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How to Measure Your Success with These Key Metrics
If you can't measure it, you can't manage it and therefore not grow it.
You probably have some ambitious growth goals you want to hit this year, and that is great.
Problem is trying to influence that significant bottom line number at the end of the year especially if it is still so far away. Today I want to show you how you can influence your end of year results by just focusing on some key metrics throughout the year.
These metrics are sales and marketing focused and provide a dashboard for you and your team.
So what numbers have a direct influence over your end of year revenue goal?
I have broken down the metrics to represent your customer lifecycle from acquisition to activation, revenue and retention.
Life Time Value (LTV) - Average Revenue per User (ARPU) - Trial to sales conversion - Customer Acquisition Cost (CAC)
I'm going to start with revenue, without it your business doesn't exist. The two key metrics that are fundamental to your dashboard are the lifetime value (LTV) of your customers and the average revenue per user (ARPU).
Lifetime value of a customer will help you to establish the average value your user will bring over her life span as a customer with you. Most customers not only purchase from you once but on repeat. Whether that is through return business or a recurring fee, the number will help you to figure out how much you can afford to spend on acquiring these customers.
ARPU is a great metric to track a company's revenue generation capability and growth at the per-customer level. It gives you a quick understanding of the impact you can have by acquiring new customers or increasing your prices. If you have 10000 users @ an ARPU of $500 = $5,000,000 in revenue. To increase your revenue by $1 million, you could now onboard additional 2,000 users or increase your average revenue per user by $100. While there is no right or wrong answer, a combination of the two tactics might seem easier than increasing the customer base by 20%.
If we step up the funnel, the next part would be to look at the number of free trials/ demos you get on a weekly/ monthly basis. If you currently get 1000 demos per month and close 30% of these, that leads to 300 sales per month.
Once you have this ratio, you can improve it by increasing the number of demos/free trials or your team needs to become better at closing sales.
The awareness metrics. What you look to measure here is finding the channels (PR, SEO, SEM, SOCIAL, BLOGS, etc.) that bring you the highest number of conversions for the lowest cost. Map out your biggest channels and calculate the cost of acquisition per user/ customer (CAC). Your CAC will help you identify where you should focus your advertising and marketing spend.
These are just some key metrics that you should measure regularly and will help you to stay on top of your sales and marketing efforts. There are many more metrics and depending on your product, industry and maturity of business should also be considered.
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How to Create a Sales Funnel from your Customer Lifecycle
In my last video I spoke about the questions you can use to map out your customer's behaviour.
The aim, to smooth out your sales and marketing flow and increase your bottom line.
Today I will show you how you can do that by creating a sales funnel that matches your customer's buying behaviour.
So if you want to convert more sales and create a dashboard for your sales and marketing efforts, watch this video.
tl;dr(w) - Too long didn't read (watch):
This is where your customer becomes aware of your product and services.
No luck needed, you can map out the most common channels for digital products (there are 19 of these) pick your top three and start testing.
Your target audience will come down from one of the above channels and end up on your landing page. Great job!
Many people will land on your page and in your funnel. Some by accident, others just browsing. This step helps you to filter out potential buyers by giving them a great first experience of your product. Think of this as providing
This step is about converting your warm leads that engaged with your product or service through trial, free download, taster or teaser. The revenue step is about converting from a free or small fee trial to your flagship product.
A lot of companies stop at getting revenue and hope for the best for more customers. But not you. In this step, you get to think about HOW you can engineer your product to help you get more customers by referral.
There is a significant number of companies that grow fast. Their secret, focus on the top three, maybe four steps. The issue though, they will soon damage their reputation as they struggle to maintain the service and quality to existing clients. It's easier to look after your existing clients than it is to acquire new ones.
Once mapped out, you can start to create a sales funnel with this simple lifecycle mapping tool (The Pirate Metrics Model _ as designed by Dave McClure)
I hope this helps and guides you in your activities to put some solid structure around your business.
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How to Map Out Your Customer's Buying Behaviour to Find - Try - Buy
Most businesses ask the question of how they can attract more customers and convert them more easily. A good sales funnel matches your customers' buying behaviour from beginning to end.
So how can you create a better sales funnel?
Generally speaking, companies start with creating a sales funnel that best matches their own internal processes. The issue here is that most times this won't 'fit' with your customer's internal process.
Imagine yourself wanting to make a purchase from an online store. You are ready to buy, but to pay you must first call and book in a meeting. Sounds silly right?!
Let me give you another example.
Last time I was looking for professional services, I browsed online after business hours as that was the only time I was able to do so. Hardly any site let me know about their specific packages or pricing list. I was unable to make a purchasing decision because I didn't have enough info to act on.
In both examples, they made the buying process hard for customers. It should be easy to purchase from you without any hurdles to jump over.
NOTE: Some sales funnels are designed to have hurdles in them as a way to provide better-qualified leads, but that is another video in itself.
The key is identifying your customer's buying behaviour. In this video, I share with you the 5 questions that will help you map out your customers' buying behaviour.
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How to Create an Amazing Value Proposition - pt 1
A kick-arse value proposition is what makes you stand out from competitors and helps your future customers have a fantastic experience with you from the start.
