Key Performance Indicators: Growing And Managing Your Online Business by The Numbers

 

There are two ways you can grow a business or grow your blog. They are:

1. Fly by the seat of your pants, guessing the whole time what’s going to work, or how well things worked.
2. Make your actions and decisions based on actual numbers.

Can you guess which one works better? 🙂

Knowing your numbers – your core metrics – is absolutely critical to your continued success. And, I’m tellin’ ya, I know this better than anybody, because I’ve spent MOST of my career flying by the seat of my pants. It is only more recently that I’ve actually been taking my metrics more seriously.

Here’s the thing…

If you’re not tracking your metrics, then you’ll have no idea what’s working, you’ll have no idea if you’re making headway or not, and you have little more than your “gut feeling” or sales numbers to go by. And, while it may seem as if dollars in the door would be the most important metric you have, it isn’t.

Consider this…

You’ve just put an offer out there – your first product – all in an effort to monetize your blog in the right way and build up a business. But, unfortunately, it doesn’t make any sales or perhaps very few. Now, you’ve got that metric. But, what’s the explanation for it? If you’re not measuring anything, then you have no idea why you’re not generating any sales.

• Is it your sales letter that isn’t working?
• Is it your sales video?
• Your email to the list just not resonating?

You just don’t know.

Even when it comes to your content for your blog, if you’re not tracking your analytics, then your whole editorial calendar could be one big guess. You could have done something that’s been working well for you in terms of opt-ins to your list and you’d never even know. However, what you should be doing is repeating what’s been proven to have worked.

Your numbers – or your key performance indicators – are very important to have and be looking at regularly.

They are your guiding light to where you should focus.

A lot of people brand new to online business or to blogging feel just overwhelmed, like they have a thousand things to do, all simultaneously. Thing is, if they had a path forward, and their progress along that track was guided by REAL NUMBERS, then it makes your forward movement quite predictable. You will SEE the progress.

In this post, I’m going to talk about the most important key performance indicators, or KPIs. I’m going to help you get started with tracking them. And I want you to begin doing it.

Your Key Performance Indicators. What Are They?

A key performance indicator is simply a metric, a statistic. It is a numerical representation of something that happened in your business. That’s all it is.

So, for instance, the number of page views that your blog got last week? That’s a key performance indicator.

And when you plot your KPIs over time using a line graph, what you get is a trend. And you use those trends to make management decisions.

Do you see that your traffic KPI(s) is on a slight downward trend for the month? Well, you better do something about it. You’d never know you had a problem if you weren’t tracking that KPI.

But, your KPIs go beyond just traffic. Traffic is just the easy one. It is the one most bloggers probably find the most obvious.

Potential KPIs For Your Business

To really monitor the performance of your business, you need to track things such as:

• Unique Visitors
• # New Leads (aka opt-ins)
• Sales
• Cost Per Lead (or CPL)
• Average Customer Value (or ACV)
• Earnings Per Click (or EPC)
• Conversion Rates (at each step of your sales funnel)

The actual list of KPIs for you can vary depending on your business. The whole idea is to create a metric to measure the effectiveness of a core component of your business. You want to be able to look at a set of basic metrics and immediately know exactly how your business is progressing. To have your finger on the pulse, so to speak.

If customer support is a big component of your business, then you’d want to have a KPI for that. Perhaps average response time.

If you’re running a membership site, you’d definitely want to be tracking # of new incoming members, # of canceling members, all to arrive at a very important metric for all membership sites: retention rate.

And that right there shows how important KPIs are…

If you’re running a membership site and you were solely focused on bringing in new members but weren’t tracking cancellations, then it could paint a very misleading picture of just how well your site is doing. You could be signing up new members in droves, but if they only stick around an average of 1 or 2 months, you’ve got a huge issue to deal with.

Stop Looking At False KPIs

I find that many bloggers are either not looking at any KPIs at all, or the ones they’re looking at just aren’t that important.

