Metrics & Monetization
“There are three kinds of economists: those who can count, and those who can’t.”
Old Joke (anonymous)
One of the aspects that is forgotten by newcomers, or by those in a hurry, is the measurement of how money comes in. We’re not talking about how much comes in. We’re talking about how the money wound up coming in.
To find out how money comes in, it is almost always necessary to measure something. Monetizing usually means customers of some sort, and customers usually first surface as some sort of lead (someone who is interested).
Planning is a worthwhile first step, if you have not started. Work out a simple process on paper (or computer) of ways that are set up for people to become customers who eventually provide money (in exchange for some benefit). Then work in assumptions of “how many”… how many people per day/week/month will find out about your offering(s)… how many people will order… how many people will return their orders… how much it will cost to market on average to each person who places an order.
If you have already started operations, these questions above can be attached to whatever information you are already tracking.
Then decide how you can measure the important questions, and also perhaps look for areas you can’t track but would like to. Maybe this includes, for an online business, how many people will find your website from search engines each day. This measurement is usually found in a website “web logs”. Maybe you want to track how many orders require special handling per day. This measurement may be in your order system/billing system.
The end of the initial exercise is when you list all of the measurements, and how often they will be measured, and who will do the measuring, and how often the information will be used to make decisions. Information collected but not used is wasted effort.
The list also becomes the basis for an ongoing metric “report” of how the various areas are changing. Fill in the current values, and set up the best way to continue to capture. Larger operations will be able to automate the task(s), and also perhaps set alerts for when some measurement changes from what is expected. An example of this is if the number of visitors who convert to customers goes from 5% to 2% for a particular product. This type of change, if measured and then noticed, might be from some part of the order process breaks down, or if a quantity available goes to zero. If not measured, such a change might not get noticed if the overall orders are increasing.
Anticipating the need to measure goes beyond just looking at what is available. Smart organizations & individuals take the time to look at capabilities of a particular website platform, or billing system, or credit card processor.
Besides reading up by doing research on what people say about using a system or service, think about where you may want to measure across the parts of the process of monetization. In other words, if it is important to measure how much you make from each paid ad, then you will want to be able to link an ad to the order that someone made after viewing the ad. This scenario would lead to wanting to look at the way that the ad platform integrates with your billing or payment systems. If you pay-per-click for ads on Yahoo!, and your orders are paid into your PayPal account, then the more you can link the ad-clickers to the orders, the more you can know about what is working, what is improving, and what is changing over time.