It is not about the one-liner on your website here, I mean the complete experience your customers get from beginning to end. How they find your product, convert and experience your business is all a part of your value proposition
All businesses need it, all want it, yet many don’t get it right. Designing one can actually be a bit tricky, and even seasoned veterans need some external input to create theirs.
The answer to designing a value proposition is in the word design, and this is where most people fail.
The design here stands for crafting, and it is best done with the end user/ customer in mind (we often think we do this, but in reality, we don’t or could do it better).
In order to redesign our value proposition, we first need to understand our customers thoroughly (I know I dwell on this point non-stop but it doesn’t matter whether you design new product features, source a new line of product or redesign your marketing strategy, all need to keep in mind who it is actually intended for). The better you understand your customers, the more rewarded you will be for getting it right.
One of the clear parts for knowing your customers better is in knowing the demographics, but the trick to understanding your customers lies deeper than this.
How familiar are you with their behaviours? Could you tell me about a typical day in their life? And even better, do you know about their needs and goals daily?
Imagine selling to medium sized companies (and no, medium-sized companies aren’t your customers… it is the people who work there). Imagine your meeting evolving around their daily issues and how you can help them achieve their goals. If you understand their daily struggles and how you could solve them, the product doesn’t need to be sold anymore.
I have helped many companies go through the process of designing their value propositions, and it always comes down to how well you actually understand the people you create it for.
To help you make a start in understanding your customers, I have shared some key points on how you can create a persona of your customer segments that in turn will help you craft a value proposition that makes competitors envious ;-)
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How to Create an Amazing Value Proposition - pt 2
Imagine the last time you stayed at a reputable hotel. The minute you arrived, someone welcomed you and took your bags while directing you to the reception area.
As you walk into the building, someone greets you with a non-alcoholic refreshment to help cool you down from the scorching heat outside. When you arrive at the reception, the check-in process is quick and friendly.
You get handed your keys, turn around, and the concierge kindly points to the lifts and directs you to your room. From the minute you arrive at the hotel to the time you leave, a great and reputable hotel will give you a consistent experience throughout.
This is all part of its value proposition. The individual departments from concierge to room service, restaurant to the day spa, all come together to give you a seamless experience.
Imagine creating this for your customers in your business. It can have a tremendous effect to take what we know about our customers and then turn it into value for our customers.
As mentioned in my previous post:
" A value proposition is NOT about the one-liner on your website. It is about the complete experience your customers will get from beginning to end. How they find your product, convert and experience your business is all a part of your value proposition. "
So once you have more information about your customers' needs and goals (on a functional, social and emotional level), know their frustrations, and how to help them achieve their goals, then you can design a proposition that becomes irresistible.
Show them how you can help them achieve their goals, show them how you can mitigate their frustrations.
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How to identify your most valuable customers
One of the most important parts of any growth strategy, let alone marketing or sales is understanding who you target. Research shows that just by changing your target audience, you could increase your conversion by as much as 700%.
So when I work with clients and they tell me that everyone is in their target group, it’s like bringing a shotgun to a sniper standoff.
By focusing on too many segments, your marketing message will dilute and you end up being too many things for nobody, albeit your good intentions.
You can segment your market based on a number of differences.
If you have a b2b business, chances are that you will segment based industry, sector or profession. Perhaps you chose your target customers based on revenue or size of the company.
When you get to consumers, the segmentation can take a whole different picture. Think about what defines your ideal target segment. Is it demographics such as their age, income or sex?
You could target your users based on interests, behaviours or psychographics.
It is worth narrowing down your target market and focusing on a small percentage to get more reach for fewer resources.
To get help with Customer Segments, check out my latest video where I show you “How to identify your most valuable customers.”
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How to Set Objectives for your Business Success
Before you go into specific tactics, the most important part is identifying what you and your team are setting out to accomplish.
Understanding what you intent to achieve will enable you to move into a direction and measure your results against some benchmarks that’ll tell you whether you are on track to achieve your goal or shooting off piste.
So where do you start?
The first part is to identify the intent you look to achieve. And depending on what stage of business you are in, this could vary. Perhaps you target higher customer acquisition, look to increase revenue or become better at closing leads.
Whatever the result you want to hit, you must ensure that you put in place metrics. To help you with metrics, it is like thinking about how you will actually know that you have achieved your goal. Maybe you measure the amount of closed sales, perhaps the quantity of people visiting your site or the amount of repeat customers or lifetime value of a customer you have.
Once you know the outcome and how to measure its success, you set out to create a timeframe in which you want to achieve this, which in turn gives you the length of your roadmap. From here you should plan your actions on a monthly, weekly or even daily basis.
This will give you a framework of what you are looking to achieve, how to measure it, over what period and what actions you need to accomplish in order to get to your desired outcome.
The key takeaway here is that if you can’t measure it, you cannot manage it and therefore not grow it. A clearly defined outcome and some a way to measure it is key here.
You should look at achieving your goals based on data rather than luck. Here’s a list of things to consider when planning your objectives:
What is the desired outcome you look to achieve and how will you know you achieved it
What is the timeframe in which you look to achieve your goal (think about your start and finish dates
What actions can you describe that will help you achieve your weekly tasks
This is the first tactic as part of our series. Stay tuned and build what others dream of.