Growth Hacking: How to earn more, using metrics correctly
How to increase the profitability of Internet business at minimal cost? How to get maximum using available resources? Let's see, because only a few key indicators will be able to drastically affect your profit.
First of all, you need to understand what makes up the revenue. The calculation scheme was proposed by Ilya Krasinsky, one of the teachers of the IIDF accelerator.
So,
Number of users attracted to the site ( User Acquisition )
*
(- Cost of user attraction ( CPA ) + Income per user per unit of time ( ARPU ))
= Profit (in this example, we intentionally do not take into account fixed costs to simplify the formula).
')
That is, UA * (- CPA + ARPU) = Profit
Revenue per user per unit of time (ARPU) depends on the conversion to purchase ( C1 ) and the average check ( Average Price ).
Thus, 4 key metrics emerge that you can influence to become profitable:
- The number of people attracted to the site - UA (for growth you can use advertising, a virus, affiliate programs, etc.),
- Average check - Average Price (you can experiment with the price of the service or offer to buy more products or services for 1 purchase),
- The cost of attracting the user - CPA (it is desirable to find those channels where the cost of attraction almost tends to zero)
- Conversion to purchase - C1 (you need to make a great landing, strive to maximize bringing the client to the purchase by taking active steps in his direction).
What should be influenced in the first place and whether it is possible to influence it:
- The number of people involved. Here the "ceiling" is limited by the size of the market. If your audience is 5,000 Moscow travel agencies, then you cannot have more than 100% of clients. To get closer to the maximum in the number of attracted customers, you need to work with channels, but they also have a limit on coverage, as well as their price. You can not attract users at a cost (CPA), which is higher than the revenue from this user (ARPU). Therefore, you should always keep in mind that the explosive growth of business may not be, if you are close to the ceiling (horizon) in terms of the number of clients, you have exhausted all the channels.
- The average check. Of course, we can try to take more money from customers. This works especially well in subscription models and with regular purchases. In exchange for loyalty and convenience, the client is ready to increase the average bill. However, this corridor also has its “ceiling”. A person, of course, may be aware of the prices of competitors, he ensures that the price does not go beyond the reasonable, otherwise the customer may simply stop using you, moving to direct or indirect competitors. For example, if you increase the cost of train tickets from St. Petersburg to Moscow to exorbitant heights, customers can choose an alternative type of transport: plane, car, bus, - or just refuse to go. Thus, the price is limited from above and cannot be increased many times, without affecting the number of customers and conversion.
- The cost of attracting a client. Of course, you need to strive to attract the lowest possible traffic. Ideally, due to virus and word of mouth. However, not all succeed. In addition, the lifetime of the virus is limited, and the word of mouth is a rather inert channel that needs to be formed and fed for a long time in order for the output to go. It is much easier and easier to use guaranteed and fast channels - contextual advertising, banner advertising, seo, advertising in social networks, offline. Nevertheless, given the ever-increasing competition in the market, the cost of attracting customers in these channels is constantly increasing. The company has a restriction - that parameter CPA, which must be strictly below the income from 1 attracted user (ARPU). If the CPA is higher, then you go to a minus and scale the losses. Well, if the CPA is 3-4 times lower than APRU, which allows you to generate a good profit.
- Conversion. This is the number of site visitors who have made a purchase. Here the ceiling is limited to 100%. However, if you look at the dependence of metrics, the increase in conversion drastically - dozens of times - affects income. It is with this metric that we recommend to work primarily in conditions of limited resources, so that without scaling costs (to attract customers) and without increasing the price of your goods / services, get more money.
We illustrate with examples.
User Acquisition (traffic) . For example, you have attracted 5,000 people per month. Conversion to customers - 0, 3%. This means that only 15 people paid you. The average bill is 1000 rubles. The cost of attracting a client is 17 rubles. Given the conversion and the total mass of visitors, each visitor brings you 3 rubles. Thus, you spend on attracting 17 rubles, and get from it - 3 rubles. You go to minus (14 rubles). If you attract more people without changing other indicators, then you simply scale the losses:
Average check. Imagine that you have the same 5,000 people, the conversion is the same and the cost of attraction is the same, but you raised the price 2 times - to 2,000 rubles. With the price increase by 2 times (!), Your minus has been reduced by 20%. To go to some kind of plus (and you haven’t subtracted the fix-bones yet), you need to raise the price 6 times!
Let's work with CPA . By reducing the price of a click by almost 2 times, our minus was reduced by 2 times. To reduce everything to 0, you need to attract traffic at an unprecedented price - 3 rubles. But we again did not deduct costa. But can you find such cheap quality traffic that many customers will deliver?
