In 2018, we published a book entitled A Member Is Worth a Thousand Visitors.
The book is anchored by a discussion of the five forces of online revenue growth through focusing on your best end users. My team and I identified these forces over two and a half years through hands-on experiments with our clients, primary research and interviews, and a review of research projects done by academics. We’ve seen our approach drive 50 to 600 percent revenue growth.
We’re previewing each of these forces to give you a taste of what the book can do to transform your business. To start from the beginning, read Force #1: Focus on Your Whales, Force #2: Be Conversion-Oriented, and Force #3: Upsell.
While some business owners view analytics as a four-letter word, they’re actually the key to maximizing the value of your membership program.
Analytics are there for you through the good, the bad, and the ugly. They provide proof when you’re doing something wonderful, so you can leverage your efforts, and they alert you when you’re off the mark, so you can quickly course-correct.
But how do you define success? What exactly should you measure and experiment with? There are three main elements to this force.
1. Build a Dashboard
Your dashboard should foster a disciplined review and understanding of the most important numbers in your business. It should contain five to nine key metrics you can carefully measure to ensure your strategy is heading in the right direction and you’re on track with your goals. Dashboards give you the power to leverage the winning initiatives in your business and tweak or cut the losers.
What’s more, your dashboard is an organizational leadership tool. Your whole team should rally around those numbers. When you see a significant change, either good or bad, that’s when you do a deep dive to figure out what’s going on. From there, you can decide how to further capitalize on the success or reverse the failure.
2. Collect Feedback
Focus on your members’ reactions to you. Collect feedback. While it can be painful to hear negative customer feedback after lots of hard work, it’s actually a gift. Constructive criticism—whether it’s about the products in your pyramid, user experience on your site, customer service, or something else entirely—will help your business thrive.
While there are any number of ways to collect and measure your customers’ feedback, we suggest using a Net Promoter Score (NPS). The beauty of an NPS is that it’s easy, practical, and actionable. You simply ask customers, “How likely is it that you would recommend us to a friend or colleague?” Then provide a scale from 10 (“extremely likely”) to 1 (“not likely at all”).
Anyone who responds with a 9 or 10 is considered a promoter. This group, according to the research, has the highest retention rate, profitability, and cost efficiency. They also serve as brand advocates and generate word-of-mouth referrals for you. (Looking for your whales? You’ve likely just found some!)
Anyone who responds with a 7 or 8 is passive. And finally, anyone who responds with a 6 or below is a detractor. This group tends to have low retention rates and is costly to serve. They may also damage your reputation in the marketplace with negative word-of-mouth.
Your NPS is equal to the percentage of people who are promoters minus the percentage of people who are detractors. Research shows there is a direct correlation between NPS and revenue. In fact, companies with the highest scores in their category grow at over twice the rate of the category average.
3. Run Experiments
A dashboard and customer feedback are inherently backward-facing. The dashboard shows you the results of the work you’ve already put in, and your NPS tells you about prior experiences between you and your customers. But when a number on your dashboard is off and needs to be tweaked, or if you’ve just come up with a fresh idea, or you need to address a key customer service issue, then it’s time to face forward. What can you do differently to improve? Experiment by running A/B split tests.
A/B split tests involve creating two versions of a page, form, or email and dividing traffic between the two to measure which one performs better. You can test nearly everything along your customer’s journey—from email subject lines to call to action button designs—to evaluate methods and more.
Split tests are also one key to becoming more conversion-oriented. If you have a relatively low pyramid entry point for your whales—say, their email in exchange for a free ebook—but you can’t seem to get anyone to sign up, test some variations to see if anything changes your results. Maybe the call to action is at the bottom of your landing page and would work better above the fold. Or perhaps the language doesn’t sell the value proposition very well. Run a split test (or several) until you find the winning combination.
Have a Learning Agenda
Don’t just run a slate of random A/B tests. Focus on what we call your learning agenda. Or, to think of it a different way, ask yourself what would you like to discover about your customers. Are you trying to understand the best price point or trial period? Are you looking to see what piece of free content will generate the highest number of leads? Think like a scientist and be hypothesis-driven. What open questions (coming out of the dashboard and the NPS surveys) do you want answers to?
Once you’ve defined your agenda, then you can devise a series of A/B tests to get your answers.
If At First You Don’t Succeed…
…Try, try again. The fourth force of online revenue growth is one you’ll revisit over and over. You might update your product pyramid or poll your whales several times a year, so measuring and experimenting is a constant piece of your sales strategy puzzle. With your eyes on your dashboard and permission to try new tests, you can enter a state of constant improvement. That way, one failed test is simply a leg up towards your next big win.
To learn what metrics you should track in your dashboard, how to calculate and maximize your NPS, and for advice on defining success and knowing when to drop a failed experiment, order your copy of the book, A Member Is Worth a Thousand Visitors: A Proven Method For Making More Money Online.
Want to learn more about the last force? Check out Force #5: Create Bandwidth.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to build deeper relationships with their best customers, launch new products and membership programs, and execute smarter marketing strategies.
We use a hypothesis-driven, data supported methodology to discover your “spin”—a simple insight that no one else is paying attention to. Then, we help you assemble the right technologies, marketing plans, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Throughout his career, his focus has been on embracing technology and analytics to spur strategic development and growth.
At the Sterling Woods Group, he and the team are passionate about helping clients understand their best customers through data, and developing products and membership programs that exceed expectations – and generate impressive revenues.
Committed to spreading this message, Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.