by Jeffrey Ries
Page inventory
Pages per visit
New visitors
Unique visitors
Content and advertising balance (you don’t want too much advertising on the page, or it takes away from the content and keeps the customer away).
Click through rates
Ad rates
Ad inventory
Audience and churn
Best metrics
Click through rate: This is the number of users that are going to click on a link out of all the users who check out the page. The average click-through rate for a paid search in 2010 is 2 percent, but some companies can get higher. If you see that you are at one percent, then it is time to make some changes. But if you are above that number, you are doing really well.
Engaged time: This is how long your reader will stay on the site and look through the content and the ads. Most media sites are going to aim for 90 seconds for content pages, and a little less with landing pages. If you find that your visitor is not spending more than a minute on the content pages, then it is likely your content is not engaging them.
Content optimization for media: This one means taking the content that you already have and changing it so that it works on other venues, such as podcasts and video. You should track how others are using the materials you have because this can help you find some new opportunities to use.
User-generated content business
If you have a community that is engaged, they are going to contribute free content. And this same engagement is going to provide you with ads as well as other revenue sources. Some examples of companies that work with this include forums, Wikipedia.com, Reddit.com, Facebook.com, and Yelp.com.
The strategy that you should use is one that takes into account user engagement. This business is going to be successful when its visitors become regular contributes, and they interact with others in the community and provide quality content. User engagement tiers to measure involvement can be good as well.
Some of the different metrics that you may want to use with user-generated content include:
Notification and mail effectiveness
Content sharing
Value of the content that is created
Content creation
Engagement funnel changes
How many engaged visitors you have
The best metrics
Time on the site each day: Here you are going to measure how long the average user is on your site and engaged on a typical day. This is a good thing to measure for engagement and stickiness. The average number is about 17 minutes a day, though Facebook is usually an hour, and Tumblr and Reddit are 21 and 17 minutes respectively.
Spam/Bad Content: With these kinds of communities, you need to make sure that good content is always uploaded. You will have to spend time and money to keep bad content and fraudulent content off the site. You can measure what you think is good and bad and then build up a system to help keep up with this. You can also spend your time watching out for quality decline and then fix it before it ends up ruining your community.
Two-sided marketplace business
These kinds of businesses are going to connect buyers and sellers, and they will earn a commission on the work. It is kind of a variation of the e-commerce store. Some options of this would include Priceline.com, Airbnb.com, Ebay.com, and Etsy.com.
The strategy with this business is that you need to be able to attract in two different customers, the buyers and the sellers. The best bet is to focus on those that have the money to spend first. If you can find a group of people who want to spend their money, then those who want to make money will pretty much line up to do it.
Some of the metrics that you are able to use when it comes to a two-sided marketplace business include:
The volume of sales and the revenue you earn
Pricing metrics
Ratings and any signs of fraud showing up
Conversion Funnels
Search effectiveness
Inventory growth
Buyer and seller growth
Best metrics
Transaction side: Sellers usually won’t have the money or time to analyze pricing and the effectiveness of their copy and pictures. As the owner, you will have the aggregate data from all your sellers, and you can use this information to help them with this analysis. Transaction size is the same as the purchase size, and of course, it is going to differ based on your business type. You should help your sellers measure it so that they can understand the behavior of your buyer and use it to sell more items.
Top 10 lists: You can make top ten lists to help your buyers find the best products, and your sellers to know what is going on in the industry and what they can do to be more profitable.
As you can see, there are many different types of businesses out there. And it is likely that your business is going to fit somewhere in this list. If it does, then there is an outline that you can use for developing a good strategy. Even if you don’t, you can combine a few of these strategies to help you come up with the metrics, and the plan, that you need to succeed.
Chapter 8: Step 2: Determine Your Current State
Now that you know which business type you are in, it is time to move on to the second step of Lean Analytics. This one is going to require you to determine which innovation stage you are in right now. The one metric that means the most to you right now is a function of time. It is going to change as your project keeps moving on through the different stages of innovation. There are several different stages of innovation that you can work with. These include:
Stage 1: Empathy or is this a real problem?
