3 Metrics You Must Track To Keep Your Business Alive

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3 Metrics You Must Track To Keep Your Business Alive

June 15, 2014 by

It’s easy to look at Google Analytics on a huge traffic day and get excited. After all, a huge traffic spike means loads of new people are coming to admire your blog, your website, and your product, right?
Attention and eyes are one thing, but they are the absolute bare minimum you need to succeed.
If the only thing you worry about are metrics like visitors, followers, subscribers, and shares you’re in trouble - you’re falling victim to vanity metrics. Eric Reis says, “The only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions. Unfortunately, the majority of data available in off-the-shelf analytics packages are what I call Vanity Metrics. They might make you feel good, but they don’t offer clear guidance for what to do.”

From vanity metrics to actionable metrics

Vanity metrics don’t really give you actionable data you can use to make meaningful decisions.
Sure, your follower count might be up, you may have had a huge spike in traffic or added a load of new blog subscribers, but what exactly does that mean for your business and it’s bottom line? It’s too hard too tell.

1. Conversion rate

Bringing traffic to your site is worthless if you’re not converting those visitors into customers or at least trial users.
Your conversion rate tracks how many people take a certain action. For example, you could track the number of people who sign up for a free trial. If 1,000 visit your site and 50 signup, you’re conversion rate is five percent.
Unfortunately, that’s where too many people stop tracking conversions.
Serious mistake.
When If you only optimize conversions at the start of the customer lifecycle, you are most likely missing out on significant revenues. You need to pay attention to conversions at every point - signing up for your blog, becoming a free user, becoming a paid user, and the factors leading up to those conversions.
Two great conversion rate optimization (CRO) strategies are:
  1. Web personalization. Personalize the content on your site to be more relevant to each visitor. The more relevant, the higher your conversion rate.
  2. A/B testing. A/B testing is when you take two versions of a particular landing page and keep them exactly the same - except for one variable. Change that variable and test to see which converts more effectively.

2. Visitor engagement

You might notice you’re converting a lot of people into blog subscribers or trials users, but those visitors won’t matter if they aren’t coming back or actively using your product. Volume alone is useless if you don’t also get those people engaged.
You need to measure what people are doing after they convert and if you should really be excited about your (hopefully) awesome conversion rate.
Andrew Chen correctly points out that it’s important to differentiate between retention and engagement:
  • Retention is the act of bringing someone back to your website - it does not speak to their level of engagement
  • Engagement is how active each user is when they return
Think of it like this: bringing people back to your website or to use product doesn’t mean all that much if they aren’t engaged with it. If they come back and don’t use it to its fullest, do you really think they’ll be long-term customers? Probably not.
Instead, you need to focus on increasing engagement with the goal of increasing that customer’s lifetime value.
Chen writes, “I would argue that the single most telling metric for a great product is how many of them become dedicated, repeat users.”
He’s right. Measuring for engagement factors in both the user’s level of dedication and if they’re repeat users.
Using behavioral user analytics, you can keep track of what features and pages your users continually use (or avoid) and utilize this data to implement improvements to your product.
To go even further, you can automate response to your behavioral data in real-time with behavior-based web personalization.
By personalizing your user's experience with focus on relevant features and messaging to each user, you will see increases in user engagement and retention over time.

3. Value per user

You need to know how much each user is worth and you need to know how much each user costs to acquire. Without these metrics, you won’t know how long it will take you to break even or how much money you could afford to spend in your acquisition efforts.
It’s important to know how much each user spends because a drop in your average order value could undermine the benefits derived from a jump in conversion rate after you implement a conversion rate optimization (CRO) strategy.
Know and improve your conversion rate through CRO, measure and increase user engagement with web personalization strategies, and know what each user is worth to your business.
Are you measuring these metrics? What metrics are the most critical metrics for your business?
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