Whilst being entrepreneurial minded, looking for a creative business strategy/model to drive a website i just started, i pondered on what really makes a site successful, i came across Seth Godin’s blog which highlighted 6 questions for analyzing a website. I found this to be interesting because as he noted it’s tempting to believe that any website can become a perpetual motion machine of profit.
But before you start one, invest in one or go to work for one, here a few things to ask:
- What’s the revenue per visit? (RPM). For every thousand visitors, how much money does the site make (in ads or sales)?
- What’s the cost of getting a visit? Does the site use PR or online ads or affiliate deals to get traffic? If so, what’s the yield?
- Is there a viral co-efficient? Existing visitors can lead to new visitors as a result of word of mouth or the network effect. How many new visitors does each existing user bring in?
- What’s the cost of a visitor? Does the site need to add customer service or servers or other expenses as it scales?
- Are there members/users? There’s a big difference between drive-by visits and registered users. Do these members pay a fee, show up more often, have something to lose by switching?
- What’s the permission base and how is it changing? The only asset that can be reliably built and measured online is still permission. Attention is scarce, and permission is the privilege to deliver anticipated, personal and relevant messages to people who want to get them. Permission is easy to measure and hard to grow.
Really, using these six metrics, one can see why the likes of Google, Facebook, Youtube, Twitter are the dominant sites on the social web. These six metrics will help you understand the difference.
The ideal structure is a business that’s a platform, not merely a place to stop by. Once people move in and become members, they’re hesitant to leave, they share permission over time, they tell their friends, their RPM goes up and the cost of acquiring and hosting members goes down.
The real question is: am i/you on that path of building or being a part of a successful website ?