Apr 28, 2021
Welcome back to another episode of Monetization Nation with Jim Sterne. In the last episode, we talked about the importance of passion marketing and value-based pricing. In this second episode, we’re going to review successful ways to use metrics to drive growth in our businesses.
Navigating Tectonic Shifts
The business landscape is constantly changing. We’ve especially seen change and tectonic shifts during this past year as we’ve been hit with a worldwide pandemic.
“I think what COVID-19 has done is force us to up our game in being human,” Jim said. It has forced businesses to become more personalized.
When the pandemic struck, many businesses were forced to close their doors and move remote. This meant many CEOs were leading Zoom meetings from their homes. “Suddenly that CEO is a human being and corporations are now made up of people, not offices and hierarchy. It's a bunch of people dressed like we are, in spaces like ours right now, doing our work,” Jim explained.
In order to adapt, businesses have embraced the personal aspects of their brands. They are shifting their focus more and more to how they can relate to their customers. We need to focus on the customer, but it has to be an even softer pitch—it has to be about how our products and services will help our customers.
But how do we do this? How can we be more personalized with our customers and really understand them and their needs?
One way to do this is to launch different marketing campaigns and then analyze them. If we’re going to spend resources, time, and money doing an ad or campaign, we need metrics to know what’s working and what’s not. The more we do this, the more we can learn and narrow down what resonates best with our audience in order to serve them better.
In order to effectively measure the success of our businesses, we need to measure and leverage metrics. Jim, author of Social Media Metrics: How to Measure and Optimize Your Marketing Investment, has shared three ways to do this.
We need to match our metrics with our business goals. Our metrics need to be aligned with our highest priority as an organization as we then use them to measure and drive our success.
"That which is measured improves. That which is measured and reported improves exponentially." - Karl Pearson
One of the most important metrics to measure is customer lifetime value—what is the cost of the product, and are we attracting people who are coming back? We should choose a handful of metrics to measure and report consistently.
Jim currently runs the business 2Y3X that helps businesses with growth. 2Y3X helps a business team reengineer the company. This is a two-year program that takes time and work. It focuses on making monthly goals and analyzing them to determine success. As we develop our own metrics, we should follow a process similar to Jim’s business. We should be using our metrics to make monthly goals and then reevaluate them at the end of the month to see our progress. And just as with Jim’s business, this process will take time and work before we will start to see obvious growth.
The metrics we choose need to be measurable, preferably measured month-to-month so we can see progress.
One great tool to measure some metrics is Google Analytics, a simple way to start off for free. Then, once we start gaining more data, we can gear up and integrate better tools.
According to HubSpot, “A key performance indicator (KPI) is a metric used to measure and track your progress toward achieving a specific goal. Business KPIs, which can vary by department, may help gauge a company's long-term performance against its own targets and industry standards.”
We want to have one to three good KPIs by which we measure everything. When done correctly, these KPIs drive our decision-making and priorities as an organization. The worst thing we can do with our KPIs is to have too many. When everything is a priority, then nothing is a priority.
“[KPIs] is absolutely crucial to having everybody in the company be aligned to doing the right stuff,” Jim said.
I used to do a lot of work for Azul airlines, a new airline started by David Neeleman The founder of JetBlue. I helped him start this Brazilian airline, which was an incredible learning experience. Here’s one example of a great lesson I learned from David. He was very good at using KPIs to make company decisions. His company focused on two specific KPIs: one was the cost per seat flown, and the other was the revenue per seat flown. Many of their decisions were based on those two KPIs.
For example, the front of their company’s headquarters was purple, even though their brand was named Azul (blue). But the color of their building did not affect either of their KPIs and so they kept the front of their building purple while I was there. They clearly identified their two KPIs from the beginning and made decisions to improve and optimize those two KPIs.
One of Jim’s KPIs is to get people to open the emails he sends. Over time, he has realized that the best way to do this is by creating a catchy subject line. He then measures success based on how many people open his email.
Another term similar to KPI is a “northstar metric”. The term northstar metric is often used in the growth hacking community. This is where we pick one metric that we try to base all of our decisions on. Whatever the case, whether a northstar metric or two KPIs, it is essential everyone in the business knows these specific goals and we base our key decisions on these metrics.
We need to communicate our goals effectively with the entire business.
The biggest mistake Jim sees is when there is a lack of communication. The analysts need to communicate to the business side of the organization. They should be taking the data and pulling out clear insights everyone else can easily understand, and then quickly and effectively communicating that with all relevant players.
“An analyst spends their time data mining in the coal mine, hacking away at the data, and wrangling it so that it will be in the right configuration so that they can do an analysis, and then they come up with an insight,” Jim said. They shouldn’t pass on the data, they should pass on the insights they gained and any other ideas they have to improve.
A good analyst will take a look at a set of data, find the problem or friction in the data, understand the cause, and then make suggestions on how to fix it. They need to be on the business side more than the data side of things so they are generating value for the organization from the data.
Thank you so much Jim for sharing your stories and insights with us today. Here are some of my key takeaways from this episode:
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