Finally, work with conversion . Considering how low it was, you can improve it a few dozen times, keeping all other indicators. Bringing it only to 2%, you are already leaving a plus. Conversion to 2% is easily achievable in modern conditions without increasing the current cost of attracting customers.
How can you dramatically increase conversion without high costs? There are many ways. However, the main way in the online business is to work with the site and the Landing Page (where the client is coming for the first time after your advertisement).
Usually the conversion of the first visit to the target action is 1-2%. That is, they make an order or buy 1-2 people out of 100. And most of those who left the site without a targeted action will not return again, that is, you will have to spend money again to attract them through paid channels, which leads to a minus on finance. What to do?
Try to make the maximum number of visitors by users, and then by clients.
Services like Witget help . With the help of this designer of marketing tools, you will significantly (2-3 times) increase the chance to “hook” the visitor due to the individual offer.
The service on your website will be interactive elements (toppers, tags, pop-up windows, flora, etc.) that, according to the rules, are seen by the target clients.
Examples:
So, you can inform the client with a pop-up window about the promotion or special offer . Invite to the group in the social network via the label. In the topper (bar above the site) to give a discount coupon. In addition, you can work on the two-phase sales method: first collect contacts, and then convince to make a purchase using mailing, calls, work in social networks (if the user has joined your group).
Witget is good because it can create a personal message - show the client what he expects to find and see. You help the client to achieve the desired goal quickly, easily and at a nice price. And the client helps you earn well.
In the modern world, when dozens of companies compete for the attention of a client, it is important to stand out and be interested.
Imagine you are working in a large market in the city center of Tunisia, offering souvenirs to passing tourists and shouting the names of everything you have: "Tableware, icons, whips, leather." A foreigner passes by your tray, where carpets, paintings, handkerchiefs, utensils are dotted. He casts a quick glance, but his gaze never clings. A tourist goes further without buying anything. And if you knew that he was looking for antique coins? You would certainly have invited him to see not all at once, but your collection of piastres and harubs. The tourist found what he was looking for, chose the necessary coins and offered a fee. Purchase completed! And all thanks to the knowledge of the client and his desires.
Witget can understand the client and select relevant messages for display.
Increase conversion to increase your business income!
First of all, you need to understand what makes up the revenue. The calculation scheme was proposed by Ilya Krasinsky, one of the teachers of the IIDF accelerator.
So,
Number of users attracted to the site ( User Acquisition )
*
(- Cost of user attraction ( CPA ) + Income per user per unit of time ( ARPU ))
= Profit (in this example, we intentionally do not take into account fixed costs to simplify the formula).
')
That is, UA * (- CPA + ARPU) = Profit
Revenue per user per unit of time (ARPU) depends on the conversion to purchase ( C1 ) and the average check ( Average Price ).
Thus, 4 key metrics emerge that you can influence to become profitable:
- The number of people attracted to the site - UA (for growth you can use advertising, a virus, affiliate programs, etc.),
- Average check - Average Price (you can experiment with the price of the service or offer to buy more products or services for 1 purchase),
- The cost of attracting the user - CPA (it is desirable to find those channels where the cost of attraction almost tends to zero)
- Conversion to purchase - C1 (you need to make a great landing, strive to maximize bringing the client to the purchase by taking active steps in his direction).
What should be influenced in the first place and whether it is possible to influence it:
- The number of people involved. Here the "ceiling" is limited by the size of the market. If your audience is 5,000 Moscow travel agencies, then you cannot have more than 100% of clients. To get closer to the maximum in the number of attracted customers, you need to work with channels, but they also have a limit on coverage, as well as their price. You can not attract users at a cost (CPA), which is higher than the revenue from this user (ARPU). Therefore, you should always keep in mind that the explosive growth of business may not be, if you are close to the ceiling (horizon) in terms of the number of clients, you have exhausted all the channels.
- The average check. Of course, we can try to take more money from customers. This works especially well in subscription models and with regular purchases. In exchange for loyalty and convenience, the client is ready to increase the average bill. However, this corridor also has its “ceiling”. A person, of course, may be aware of the prices of competitors, he ensures that the price does not go beyond the reasonable, otherwise the customer may simply stop using you, moving to direct or indirect competitors. For example, if you increase the cost of train tickets from St. Petersburg to Moscow to exorbitant heights, customers can choose an alternative type of transport: plane, car, bus, - or just refuse to go. Thus, the price is limited from above and cannot be increased many times, without affecting the number of customers and conversion.
