Measuring Value for Customers

This article emphasizes the importance of measuring value created for customers rather than solely optimizing for internal metrics like pageviews or revenue. It argues that focusing on customer benefit drives long-term success and aligns a business with its customers' needs.

• The author posits that standard analytics often prioritize inward-focused metrics, neglecting the outward value generated for customers.
• Examples of inward-focused metrics include account registrations, pageviews, unique visitors per month, and revenues. While these are valuable, focusing solely on optimizing them can lead to a value extraction mindset instead of value creation.

Shifting Focus to Customer Benefit

The article suggests a shift towards "benefit-driven metrics," which are quantitative measurements that reflect how customers perceive and experience value. These metrics differ from traditional analytics and are unique to each business and its customers.

Examples of Benefit-Driven Metrics

The article provides examples of how to implement benefit-driven metrics across various industries.

• Dating Sites: Instead of focusing on lifetime value (LTV), measure successful matches made, reflecting the core customer benefit of finding a soulmate.
• Marketplaces: Measure the amount sellers take home and the satisfaction of buyers, aligning with the core benefit of facilitating profitable transactions.
• Social Networks: Focus on the number of messages, comments, and posts that receive replies from friends, emphasizing the core value of communication and connection.
• Online Publishers: Measure the revenue generated for advertiser customers or conversions they achieve, prioritizing the value proposition for advertisers who drive revenue.

Special Note for Ad-Driven Startups

The article highlights a key distinction for ad-supported startups: their primary customers are often the advertisers, not the users. Focusing solely on user experience to the detriment of advertisers can lead to negative consequences.

Start Early with Benefit-Driven Metrics

The author strongly advocates for implementing benefit-driven metrics from the beginning of a business. This helps companies develop a culture of value creation, making it easier to adapt and evolve over time.

• Focusing on internal metrics early on can create a deep-rooted focus that makes it difficult to shift to customer-centric metrics later.
• Adopting benefit-driven metrics early allows companies to gather valuable insights and make informed decisions aligned with customer value.

Conclusion

The article concludes with a call to action for businesses to prioritize measuring the value they create for their customers. By focusing on benefit-driven metrics, businesses can drive sustainable revenue growth, foster long-term customer relationships, and ultimately succeed in a competitive marketplace.