{"id":1692,"date":"2017-09-23T15:17:01","date_gmt":"2017-09-23T13:17:01","guid":{"rendered":"http:\/\/147.91.204.66\/wordpress\/how-to-map-behavioral-metrics-into-your-key-business-drivers\/"},"modified":"2017-09-23T15:17:01","modified_gmt":"2017-09-23T13:17:01","slug":"how-to-map-behavioral-metrics-into-your-key-business-drivers","status":"publish","type":"post","link":"http:\/\/147.91.204.66\/wordpress\/how-to-map-behavioral-metrics-into-your-key-business-drivers\/","title":{"rendered":"How to Map Behavioral Metrics Into Your Key Business Drivers"},"content":{"rendered":" <style>\r\n  .ui-tabs {display: table; }\r\n  .ui-tabs-nav {display: table;}\r\n \r\na.ui-tabs-anchor {\r\n\tfont-family: Tahoma;\r\n\tfont-size: 15px; \r\n\tcolor: #B52700;\r\n        margin: 5px 20px;\r\n}\r\n\r\ndiv.ui-tabs-panel {\r\n\tfont-family: Tahoma;\r\n\tfont-size: 14px;\r\n\tfont-weight: normal;\r\n\tcolor: #B35B22;\r\n}\r\n\r\n  <\/style><p>this is a essay on How to Map Behavioral Metrics Into Your Key Business Drivers.<\/p>\n<p>Be sure to view the full article and view the original source<\/p>\n<p>Digital marketing is a blessing to marketers because of the wealth of data it provides.<\/p>\n<p>Online marketers can analyze and dissect innumerable elements to gain a deeper understanding of the habits and preferences of their customers. <\/p>\n<p>As a result, they can effectively put themselves in their customers\u2019 shoes and optimize the entire experience. This allows them to fine-tune even the most minute aspects of their campaign, thereby improving customer satisfaction and increasing sales. <\/p>\n<p>But this also creates of a quandary. With such an abundance of data points available, it can be a little perplexing deciding which behavioral metrics to focus on. <\/p>\n<p>So, what do you do? <\/p>\n<p>In this article, I attempt to answer the question by suggesting seven of the most important behavioral metrics that drive business. <\/p>\n<h2>What Behavioral Metrics Should Marketers Focus On?<\/h2>\n<p>Sometimes, the sheer volume of behavioral metrics can feel paralyzing. So which behavioral metrics most demand your attention?<\/p>\n<p>Obviously, it varies from company to company, but it all boils down to answering a single crucial question \u2014 what behavioral metrics impact your key business drivers?<\/p>\n<p>For most businesses, there are three key business drivers in play:<\/p>\n<ol>\n<li>Revenue<\/li>\n<li>Active users (for SaaS companies)<\/li>\n<li>Customer loyalty (for Ecommerce companies)<\/li>\n<\/ol>\n<p>Here\u2019s how to go about mapping behavioral metrics into these key business drivers.<\/p>\n<h2>Revenue<\/h2>\n<p>There are two behavioral metrics that heavily impact revenue. <\/p>\n<p>Conversion rate and churn.<\/p>\n<p>Conversion rate influences your ROI and overall bottom line. <\/p>\n<p>It\u2019s also what allows you to benchmark your website month-to-month and year-to-year to track long-term progress. <\/p>\n<p>Therefore, it\u2019s arguably the most important metric to examine pound-for-pound. <\/p>\n<p>One of the simplest tools for determining how your conversion rate directly impacts your revenue is this one from Foremost Media:<\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/website-statistics-fields.png\" class=\"alignnone size-full wp-image-34184\" \/><\/p>\n<p>It\u2019s pretty straightforward. <\/p>\n<p>Enter the average number of visitors to your website each month, the percentage of visitors that convert and the average value of a conversion. <\/p>\n<p>Here\u2019s an example:<\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/website-states-revenue-gains.png\" alt=\"\" class=\"alignnone size-full wp-image-34185\" \/><\/p>\n<p>In this case, website revenue would be $150,000.<\/p>\n<p>But you can take it one step further.<\/p>\n<p>If you\u2019re wondering how much your revenue would increase by increasing traffic, increasing your conversion rate or both, you can do it with ease.<\/p>\n<p>Just type in the increase in percentage of traffic and\/or increase in conversion rate. <\/p>\n<p>Let\u2019s say, I\u2019m able to increase traffic by 15 percent and increase conversions by 0.5 percent.<\/p>\n<p>Here\u2019s what I get:<\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/revenue-gains-calculator.png\" class=\"alignnone size-full wp-image-34186\" \/><\/p>\n<p>This tells me that these improvements would take my website revenue from $150,000 to $173,650 \u2013 an increase of $23,650. <\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/increase-conversions-backwards.png\" class=\"alignnone size-full wp-image-34187\" \/><\/p>\n<p>By following this simple formula, you can see exactly how your conversion rate is affecting revenue. <\/p>\n<p>As for calculating churn, it can get pretty complicated and depends on a myriad of factors like how you count customers, time frame, customer segments and so on.  <\/p>\n<p>ProfitWell even goes so far as to say that there are 43 different ways to calculate SaaS churn. <\/p>\n<p>But when broken down in its simplest form, the formula looks like this:<\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2014\/11\/1-the-churn-equation.png\" class=\"alignnone size-full wp-image-26078\" \/><\/p>\n<p>It\u2019s important to note that <strong>churn is inevitable<\/strong> and is bound to occur in nearly every business. <\/p>\n<p>What\u2019s important is that you have an acceptable churn rate.<\/p>\n<p>So\u2026what\u2019s considered \u201cacceptable?\u201d<\/p>\n<p>Hate to say it, but it just depends. <\/p>\n<p>I like the answer that David Mytton of Server Density wrote on Quora:<\/p>\n<blockquote>\n<p>You can\u2019t just pick a number and say \u201cthis is what churn should be\u201d because it depends entirely on your customer segment.<\/p>\n<\/blockquote>\n<p>This is a guy who knows that segmentation is crucial. Any churn rate that excludes customer segmentation from the equation is most likely misguided. <\/p>\n<p>Mytton does, however, admit that it\u2019s helpful to have benchmarks. He provides these: <\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/segment-churn.jpg\" class=\"alignnone size-full wp-image-34188\" \/><\/p>\n<p>Lincoln Murphy of Sixteen Ventures suggests than an acceptable churn rate is in the 5-7% range annually or 0.42 \u2013 0.58 percent monthly. According to Murphy, \u201cCompanies with acceptable churn only lose about 1 out of every 200 customers (or dollars) per month.\u201d<\/p>\n<p>In my experience, this sets the standard <em>way too high<\/em>. <\/p>\n<p>Churn happens, regardless of how amazing your customer service, how flawless your product, or how perfect your price point is. <\/p>\n<p>But there are holes that should be plugged. If left unchecked, an exorbitant churn rate will erode your revenue. <\/p>\n<p>If you\u2019re staring at an alarming churn rate \u2014 whatever that might be for your vertical and segment \u2014 start taking action immediately. <\/p>\n<h2>Active Users (SaaS)<\/h2>\n<p>When it comes to SaaS companies, they\u2019ll want to keep a close eye on their number of active users at any given time. <\/p>\n<p>This is perhaps the best indicator of engagement and shows how many users are actually using their product on a consistent basis. <\/p>\n<p>Of course, the term \u201cactive\u201d is inherently nebulous and can be defined in a variety of ways. <\/p>\n<p>Pipz Automation even calls active users a vanity metric saying that it\u2019s too black and white to identify a user as active or inactive with nothing in between. <\/p>\n<p>Although it\u2019s an interesting argument, and determining \u201cactiveness\u201d can depend on a variety of factors as well as the industry in question, I feel <em>there are some concrete ways<\/em> to identify active users.<\/p>\n<p>So let\u2019s get right down to it. <\/p>\n<h3>Logins<\/h3>\n<p>Perhaps the most obvious and universal is logins.<\/p>\n<p>Facebook has a super simple way of defining active users, which primarily hinges upon logging in. You don\u2019t need to Like, Comment, or use any feature to be counted as active. Just login.<\/p>\n<blockquote>\n<p>We define a daily active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, or used our Messenger application (and is also a registered Facebook user), on a given day.<\/p>\n<\/blockquote>\n<p>If a user doesn\u2019t do this within a 30 day period, they\u2019re marked as inactive.<\/p>\n<p>This is a means of identifying users that pretty much any SaaS company can do with ease. <\/p>\n<p>Pipz Automation makes another interesting point by saying, \u201cFor all you know, \u2018inactive users\u2019 could be on vacation, or their business could be passing through a slow sales season, so they don\u2019t have the need to login on your product for a while.\u201d<\/p>\n<p>While this is definitely food for thought, I still think that examining logins is one of the most straightforward ways to gauge active users. <\/p>\n<h3>Session Duration<\/h3>\n<p>Another factor to take into account is how long a user is logged in.<\/p>\n<p>Having someone logged in for 10 minutes would be favorable to someone only being logged in for 2 minutes.<\/p>\n<p>Although anyone who logs in would be considered as an active user, you would assign more value to someone who stays logged in for longer.