In this stage, you are going to identify a problem in your business and then get inside the head of your potential user. You should be in their shoes and understand why there is a problem and what they are thinking. You may need to spend some time talking to potential customers to help with this stage. The more that you are able to talk to your potential customers and others in the market about the product or service you want to offer, the better off you will be. This can give you some real insights that can drive your business forward.
You need to focus on any metrics that are going to help you to determine whether or not the problem is harmful to your business. The metric needs to also determine if there are enough people who care about this problem. If only a few people see it as a problem, then it probably isn’t worth your time taking care of it. But if a big percentage sees this as a problem, then it is something to take care of. You can also use metrics that will see what the success rates of your existing solutions are and if you need to change some of them.
Stage 2: Stickiness or do I have a good solution?
In this stage, you are going to start by making a Lean prototype of your solution to the problem you found in the previous step. You have to ask yourself whether or not people will pay for this. This is when you can gain feedback from small focus groups and testers. Based on that information, you can make adjustments and changes to the solution until you get it right.
You are going to need to focus on any metric that proves your solution will encourage the user to engage and also come back to your business.
Stage 3: Virality or does this solution provide value to enough people?
Once you have a solution and a product and they are seen as effective, you need to decide whether its value adds enough that the customer will tell others about it. Remember that word of mouth endorsements are valuable as a precursor to growth measurement and as free advertisement for the business. You can work for endorsements that are either natural (the customer enjoys the product or service enough that they just give out recommendations to their friends) or ones that are incentive-based (such as giving the product for free or at a discount).
For this one, you need to focus on metrics that are able to measure out if you are getting any new customers from your existing ones. And you want to know how many of these referrals are happening. You can also take a look at metrics
that can check for how long it takes for news to spread or the cycle time.
Stage 4: Revenue or can I make this profitable?
Now you need to work on how much revenue you can expect from selling the product or service that you created in the last step. You can work on prices, standardization, control costs, and margins. You need to take the time in this step to prove that you are able to make money in a self-sustaining and scalable way, or this is not the solution for you.
This one is going to need you to focus on metrics that can tell you the net revenue that you are able to earn for each customer. The net is going to be the revenue that you make per customer minus the amount you spent to get that customer.
Stage 5: Scale or can we expand to a bigger audience?
Now that you have a product, you showed that it is effective, and you have a business model in place to show that it is going to be functional and profitable, you can now invest and expand it into new markets. This can include new geographies, channels, and audiences as well.
If you are dealing with a project or business that is oriented on efficiency, you need to focus on metrics that are able to reduce costs. If you are working in a business or project that is differentiation oriented, you will want to focus on metrics that will track margins for you.
What can I do with these innovation stages?
Now that you know a little bit more about these innovation stages, it is time to figure out where you are and learn what you can do with each one. The steps that you should take from here include:
Look through the stages above and determine where your business or project is right now.
Refocus on the things that you should be measuring at the stage you are in.
If you find that your project does not fit into this framework, then it is important to remember that all innovative endeavors are going to follow a pattern of stages as well as maturity through time. Are you able to borrow this framework and leverage it in some manner so that you can figure out what stage your project is in right now? This can really make a difference in helping you to understand what you really need to be focusing on right now.
Knowing where you are in the innovative stage can make a big difference. When you look at the five stages above, you will have a clear outline of what you need to focus on and what needs to be done to keep you moving forward. If you have no idea where you are right now, then how are you supposed to know what steps to take to get to the next level? Always have a good idea of where you are in the innovation process, and then you have a clear picture of where you should go next and can keep on track.
Chapter 9: Step 3: Pinpoint the Most Pressing Metric
To help you to be successful with any type of innovative project, the key is to focus. Consequently, you can’t spend your time on too many metrics because this is going to make you feel distracted and you are going to lose all your focus.
In the first few stages of innovation, it is often best to reduce the number of metrics that you track. If you can, you should focus on just one metric, the one that matters the most right at the moment. The metric that is the highest-priority is usually related to the most important project or business need.
For example, a subscription software company may be in the virality stage, and they are trying to gain traction with it. They may decide that the net adds metric is the one that will help them out the most. Remember that Net Adds = Total of New Paid Subscribers – Total That Cancelled.
There may be other metrics that your company can use, but you need to just focus on one. You will need to figure out what problem is the most pressing or the most important right now, and then go with a metric that fits with this the most.