- The cost of attracting a client. Of course, you need to strive to attract the lowest possible traffic. Ideally, due to virus and word of mouth. However, not all succeed. In addition, the lifetime of the virus is limited, and the word of mouth is a rather inert channel that needs to be formed and fed for a long time in order for the output to go. It is much easier and easier to use guaranteed and fast channels - contextual advertising, banner advertising, seo, advertising in social networks, offline. Nevertheless, given the ever-increasing competition in the market, the cost of attracting customers in these channels is constantly increasing. The company has a restriction - that parameter CPA, which must be strictly below the income from 1 attracted user (ARPU). If the CPA is higher, then you go to a minus and scale the losses. Well, if the CPA is 3-4 times lower than APRU, which allows you to generate a good profit.
- Conversion. This is the number of site visitors who have made a purchase. Here the ceiling is limited to 100%. However, if you look at the dependence of metrics, the increase in conversion drastically - dozens of times - affects income. It is with this metric that we recommend to work primarily in conditions of limited resources, so that without scaling costs (to attract customers) and without increasing the price of your goods / services, get more money.
We illustrate with examples.
User Acquisition (traffic) . For example, you have attracted 5,000 people per month. Conversion to customers - 0, 3%. This means that only 15 people paid you. The average bill is 1000 rubles. The cost of attracting a client is 17 rubles. Given the conversion and the total mass of visitors, each visitor brings you 3 rubles. Thus, you spend on attracting 17 rubles, and get from it - 3 rubles. You go to minus (14 rubles). If you attract more people without changing other indicators, then you simply scale the losses:
Average check. Imagine that you have the same 5,000 people, the conversion is the same and the cost of attraction is the same, but you raised the price 2 times - to 2,000 rubles. With the price increase by 2 times (!), Your minus has been reduced by 20%. To go to some kind of plus (and you haven’t subtracted the fix-bones yet), you need to raise the price 6 times!
Let's work with CPA . By reducing the price of a click by almost 2 times, our minus was reduced by 2 times. To reduce everything to 0, you need to attract traffic at an unprecedented price - 3 rubles. But we again did not deduct costa. But can you find such cheap quality traffic that many customers will deliver?
Finally, work with conversion . Considering how low it was, you can improve it a few dozen times, keeping all other indicators. Bringing it only to 2%, you are already leaving a plus. Conversion to 2% is easily achievable in modern conditions without increasing the current cost of attracting customers.
How can you dramatically increase conversion without high costs? There are many ways. However, the main way in the online business is to work with the site and the Landing Page (where the client is coming for the first time after your advertisement).
Usually the conversion of the first visit to the target action is 1-2%. That is, they make an order or buy 1-2 people out of 100. And most of those who left the site without a targeted action will not return again, that is, you will have to spend money again to attract them through paid channels, which leads to a minus on finance. What to do?
Try to make the maximum number of visitors by users, and then by clients.
Services like Witget help . With the help of this designer of marketing tools, you will significantly (2-3 times) increase the chance to “hook” the visitor due to the individual offer.
The service on your website will be interactive elements (toppers, tags, pop-up windows, flora, etc.) that, according to the rules, are seen by the target clients.
Examples:
So, you can inform the client with a pop-up window about the promotion or special offer . Invite to the group in the social network via the label. In the topper (bar above the site) to give a discount coupon. In addition, you can work on the two-phase sales method: first collect contacts, and then convince to make a purchase using mailing, calls, work in social networks (if the user has joined your group).
Witget is good because it can create a personal message - show the client what he expects to find and see. You help the client to achieve the desired goal quickly, easily and at a nice price. And the client helps you earn well.
In the modern world, when dozens of companies compete for the attention of a client, it is important to stand out and be interested.
Imagine you are working in a large market in the city center of Tunisia, offering souvenirs to passing tourists and shouting the names of everything you have: "Tableware, icons, whips, leather." A foreigner passes by your tray, where carpets, paintings, handkerchiefs, utensils are dotted. He casts a quick glance, but his gaze never clings. A tourist goes further without buying anything. And if you knew that he was looking for antique coins? You would certainly have invited him to see not all at once, but your collection of piastres and harubs. The tourist found what he was looking for, chose the necessary coins and offered a fee. Purchase completed! And all thanks to the knowledge of the client and his desires.
Witget can understand the client and select relevant messages for display.
Increase conversion to increase your business income!
Source: https://habr.com/ru/post/215481/
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