You Eat What You Measure

When you first get your website up and running, what is one of the first things that you do? One of them is probably placing a piece of javascript on all of your pages so that you can track and measure your page views, unique visitors, search engine traffic, and other stats like that, right?

Well, the problem with doing this is that you’re eating what your measure. And if you aren’t sure what that means, think of it this way…

If you are running an ecommerce site and you are measuring page views, one of your goals is going to be to increase the amount of pages each visitor sees. The problem with this goal is that a page view doesn’t necessarily correlate with the number of products that are purchased on your site.

So if you measure unimportant metrics, you’ll end up focusing your time on things that aren’t improving your business.

Think about what you measure

Just for a second, think about the metrics you should be measuring and tracking. If you are stuck, here is some food for thought…

Blog

• Pageviews – a common way blogs make money is through advertising. And one way to increase how much ad dollars you are getting each month is to increase the amount of page views your blog receives. This is because advertising is usually based on a CPM basis. So a couple of metrics you should be measuring are page views and pages per visit.

• RSS button clicks – in addition to measuring pageviews, another thing you can consider measuring is the placement of your RSS subscription buttons on your blog. The more clicks your RSS buttons get, the more subscribers you’ll get, thus your overall traffic should go up over time, which means more ad revenue. Through Google Analytics you can track the clicks you are receiving on your RSS buttons and you can analyze that data to maximize the placement of your buttons.

• Engagement – if your readers don’t care about your blog, they won’t come back. Because your overall goal should be to increase your traffic, you’ll want to make sure you are writing content that people actually like reading. A few ways to measure this is to analyze how many times people comment on your posts, link back through track backs, and tweet about your content.

Ecommerce

• Conversion rate – if you have an ecommerce site, your main goal is to get more sales from your website. So a metric that would be worth tracking is your conversion rate, because if you can improve it, you’ll increase your revenue.

• Cart abandonment – if people add items to their cart and never check out, you won’t make money. One way to figure out what is causing people to not check out is to create a funnel of your check out process. This way you can see if most people are leaving when they are asked to put in their credit card, or even just register. Because you may end up finding out that requiring people to register before they purchase is what’s causing your buyers to not purchase from you… so you would then want to remove that process from your check out funnel.

• Competition – through service providers like Comscore, Hitwise, and Compete, you can get a rough understanding of where your competitors are getting the majority of their traffic. In the ecommerce world, chances are that your competition is buying traffic from specific sources to increase their revenue. This is a good way for you to learn about new marketing channels that are worth testing out.

Social games

• Time on site – one way social games make money is by convincing people to buy virtual goods. So one important metric for a social gaming company is to measure the time people spend in the game because the more time people spend playing your games, the more likely they are to pay for virtual goods. Another related metric is the percentage of people who come back to the game after they first play it. The more people come back, the more they play the game and the more opportunities you have to get them to buy virtual goods.

• Viral loop – the more people playing your social game, the more money you’ll make. One thing to track is the virality of your game. By tweaking it, you can drastically affect how many new people play your game on a daily basis.

Software as a service

• Lifetime value – as a SaaS based business you make money when your customers keep on paying you every month/year. So the longer a customer keeps on paying you, the more money you’ll make in the long run. And if you want to keep customers for a very long time, you should consider measuring sign in rates because if someone signs into your software on a daily basis they are less likely to cancel their subscription.

• Attrition rate – if your goal is to increase your revenue, one way to do it is to get new customers. Another way to do it is to keep your existing customers happy so they keep on paying you. By measuring your attrition rate you can see how many customers you are losing each month and then you can survey them to find out why they are abandoning your product. You can then use this data to improve your product so that users are more satisfied with it.

• Up sells – with SaaS based businesses one way you can make money is by up selling your current customers. By tracking the call to actions inside your application you can find out what actions causing users to upgrade and which ones don’t. In addition to that you can also track the type of users that are upgrading because you may notice a trend in which users who login in at least once a day are more likely to upgrade, so you goal would be to get more users to login more frequently. You can do this by utilizing email for reminders and notifications.

Things change over time

Even if you are measuring the right metrics at this point in time, it doesn’t mean you’ll be measuring the right ones in the future. Your business will change over time, so you’ll have to adapt with it.

For example, if you are releasing a new product to the market, revenue is an important metric to measure, but in the short run product/market fit maybe a better metric. If users aren’t satisfied with your product then than it is going to be hard to create a real business… because why would people pay for something they don’t like?

So in the short run you should be measuring product market fit so you can get to a point where people consider your product a “must have”. Once this is achieved you could focus more of your efforts on growth and increasing your revenue.

Conclusion

The metrics I mentioned above, maybe a good fit or a bad fit for your business. But before you decide on which metrics you are going to measure, make sure that they directly impact your business. Because the last thing you want to do is work on improving metrics that won’t be help your bottom line.

If you are measuring the wrong metrics don’t worry because it isn’t too late to change what you’re tracking. They key is to think beyond basic metrics such as page views, unique visitors and search engine traffic.

This post was written by Hiten Shah & Neil Patel of KISSmetrics, a new generation analytics company funded by True Ventures.