Each successful business, despite its many forms, is essentially a value engine with three stages:
- Attraction: Are you attracting a steady stream of potential buyers?
- Conversion: How many potential buyers are you able to convert to paying customers?
- Retention: How many customers do you lose? How many of your current customers stay active with additional purchases?
If you consistently attract or retain more customers than you lose, you have an engine of growth. (Costs/Profits are also important but here I am focusing on a marketplace perspective.) Looking at these three numbers helps you quickly diagnose where you should be focusing your energy. And if you are developing a new business, you ultimately discover whether you have a viable business model or not. Here are some examples of these three important indicators by industry:
|Ecommerce||Search effectiveness||Conversion rate to sales, Shopping cart abandonment||Repeat purchases|
|Saas/Mobile App||Sign-ups for free version||Freemium to paid version||Paid churn (% of customers you lose each month)|
|Marketplace/Distributor||New sellers, New buyers||Shopping cart size (no. items and $ amount)||Top sellers, Top buyers|
|Professional services||Prospects in funnel||Contracts or Engagement letters||Additional contracts|
|Retail store (bricks and mortar)||Store traffic||Sales per week||Repeat customers|
|Consumer product||Distributor agreements||Sales per distributor||Repeat purchases|
|Online Publication||Number of readers, number of advertisers||Clicks per ad||Repeat reader visits, Advertiser churn|
These three numbers provide a quick actionable snapshot of your business.
What key numbers do you look at regularly? Share in the Comments section below.