How do you measure success in your web business? Do you have a model to test actual numbers against each month? Are you are investing in the right places? Are the changes you are making to your site creating more business activity – whatever that is for you?
Too frequently there is a simple measure like ‘uniques per month’ but this tells us very little. A small number of uniques can generate a large amount of business in some sites. The metric also doesn’t tell us anything about the engine inside a web business. Does it have an internal momentum or does it need lorry loads of cash thrown at each campaign to get any kind of user traction or transaction?
David Skok has posted a must-read post for anyone growing a web business built upon a social dimension. He clearly defines a working model that we all can use. Here’s the principle:
Virality is not a marketing strategy that can be executed by the marketing department. It has to be built into your product right from the beginning.
And here are the top learnings.
- Understand what your ‘viral coefficient’ is. This is the number of invites sent out by each user multiplied by the conversion rate. He shows how the viral coefficient needs to be at least 1 for viral mechanics to kick in. So if each user sends out 15 invites and only 1 converts, then your viral loop will collapse quite quickly.
- Understand your ‘viral cycle time’. This is how quickly new users invite more users. The shorter the better.
I encourage you to read the whole thing carefully then download his spreadsheets and try them out against your actual numbers.
Then use them every month to test your assumptions.