I’m speaking of vanity metrics. Things like:

• Twitter followers.
• New likes to your Facebook page.
• Stressing over organic reach of your Facebook page.

The entire point of a KPI is that it is a DIRECT measurement of your business growth.

Spending your time worrying about Twitter followers is a stupid KPI unless your only goal is popularity. But, I can point you to many popular bloggers who are broke as a joke. Popularity has nothing to do with income.

So, what’s your real goal? You want to monetize? You want to have a real business which makes people’s lives better, but fuels your own lifestyle as you do it?

Then, look at KPIs which matter. Like the ones I listed above.

Determining Your KPIs

If you’re just starting out and perhaps you don’t have a product to offer yet, then at the very least you should be working on lead generation. So you have two primary KPIs:

• Unique Visitors
• # New Leads (aka opt-ins)

From those two numbers, you would have a global opt-in rate for your blog. You should be tracking that, for sure.

But, let’s build this out to a full information business. Let’s take the full blog revenue funnel and look at the KPIs for each part of it:

At the top of your funnel is going to be the blog itself. So, your most obvious KPI is unique visitors. This is a better metric than page views because it is counting actual people who visited your site. One suggestion would be to also track unique visitors to your individual “money pages” on your blog. These are the pages which are designed to get a conversion.

The next step of the funnel is for them to opt-in for a lead magnet. The two most important KPI here are:

1. Unique Visitors to the Landing Page
2. # New Leads

To get your conversion rate, you’d do a simple calculation:

These two KPI are important. For instance, if you’re not satisfied with how fast your list is growing, then these two KPIs will let you know whether you have a traffic problem or a conversion problem. If your landing page isn’t getting enough traffic, then you concentrate on sending more people to that squeeze page (whether it be more internal links from your blog, or via paid traffic). If your opt-in rate on your traffic is low (say, conversion rates less than 30%), then you need to look at your landing page design and your lead magnet so as to get better conversions.

Now, once you move past the opt-in, you move into the first actual offer. And regardless of which stage of the funnel they’re at, the basic things you need to know are:

1. Unique visitors to that sales offer
2. # of Sales

You can then calculate the conversion rate in the same way.

You would also want to know the total volume of sales from that page, so just multiple your # of sales by your price tag.

Those last two metrics are pretty damn important, though:

• Average customer value (ACV)
• Earnings Per Click (EPC)

Those two numbers are critical to you being able to predictably and reliably grow your business. They allow you to not have to rely on Google for your traffic. They allow you to predictably raise your income and turn your blog into a five figure, six figure, even higher level business.

Why? Because they allow you to begin using paid traffic without losing money. And when you are able to pay to grow your leads and your customer base, there’s literally no stopping you.

You want to know how to grow your online business and blog fairly quickly and not have it take years to do it? This is how you do it.

An Example Of How This Works

Let’s take the following (very simple) sample sales funnel:

So, in this funnel:

• 30% of people who are sent to the opt-in page sign up for the email list.
• 5% of new leads who opt-in end up buying the front-end offer for $7
• 25% of those people buy the upsell for $67
• 10% of those people buy the profit maximizer for $297

So, first off, how much is each customer worth (Average customer value)?

Your formula would be:

So…

$7 + ($67*0.25) + ($297 * 0.10) = $53.45

So, every customer… every person who buys the initial offer of $7… is actually worth $53.45 to you.

What does this tell you? It tells you that you could spend up to $53.45 to acquire one customer and you wouldn’t lose money.

Now, taking it further by looking at your EPC…

If you know that your squeeze page for the lead magnet is converting at 30%… and 5% of those people buy the front-end (which makes them then worth $53.45), then what is the earnings of every single person who hits the landing page?

Well, EPC is a simple formula of:

Sales / Clicks

If you have that historical data at your disposal (how much revenue was earned and how many clicks hit the landing page), then it is an easy calculation. However, we can also arrive at it by using our ACV of $53.45.