How can I find that one metric?
Some of the steps that you can use to find the one metric that matters the most right now include:
Write down the top three to five metrics that you really like, and you often track.
How many of these metrics are actually any good and help you out?
How many do you use to make business decisions? How many of those would actually be vanity or false metrics?
What stage are you at with the business or the project? Do you really understand what matters in the business model? Can you discard any of the metrics that aren’t really adding value to you right now?
Are there any other metrics that are not on your list that you can think of and that you think could be more useful right now?
Once you have written down all those metrics, you can go through the list and cross off any bad or false metrics. Add any new good ones that you think of on the bottom.
Now that you have a list, you should go through and pick the one metric that you absolutely can’t live without to help you with the project in its current stage.
What to do after optimizing that one metric
Once you have the metric and the project at a level where you are happy with the numbers, you must remember that you will need to continue measuring them. You never know when that project or that metric will need to be changed up again to help you in the future. But you can rest assured knowing that the process is now controlled and optimized. What this means is that you are now at a point where you are achieving a certain level of results.
Now you are able to go back to your list and work on the metric that is the next highest priority. This is going to be the next highest priority of your business, or the next biggest project need. You can review through the innovation stage you are currently at and the business or project type, and then you can determine which point of interest you should focus on.
Remember that the goal here is to only work on one metric at a time. There may be several metrics that need to be addressed in your business. Keep your focus on one at a time.
Sure, you can go through and write out a list of the different things that need to be addressed at some point, and Lean Analytics is a good time for this because it can help you see what problems are there. But you should pick the one that is the most pressing and work on that one first.
After you have time to complete the Lean Analytics stage on this problem and you have a winning strategy in place for it, then you can move on to the next step of picking out a new project to work on. You can implement this process on as many projects as you would like. Just make sure that you are only working on one at a time.
Chapter 10: Tips to Make Lean Analytics More Successful for You
Getting started with Lean Analytics is something that can take some time to get used to. It is going to provide you with great results and a winning strategy that is sure to get you ahead. But for those who are just starting out with this stage, or who are just getting started with the whole idea of the Lean system, you may need some help to get going on the right foot. Here are some great tips that you can follow to ensure that you are doing well with Lean Analytics and to ensure it is as successful as possible for you:
If you are doing an A/B test, you need a lot of users: You are not going to get any good results from you A/B test if you don’t have a lot of users to help you out. This means that it is not going to work all that well if you are a small startup or if there are not a lot of people you can measure. You should have a minimum of 10,000 events before you attempt this kind of test. These events can include visits or people who use a feature. Make sure that you are able to get this many users to help you out before you get started.
Make big changes: If you are not able to see the changes from a few feet away, it is likely that the people you are testing with the A/B test won’t either. For example, A/B tested 41 different shades of blue. The results were not the best because there were just too many different shades and for most people, they looked too similar. You need to make big changes before you do an A/B test, or it won’t work well for you.
Measure the tests properly: You are not going to get the right results if you are not properly measuring the tests. You need to have the right metric in place. Also, make sure that you never stop a running test too ea
rly, or you may miss out on some of the important results that you need.
Use the tools that you need: Lean Analytics has a ton of tools that you can use to make it successful. Make sure that you are properly trained to handle each part and that you don’t miss out on some important tools that can make this more successful.
Know where your business is now: How are you supposed to have any idea of what kind of project to work on and what metrics to use if you don’t have a good understanding of your business? Make sure that you know the overall goals and vision of the business. This can help you to spot some of the problems that you need to fix and can make it easier to ensure that whatever changes you do decide to make are going to go along with what your business is all about.
Understand the different metrics: You should spend some time looking at the different metrics that are available for you to use on your project. Each one can be great, but it does depend on the type of business that you are running and the project that you want to work with. You need to learn which metric is going to be the right one for you.
Add this into the Lean Support System: Many people are fond of the Lean Support System. This allows them to get rid of a lot of the waste that their company may have, and can make them more efficient. But you need to do Lean Analytics first to see success. This helps you to gather the information that is needed and then sort through it and analyze it. Then you can use this information to come up with the best plan to handle your problem. If you just jump into a strategy without the resource, it is likely that you won’t see results at all.