it is some amalagation of different site metrics (hits, stickyness, influence, etc.)
Their latest attempt:
http://www.forrester.com/Research/Document/Excerpt/0,7211,45730,00.html
Thanks for the link!
The most important metric for a new business to measure is the customer satisfaction. As Tom Watson said: “If you don’t genuinely like your customers, chances are they won’t buy”.
It is always nice to have satisfied customers, but if you don’t have too many sales, measuring the satisfaction won’t do much for you.
With my blogs I run in the entertainment niche I always judge by traffic levels being on average at least and best of all I really look at them as successes or the beginning of being a success when we get contacted by large companies in that niche promoting or pitching to us.
Traffic can be a bad metric because it doesn’t tell you how many of your visitors are qualified. I rather have 100 qualified people reading my blog than 1 million people who don’t care about my content.
I would say for sure it’s listening to the customers, and soliciting feedback. If you don’t mold your product, service to what customers want, then you won’t grow nearly as much as you could.
If you’re a massive company like Coca Cola, or Microsoft, you can spend millions to convince customers of what YOU want them to want, and create markets that didn’t previously exist.. but in the absence of that, it’s important to listen to customer, provide exceptional customer service, and get them involved in the process.
People who feel like they matter, and have a stake in the process are much more apt to get involved, stay involved, and tell others about it. Everyone likes to feel good, and feel that they matter.
Good point. Many business owners tend to tailor their products around their tastes, instead of their customers.
Listening to the customer is always important, and making sure your staff are consistently polite in your absence is also very important.
The staff part can be tricky. If anyone knows how to figure that one out, please let me know.
I would say that each business type has its own metric to look at, since one company might have one numerical value to keep a watch on, while another company might not even have that statistic to work with. Most would seem to have a numerical value as their guiding factor.
You are right, every business is going to be different. For me, I measure revenue and subscription growth. For other businesses it could be measuring traffic.
A lot of people might say profit, but for a bootstrapped company I would say it’s cashflow. If you can buy an for $10k but get net 30 terms on it and make $7k back within a month, the ad only cost you $3k (which you will hopefully make up as it continues to age).
Just my 2 cents.
Nice metric! Cash flow is what kills a lot of small businesses.
We did a net 30 on a $12,000 ad with HGTV.com and it definitely backfired!
Ouch that sucks. That is a big amount of money to waste.
Hey Neil I didn’t know you had mad dance skillz. ; )
That was a interesting response to this question… engagement. Pretty deep. It’s really hard to argue with that.
But I want to raise the question…if it’s profit for a large company then maybe it’s profit for a small (or new)company too. But they way in which that company achieves profit is different.
See that small company won’t be in business very long if they don’t have profit…and pretty soon doing what they love or providing solutions to people in areas that they are passionate, will be a drag. It’ll become something they do in their spare time while they find away to make money…
…But, maybe the KEY to having profit is engagement.
Meaning that that should be apart of their marketing strategy… “Engagement Marketing”. Don’t know if that has been coined yet, but hey… lol
Ok I don’t want to start rambling ; )
I like the concept of using milestones. I use a project management system for my company and it has been very effective. At the end of the day at least you know you are closer to achieving your goal.
That works well for a company that doesn’t have a product yet, such as a new .com startup.
I am very impressed, as i was running free blogspot network and doing promotions for that but now i am very very eager to have one blog like you or john chow, i can’t believe $ 40 k in a month? I am going to implement, i appreciate your effort and that encourage me for making my own blog.
Yea, John is a really successful guy. Plus a lot of his income goes to charity.
Traffic / Visitors / Customers (not so much leads).
Or “good content”….How do you measure that though – Possibly through amount of comments, or amount of RSS subscribers. Traffic is one thing, but if people subscribe you know theyre interested.
I actually measure my blog’s success through RSS subscribers, comments and traffic.
i think feedburner reader will show you how much your visitors like your blog/site . if much subscribers this mean that they like your words if not much hmm try to make a quality posts .
It does, but it doesn’t give you too many details that sites like measuremap.com once did.
i try to signup with them but it seems that they don’t accepts new member during them improvement ” We’re making improvements and not currently offering new accounts. Sign up and we’ll let you know when we do: ” actually i added my mail to get email if they start again .
Yea, Google acquired them and they are trying to fix things. Hopefully they will open the doors back up soon.
I would say that traffic and pageviews would be the best measure of success for a blog.. but it is good to be engaged with your readers and listen to what they have to say
Those are good metrics. Links could be another one for a blog. The more blogs that link to you, the better off you are.
not in all sites mean this . because much sites have high traffic rank and didn’t make any success .
but i agree with Neil about links from the others .
For blogs it is though. The more pageviews per user you have on your blog, the more likely your visitors are engaged.
Confidence is very important And I also agree that it’s better to create a value for service…It makes your companies image/reputation better, but sometimes ppl r just straight out looking 4 free stuff or incentives so it works.
When a company measures success by money it almost feels like they’ve lost their originality, their goals, and any soul they had left and have fully been “Corporatized”. (Like Google has / is in the process of doing)
Yeah money is the bottom line but there has to be more to life than green paper and numbers on a screen. I feel like a lot of businesses have lost touch with the human element.
A business is about doing a service to people or creating a product for them and doing it well. And in exchange for your fine services and products they reward you.
But something has happened in the business world. Something Terrible. People start businesses not to solve problems or help people but for the sole purpose of making money with no care for the human element whatsoever. Fortunately humanity has a built in mechanism to fight back. Humans are emotional creatures who make emotion based decisions. So when people have to choose between a faceless emotionless corporation or the little guy company who’s fighting his way to win their affection… People will choose the company that cares about them.
This is what allowed little “2 guys in a garage” Google to rival Billion Dollar Corporation Microsoft. This is also the reason why little opensource Linux is slowly rising and already dominating the server market. And the reason why crappy featureless little Craigslist can compete with Ebay and Amazon.
Mark my words… The future of battles between competing businesses will not be done through marketing or ads or any of the Bull S**t they currently use but by winning the hearts of Americans and gaining their emotional support. Why? Because Americans root for the little guy, it’s our culture.
â–ˆ Kris Tian â–ˆ
Not really. From day one my company measured success by money. I went into business because I wanted to make more money.
How are you Neil, Offering readers something free engages them the most. It’s simply just being real to all your readers. They eat it up, especially if you show them ways how to make money for free. Believe me it’s the best method ever. Sooner later they trust you enough to buy from you, but I would only offer stuff that works.
I am good.
It does, this is why a lot of bloggers offer free ebooks.
I personally hate the way John Chow’s blog shows up. All kinds of weird irritating things happen, pop ups load and more over the interface is full of ads. Amazing that he manages to engage so many visitors.
He is one of the original “how to make money online gurus”
The control comes from measuring performance through a set of “Key Performance Indicators,” or KPIs. What’s so new about measurement? Most companies already measure their performance in sales, profitability, and other areas they consider “key.” The two major differences between traditional business measurements and KPIs are their connection to the business strategy and their ability to measure processes and activities rather than just financial results.
It seems like you’ve been around the block in the entrepreneurial world. What are you working on now?