If each person who bought the front-end is worth $53.45 and we know only 5% of the total who see that page buy, then that means each VISITOR is then worth $2.67. Once a person opts in, they are worth $2.67 because your conversion rate data shows that for every 20 people who visit the page, 1 will buy. You can then spend up to $2.67 to acquire each new subscriber and you’d still not be losing money.

But, then back it up to the squeeze page itself. 30% of them opt-in. That means 70% of people do not, yet you still paid to send them there. So, for every 1000 people you send to the squeeze page, 300 will opt-in. Of those 15 will buy the front-end offer. And because we know the ACV, we know those 15 buyers would be worth $801.75. Divide that by number of clicks (1,000), and that means we could pay roughly 80 cents per click for this traffic.

Now think about that…

Because you have a backend funnel in place for your blog, you can literally pay up to 80 cents for every single visitor to this squeeze page, and you’d be not losing any money. You pay less than 80 cents and you’d actually be MAKING money while you build your list and your blog audience.

You’re Dead In The Water If You’re Not Tracking Your KPIs

What I just outlined for you above… that’s how the “big boys” do it.

Well, actually, that’s not even true. These days, this is how even just regular people like you and me do it, too.

This is one (of many) reasons why I don’t teach blog monetization which relies on crap like banner ads and affiliate links. I think banner ads are a waste of space, and affiliate marketing is a revenue maximizer but not a core business.

A blog is the front-end of a POWERFUL business, but it requires that offers be made to the audience, that it is set up using a backend sales funnel, and that you know your numbers.

It is harder than ever to grow these days based on organic traffic alone. There are millions of blogs popping up every day, and if you’re relying solely on Google rankings to get traffic, you’re playing a fool’s game.

But again, NONE of this is possible if you don’t know your metrics.

And backing up from even that point…. I’m talking even to those in my audience who are brand new, just starting out, and have no products on sale.

Even for you… you NEED to track your basic KPIs. Because you’re going to build up the business you want one KPI at a time.

It really bothers me when I ask a blogger how much traffic they’re getting and they don’t even know. How can that be?

Its as simple as that.

Getting Started With Tracking KPIs

First off, if you don’t have Google Analytics installed on your blog, then that is your first item of business. Right now. That’s your homework.

Go to the Google Analytics site and sign up. It is totally free. Set up your site profile with them. They’ll then give you a little blurb of code that you need to insert on your site.

Now, you can do that manually by inserting that code into your blog’s header. OR you could take an easier route and use the free Google Analytics plugin from Yoast. That plug-in makes it super easy to get started.

If you’ve already got Analytics set up, then I recommend you set up a custom dashboard inside your account to give you your most important KPI on a single screen. This keeps you from having to hunt all around for them.

You can also use Analytics to track sales funnels and conversion rates, but that’s beyond the scope of this particular post. VIP members will have some training coming up for that. 🙂

For your leads KPIs, you can just run a report inside your email list host (such as Aweber).

And for sales figures, you’d just run a sales report in whatever cart you’re using for order processing.

Then I’d recommend that you begin recording these numbers in an Excel spreadsheet. You can use Google Spreadsheets if you like.

VIP member? I’ve prepared a starter Excel file for you to get you going tracking your KPIs. It also has some formulas pre-setup for you for calculating ACV and EPC – so that will save you some time. As long as you’re logged into your account, you should see the link to the Excel file directly below, along with a quick walk-through video of how it works.

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Click Here To Download The Funnel KPI Calculator Excel Spreadsheet

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If you’re not a VIP member, then consider joining us. While there are a lot of courses and Action Plans for VIP members, I also create tools (such as this KPI worksheet) which I only make available to my VIPs. That – and other tools – are being added to the “BMA Toolbox” inside the Vault – and only available to VIP members.

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If you’re not a VIP member, then consider joining us. While there are a lot of courses and Action Plans for VIP members, I also create tools (such as this KPI worksheet) which I only make available to my VIPs. That – and other tools – are being added to the “BMA Toolbox” inside the Vault – and only available to VIP members.

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