Measuring Effectiveness of Online Business
by admin on Jul.06, 2009, under General
Do you agree that it is impossible to improve something you can not measure? If you market something online and and want to be profitable, you should start from measuring what does work, and what doesn’t. But what are the more effective and painless ways to measure progress without being stuck in the paralysis of over- analysis? This is a skill you need to know, and here you have three different ways of how to do it.
The first key to effective measuring is to know what your average customer is worth at the present time. This can be done by adding up how much you spend on acquiring a customer, and subtracting it from how much you make when they initially become a customer. In other words, if you know that you have to pay for 100 hits at .24 cents each to generate two conversions at 47 dollars each, each customer costs you about 12 dollars. Each of those customers is worth about 35 dollars.
Then you have to take into consideration the cost of processing the payment and other kinds of overhead. Once you are through with this process, you have real number of how much profit you are generating from each customer. Then you can move on to the next issue, which is measuring the lifetime value of each customer.
You will have to dedicate some time to it, but you will be rewarded, you will be able to choose whether you prefer to pay for every new customer or possibly increase each one’s lifetime value. If you have other offers customers are taking advantage of, you factor the profit of those products back into the equation. For instance, imagine that you have a data base of 5000 people and 500 of them buy your product at $100. This adds another ten dollars to the value of all the customers in your data base, which increases your value to 45 dollars.
Now as you are doing this, you will see that there are other variables involved, but this should give you an overview. When you will find out how much a customer is worth, you can you will start to project using the third measurement key. The third key is measuring the buying motivation of your established customers by asking them questions and sending them surveys. This is the most valuable way to measure your marketing process, because it will it will show you how to move forward.
When it comes to marketing you can come up with all of the great ideas that you want, but in the end the customers are going to be the ones who decide what really works. Why not find out from them, before you create a new product? Once you understand the worth of gaining a new customer and what their lifetime worth to you is, as well as understanding what will motivate a person to make a purchase, you can save a ton of money on marketing and really rake in the profits. If you don’t have time and desire to do everthing mentioned above on your own, as well as don’t want to obtain in-depth knowledge of seo analytics, you can always hire seo agency to do everything seo and paid directory submission include on your behalf.
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