Measure Twice, Cut Once – The Importance of Performance Measurement for Online Businesses
One of the great aspects of being an online business is that we can test the site in a multitude of ways on a weekly, daily and even hourly basis. However, without an effective performance measurement process, it’s akin to flying an aircraft with no instruments!
Your first option for measuring site performance could be to use Google Analytics – it’s free and can give you a high level sense of your site metrics. In SkillPages, we’ve built our own comprehensive performance measurement engine that allows us to examine member behaviour at an exceptionally granular level. This information enables us to refine the offering to our members, with the objective of ensuring that each member is gratified in a variety of ways – whether they’re looking for skilled people, seeking to get found for their skill or wishing to collaborate with similarly skilled people.
At SkillPages, we’ve adopted and adapted much of Dave McClure’s thoughts on Startup Metrics for Pirates. This involves measuring member behaviour in 5 distinct ways:
- Acquisition – Conversion metrics from various traffic sources and activity of new members during first time member flow.
- Activation – It’s one thing getting someone to join the platform, but what do they do on the site soon after joining?
- Retention – Measurement of member behaviour on multiple return visits to the site – we embrace cohort analysis, whereby members are grouped together based on when they joined the site, where geographically they joined from, which traffic channel they joined through, etc. – it’s worthwhile having a look at the Q&A with Evernote’s Phil Libin at Le Web 2010 for how he embraces cohort analysis to successfully manage the business.
- Referral – Much of SkillPages’ member growth comes from existing members referring the site to their contacts. Viral growth must be nurtured and encouraged in social businesses – hence, the philosophy of REFINE, TEST, MEASURE and IMPROVE can deliver exponential results in member growth.
- Revenue – Members must ultimately engage in some form of monetization behaviour on the site – measurement of the effectiveness of different monetization options is vital to drive the business forward.
Measurement of micro detailed metrics, as well as high level key drivers of member growth and engagement, allows you to uncover those nuggets of gold, those high potential members, those viral junkies, etc. Devoting time and resources to properly building a comprehensive performance measurement system should get your business from A to well beyond B, and at a much faster pace, compared to trying to fly a half built plane with no instruments!
Posted on December 19, 2011, in Tips and tagged analytics, important, measurement, metrics, performance. Bookmark the permalink. Comments Off on Measure Twice, Cut Once – The Importance of Performance Measurement for Online Businesses.