Measure your business

Someone (thanks Ashwin) forwarded me some notes from a presentation on why measuring your business is so important. It was a good reminder on how true this and a good reminder on how we forget about it. Here’s the jist of it, complements of a talk by Chris Klaus from Kaneva :

1). Use a “lean startup” approach. (Google “lean startup”)

2) Focus on “metrics” from day one. The best 5:

• Acquisition – what is the cost per lead to the site? In his experience, Google ads are best, but do a range of things.
• Activation – once users get to the home page, how many actually engage in your activity. MUST do A/B testing. It is built in to Google analytics.
• Viral coefficient (referral / word of mouth marketing) – what percentage of users invite others X what percentage of invitees accept and become users? If viral coefficient > 1.01, the site is growing by itself. (Most aren’t). Paradigm shift: spend $0 on marketing focus on improving viral coefficient.
• Retention: once users visit the site, how many come back, how often, find out why. At Kaneva, the #1 thing users say will attract them back more often is more games.
• Revenue: how to monetize. He likes freemium best, but it may not always apply

You MUST collect these numbers to validate the model, no matter how early or small the site is. e.g., if viral coefficient > 1.01 and retention = 40-50%, nothing else matters, he will invest in it. We’re just kicking off things at Openstudy and we really need to focus on how students are using our platform to study with each other. It’s something – metrics that is -  we do have in place but this reinforces maybe not enough.

Vocalocity's Customer Testonial Channel

One of my old companies, Vocalocity, took a simple idea and blew it up into something very creative and effective.

Premise. Send out a cheap video camera – like the Flip – to a handful of your best customers and ask them to record a testimonial. Provide a stamped addressed envelope for them to return the camera and there you a go, a low budget real life video to use in your sales pitch. Now recycle the camera and send it to another customer. Believe it or not, people do send the camera back as a rule. If the camera only costs $150 and 5 customers recycle it before it’s swiped or gets busted, that’s only $30 per testimonial, not bad!!!. Try giving that budget to a full service production company.

The Voclaocity guys took the concept a step further and built an entire video channel around the testimonials called Vocalocityflix. Great idea. They could take it one step further by allowing others (like resellers) embed the videos on their web site , increasing SEO and reach even more.

Link to their video channel – http://vocalocityflix.com/

Some of the benefits:

• More effective – the low production value plays to your favor. Prospects see it as real and genuine and therefore more believable.
• Better customer loyalty – the customers who participate in the testimonials love it. It’s all about engagement
• Great sales tool – instead of sounding all sales like on the phone, just get your prospect to watch some testimonials within you online while you have them on the phone.
• Build SEO – the video site builds great SEO for your web site.
• Increase ad response rates – the video channel makes a great landing page for ads.

It’s an emotive subject the company mission statement. Everyone has a view on how it should be worded and how useful it should be. While nibbling on a slice of spinach and mushroom pizza today in Wholefoods, my eye was taken by the way they present their mission and values statements to customers.

Instead of trying to get everything crammed into a single mission statement, so it becomes meaningless and wordy, they have adopted a different statement for each part of their business. Each has its own meaning relevant to a specific audience, therefore giving them context and most importantly ensuring they are useful. The same approach has been applied to “Values”  and “Quality” statements: