Digital Innovation: Understanding growth KPI‘s
The single most difficult thing to do in any new project is measuring the impact and success of your work. One of the most common mistakes in measuring project success is an early focus on top level revenue.
Of course, it is not more than natural to focus on top line growth; You will want to make sure that you do not need to invest tons of money in a project for it to succeed. However, I believe that a lot of companies and especially larger companies tend to focus too early on top line revenue. They forget to focus on the KPI’s that are the actual pre-requisite’s that enable top-level growth.
Important growth KPI’s
Each company’s business unit economics are different. Hence, it is not very easy to come up with a general rule of thumb for every business model.
However, there are a number of common denominators amongst most B2C businesses; especially business that are transactional based behave similarly. One of the key pre-requisite’s for growth is understanding whether there is market potential or not.
The main KPI is not only the sheer market size, but the fact whether you are able to attract people to your business within a certain amount of time and with a budget that makes sense. One of the first things I checked before starting a new project or business, is to check market prices for relevant search traffic in Google.
Next that, I check what the prices are that need to be paid to reach my target group on Instagram and Facebook. By target group I am referring to the gender and age specific customer segments that I want to reach.
So the first KPI that I focus on is cost efficiency in acquiring new customers. Not so much, how much money I have actually spend on the fall campaign. The variable cost per customer that I will need to acquire to reach my business are far more important than the actual total (variable) cost of marketing.
The community approach
As a performance marketeer I know that I cannot reach each and every customer through first level platforms such as Google and Facebook. This would simply be too expensive. Hence, I need to focus my attention on building up a community around my product. A community that is scalable and able to promote my product on my behalf.
The speed at which I can grow this community defines how well the product will do in the long run. If I am able to create a short term buzz around my product, it is highly likely to reach a larger target demographic in the long run.
The speed of community growth is one of the most important KPI’s I focus on when looking at the success of a new campaign or business. At the end of the day it is very important to create a community around your brand and product. This is the only way you are able to get around having to pay Google and Facebook for each and every customer interaction.
These first level platforms such as Google Facebook and Amazon can be highly effective in reaching your customer segment, but are also very expensive. The faster you were able to reach your community, without having to go through any of these platforms in a paid form, the better and more profitable your business will be.
The last and maybe most important part of measuring success for young businesses, is measuring customer interest. Customer interest and especially to Maine KPI’s are the ones that I look at most.
These two KPI’s evolve around: the time of interaction with my brand or product. I like to measure the interaction in the amount of time spent on my website and the number of pages visited by a customer.
These two numbers give you a very good first indication of how good your product is. If the potential customer is willing and able to spend more time on getting more information on your product, he will likely come back in the future and buy or recommend your product or service.
Having a clear focus on how you can raise the interaction with your product or brand from day one should be an essential part of your product development roadmap and strategy. Product interaction might be the single most important KPI to look at if you want to know if your product is doing well or not.
Summary: Don’t just focus on revenue
I think that these KPI’s should be amongst the most important KPI’s that are used to measure product and brand success from day one. In many organizations this is currently not the case. The most important KPI is still the number of transactions or top level revenue that can be created.
However, especially new digital products need time to evolve and need to be developed. Hence, we need to look at the KPI’s that actually help us develop a great product that has the chance of succeeding in the long run.
If you were serious about product development, I think you will be able to relate to these words. If you need any help understanding these KPI’s in further detail, of course feel free to contact me at any time.
Have a great day and good luck, Remco