Rabu, 29 April 2015

The 9 indicators of your business online

Starting a business is difficult, but it is even harder to make the right decisions at key moments of your online business. In order to make the best possible decisions, there is only one thing you need: information. The preparation of a financial plan complete and structured around objectives, it is essential to know what to pay attention, what to ignore and ultimately, what is the way forward for your online business to be a success.

In this financial plan, you can make the best freelance talent , there are 9 indicators must-haves:

1. Customer acquisition costs (CAC)

The CAC's financial plan is a crucial step in the early stages of growth of your online business. To start making money you need customers and to get it you will probably need to invest resources in marketing . Therefore, your ACC is the amount of money you require in this marketing process.

To determine the cost of customer acquisition two numbers are needed:

    The amount spent your business over a period of time dedicated to sales (marketing or related expenses)
    The number of customers captured during the same period.

Your CAC is equal to your cost of acquisition divided by the number of customers. This number included in the financial plan will show how expensive it is to attract a new customer to your business if the cost is too high you need to re-analyze spending, cut back on shopping and unprofitable marketing areas and optimize everything to get the conversion maximum.

The cost of customer acquisition is reflected in the income statement of your financial plan and allow calculating a gross margin or profit margin. The gross margin is the money left to your online business to support other costs: personal, general and administrative expenses ...

2. Customer Retention

There is something more important than customer acquisition: what will you do with them once you have them. Many online businesses fail because they invest too much time, money and effort on getting new customers and neglect those who already have. In fact, it will always be more valuable to your business to keep your current customers to get new, since the cost of acquisition is higher than generate new sales by a loyal customer.

It is find out how you can improve the experience of users who already know your business and then build a relationship with them. To the people we love to share views on certain products or services, so it is usually not difficult to get valuable information to improve your conversion. However, for inactive customers, ie those who have reduced or stopped using your product, you need them to ask why, and based on their comments give a solution and try to increase retention with minimum cost and effort.

3. churn rate ("churn rate")

All businesses, even the most successful, lose customers constantly. This indicator, known as "churn rate" or rate of abandonment or loss of customers, is key to the financial plan of your online business. The measurement is usually made ​​taking into account a period of 30 days, during which there will be an indication of customers to abandon your service s for a while, but you can come back later.

The variables in this case are many and must be explained in a financial plan to help you get a complete picture of the situation. In some cases it is advisable to perform a measurement of 90 days to get an idea of ​​people leaving permanently. Your ultimate goal is to contact people who leave and find out why to solve the problem.

4. Revenue per customer "Life Time Value" (LTV)

The "Life Time Value" is an Anglo-Saxon term that means how much money won by each customer in our online business for the time spent by that customer. This ratio is closely linked to the "loyalty" of customers, the number of times they repeat purchase and "media buy" they perform. In fact, to calculate the LTV, the first thing to do is multiply the average basket by the number of times a customer buys us in its life cycle, this tells us what the revenue per customer, and if we subtract the CAC obtain LTV, which is money or benefit we get from each customer in their life cycle.

It is very important to compare the LTV with CAC -costs customers- acquisition. LTV is actually telling us the most money we can invest in attracting a customer. If the CAC is higher than your LTV, you're losing money and must implement certain strategies to balance the situation.

5. Product Metabolism

The metabolism of the product is relatively new indicator of online business. The idea is to calculate how fast your team makes decisions and sends updates to your products.

If the metabolism of a product is too slow obviously be a bad sign, because it means that your online business reacts slowly and this will cause the loss of customers if you do not you solve soon. On the other hand, maintain a fast metabolism is not too positive, because it will cause a constant insecurity in the equipment itself and users. Striking the right balance that suits the size and stage of your business online is the key to success.

6. viral coefficient

Everyone dreams of your product thanks to a viral marketing strategy made by themselves. Although it may seem a matter of luck, viral processes are often carefully designed with a lot of work behind them. To achieve this, users need to have constant access to action buttons and the product must be good enough to be worth sharing. In fact, the incentives for sharing can be good too.

The viral coefficient is a calculation that measures your initial customers and the number of invitations sent. The number of those invitations that go on to become sales compared to the number of invitations sent is an indicator of the popularity and success of each campaign. The higher the conversion rate referred to in the financial plan is more likely that your product viral. Attract customers in this way is truly economical, the more referrals and get viral lower the cost of acquisition of your business and so must reflect on your financial model. Not all products are suitable to become viral, but it can be a good way to success.

7. Income

Is your business generating income online? This is the most obvious indicator of the financial plan, but also the most important. You must know in detail from which each of your income or sales line: product, service, market, customer type, channel ... is key to identifying problems and opportunities for growth.

Some alternatives to enhance our line of income are:

    To sell more to existing customers: creating new products or services of value added or engaging them for longer subscriptions are very popular choices.
    Attract new customers: improving the conversion of users or visits to customers ("on"), entering new markets or channels such as affiliate networks.
    Diversifying our business: that is detecting other businesses with some synergy with the current business, which sell new products or services either to the same customers or new customers. A typical example is a startup that decides to sell the rights to the technology you use for your own business as "white brand software" for others to use in markets that do not compete directly with yours.

8. Activation

Also known as activation rate is a measure of the amount of visitors that become customers. Depending on the product or type of online business it is possible to measure the activation of visitors by new subscriptions, subscription renewals, software downloads or other action.

High rates of conversion on your financial plan indicate that you are doing well and that people like your product enough to become active users. Low conversion rates indicate a lack of usefulness in your product or a specific deficiency. Ask them why they choose not enabled is a good way to figure out what to fix.

A well-designed financial plan must allow introduce an estimate of expected traffic ("visitors"), and the conversion or activation of those visitors into customers. That's the right way to build online sales revenue or financial plan of your online business.

9. Reference Rate

The reference rate is measured as part of your viral coefficient, but is a separate number handy too. The key to measuring is to ask the new users to inform how you met your product. You can add an incentive for users to recommend to their known your product or service. It is not an easy indicator to measure, some customers say nobody told them even if someone did, so the number may not be completely accurate, but it will be helpful anyway.

As reference rates rise, the CAC is reduced. If you are spending less to acquire customers, it's because you're getting more income during his time as active users. Everything comes together with your reference rate.

We hope this article helps you to make a "useful" to manage and make important decisions in your business online financial plan.

It is very common to find plans or models who speak a language very "financial" or "accounting", often the entrepreneur, when you read is not able to see what he knows about sales, margins and costs of your online business that traditional financial plan.

As an entrepreneur you should require that the financial plan of your business speak "your language", that is, you have to be able to estimate sales or revenue depending on your visits, your customer lifecycle, the abandonment rate, etc. and the costs of your business should explicitly include the cost of customer acquisition.