Which of these sounds most reasonable?
- Growing your business and blog (hopefully) based on your gut feeling, or…
- Having a simple set of numbers where you can clearly see how you’re doing at any point and adjust accordingly.
Personally, I far prefer the second.
It is far more predictable. It gives a real focus to where you spend your time and effort.
And, in the end, isn’t it just more business-y? 😉 I mean, having a set of stats to work from just seems so much more concrete than practicing the “see if it sticks” approach (publish a blog post, cross your fingers and hope Google shares the love).
Like any business owner, I have quite a few things I keep track of. In fact, I have an entire dashboard set up (using Cyfe) where I have real-time KPIs (key performance indicators) on screen at all times.
But, there are 3 specific stats that I use as my “big picture” KPIs.
Let me share them with you. It’s actually pretty simple.
3 Ways To Grow A Business
Here’s some business 101 for ya. I originally heard this from Jay Abraham, but I have no idea where it first came from.
There are, in essence, 3 ways to grow the revenue of any business. They are:
- Get more customers.
- Increase the average transaction size.
- Increase the frequency of transactions for each customer.
And it is your blog profit funnel, fully developed, which accomplishes each of these 3 things. It is literally the core of your business, and the job of your blog is to send people into the funnel.
Now, those 3 business growth methods are easily transferred into measurable statistics.
- How many people bought from you? (aka how many customers?)
- What was their average ticket size?
- How many times did the same person buy from you?
So, here’s what I did…
The 3 Growth Metrics And How I Track Them
To turn these into a metric, we need to assign a time interval to them. In my case, I track 3 numbers based on a 90-day period. They are rolling averages.
- Number of paying customers in the last 90 days
- The average transaction amount in the last 90 days
- The average repurchase frequency in the last 90 days
The more I can keep these 3 KPIs trending upwards, the more I know my business is growing.
Now, the mechanics of getting these 3 numbers will depend a lot on the software you use to run your business. Some shopping carts don’t have a nice pretty report that simply hands these numbers over to you.
In my case, I am running all transactions through MemberMouse. However, MemberMouse has push notifications that allow me to interact with outside systems. I have an internal database that tracks all transactions for me and MemberMouse pings this database every time anybody is billed. By running simple queries on that database, I am able to extract these metrics.
Another way I could have done it would be to use a service like Zapier to add a row to a spreadsheet on any transaction and then run some functions on that spreadsheet.
However, my system is custom.
I even have a daily email report emailed to me each morning that reports the KPIs to me from the prior day, including the 3 growth KPIs. This way I can see, on a day to day basis, how the numbers shift around.
For instance, the average transaction value KPI for the Blog Marketing Academy has been hovering around $65-ish for awhile. This means that the 90-day rolling average ticket size has been around $65. Well, I recently implemented some price increases to the Blog Monetization Lab so that KPIs is trending upward right now. As I write this post, that KPI is sitting at $68.03.
Making Growth Strategies Using These 3 Metrics
You’re faced with 3 simple questions:
- What can you do to bring in more customers?
- What can you do to increase your average ticket size?
- What can you do to get people to buy more frequently?
I mean, those are the basis of these 3 KPIs. If these 3 KPIs are the foundation of how you determine your day’s activities, then you will obviously be far more targeted about growing your business.
Instead of goofing off on Facebook all day (which likely doesn’t impact any of those 3 metrics), you would spend your time on something that would affect the stats.
How can you get more customers? Well, you could launch another product. You could run a promo campaign. You could run a flash sale to activate more customers. Plus, we know that new customers is a metric which depends on new leads in the first place. So, what could you do to go grow your list? New lead magnet? Better autoresponder emails to convert a new lead into a first sale?
Then, look at the next metric: Average transaction size. How can you increase it? Maybe raise your prices? Implement new upsells? This isn’t rocket science. It is math.
Lastly, how can you get people to buy more often? Maybe run routine promos to your existing customers to offer a cross-sell? Implement one-click incremental upgrades inside your membership site?
Sure, There Are Other Metrics…
Yes, there are other numbers which are important to your business. # of incoming leads, cost per lead, conversion rates, blog traffic.
But, what these 3 core KPIs do is keep you firmly focused on what will GROW your business. It is those 3 things.
Everything else is more a measure of what makes those 3 metrics possible.
Your Next Steps
I encourage you to put this to use unless you’re already doing it.
If your business is more established and you’re already making sales, you really should be measuring this stuff. If you’re not, set it up.
If you’re brand new and you don’t make any sales, then obviously all 3 KPIs will be at zero. So, your job is to track them anyway so that you can clearly see your area of focus. And that area of focus will be to get those metrics up. It will obviously start with your offer. Whatever you need to do to get your first customer, that’s where you should focus. Blog posts and twitter engagement be damned. Just focus on getting a customer.
Growing a business is a fairly predictable affair. It isn’t about luck, as much as it may seem that way sometimes. It begins with a solid product/market fit – obviously. But, from there, it is just about a core set of numbers and making tweaks that will result in the trend going up.
Manage by statistics, not by the seat of your pants.