<\/p>\n<p>The longer your average session duration is, the better. <\/p>\n<h3>Using Features<\/h3>\n<p>This is the second metric that Facebook (and many companies) use after logins. <\/p>\n<p>Of course the specific type of features used can vary widely, seeing that a user is accessing key features is obviously a sign that they\u2019re active. <\/p>\n<p>For instance, Ahrefs might take a look at which specific features users were accessing most frequently from their dashboard. <\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/ahrefs-rank-tracker.jpg\" class=\"alignnone size-full wp-image-34189\" \/><\/p>\n<p>You\u2019ll probably also want to classify some features as being more important than others. <\/p>\n<p>For example, you might assign more value to someone taking the time to fill out their profile rather than checking for notifications.<\/p>\n<p>This would show that they\u2019re engrossed in your software, which is a good sign. <\/p>\n<h3>Creating a CEI<\/h3>\n<p>A customer engagement index (CEI) is a way to gain even more comprehensive insights into user activity. It is sometimes also known as customer engagement <em>score<\/em>.<\/p>\n<p>It involves assigning different values to a user\u2019s actions, which ultimately gives you a snapshot of overall user engagement. <\/p>\n<p>This ends up being quite helpful for determining just how active your users are on the whole.<\/p>\n<h2>Customer Loyalty (Ecommerce)<\/h2>\n<p>Finally there\u2019s the matter of customer loyalty. <\/p>\n<p>This affects everything from revenue and brand equity to the long-term sustainability of your business and how competitive you are in your industry. <\/p>\n<p>You\u2019ve probably heard something like, \u201cIt can cost five times more to acquire new customers than it does to keep current ones.\u201d<\/p>\n<p>This is a good quote that shows why companies are so concerned with customer loyalty. <\/p>\n<p>But here are some other interesting statistics that demonstrate the full impact of having loyal customers. <\/p>\n<ul>\n<li>\u201c61 percent of SMBs report that more than half of their revenue comes from repeat customers, rather than new business.\u201d<\/li>\n<li>\u201cOn average, loyal customers are worth up to 10x as much as their first purchase.\u201d<\/li>\n<li>\u201cA five percent increase in customer retention can increase a company\u2019s profitability by 75 percent.\u201d<\/li>\n<\/ul>\n<p>When it comes to using behavioral metrics to determine customer loyalty, looking at repurchases is usually your best bet. <\/p>\n<p>If a customer is compelled to purchase multiple products from your company, it indicates at least a base level of loyalty.<\/p>\n<p>They like your brand enough and have had at a pleasant enough experience to buy from you again. <\/p>\n<p>The more purchases a single customer makes correlates into stronger loyalty. <\/p>\n<p>When it comes to a repeat purchase rate formula, it\u2019s really quite simple. Here\u2019s how to calculate it:<\/p>\n<p><img src=\"https:\/\/blog.kissmetrics.com\/wp-content\/uploads\/2017\/09\/repeat-purchase-rate.jpg\" class=\"alignnone size-full wp-image-34193\" \/><\/p>\n<p><em>Image Source<\/em><\/p>\n<p>So if out of 100 customers,15 have shopped with you previously, you would have a repeat rate of 15 percent. <\/p>\n<p>Calculating your retention rate is one of the most effective ways to gauge the collective loyalty of your customers and determine if any adjustments need to be made.  <\/p>\n<h2>Conclusion<\/h2>\n<p>The key business drivers I mentioned \u2013 revenue, active users and customer loyalty \u2013 contribute most heavily to your company\u2019s bottom line. <\/p>\n<p>There are of course a multitude of factors to take into account, but I feel that these three are most pertinent in the grand scheme of things. <\/p>\n<p>Diagnosing the health of these key business drivers revolves around identifying which behavioral metrics impact them the most. <\/p>\n<p><a target=\"_blank\" href=\"https:\/\/blog.kissmetrics.com\/map-behavioral-metrics\/\">View original article here<\/a><\/p>\n<script type='text\/javascript'>\r\n jQuery(document).ready(function() {\r\n    jQuery( \"#tabs_1692\" ).tabs({\r\n    collapsible: true,\r\n    active: false\r\n        });\r\n\tjQuery( \".scroller_1692\" ).width(jQuery( \".scroller_1692\" ).width()+1);\r\n\t\r\n\t\r\n\t\r\n  });\r\n  \r\n  <\/script>\r\n  ","protected":false},"excerpt":{"rendered":"<p>this is a essay on How to Map Behavioral Metrics Into Your Key Business Drivers. 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