Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

Much has been written about what entrepreneurs should concentrate on to make their startups successful and a lot of emphasis has been laid on three key factors: team, product and market, with specific impetus on the significance of product/market fit. 
 Failure to get product/market fit right is likely the number 1 reason for a <keyword id="138263" type="UNKNOWN" weightage="20" keywordseo="startup">startup</keyword>’s failure. However, not many discuss about the second greatest reason for startup failure, which is ‘the cost of acquiring customers’ that ends up being higher than expected, and surpasses the ability to monetize those customers. 
 
The question is, “What should be the cost of user acquisition? And how will it sustain the competition” 
 While acquiring new customers is a happy feat, it doesn't mean, in any case, that you lose out on common sense in accounting time and human resource efforts in acquiring them, normally alluded to as your <keyword id="357813" type="ORGANIZATION" weightage="20" keywordseo="CAC">CAC</keyword> (<keyword id="3982726" type="UNKNOWN" weightage="20" keywordseo="Customer-acquisition-cost">customer acquisition cost</keyword>). 
 It doesn't take a genius to comprehend that plan of action failure comes when CAC (the cost to gain customers) surpasses <keyword id="193041" type="CITY" weightage="20" keywordseo="LTV">LTV</keyword> (the ability to monetize those customers). 
 
A well-balanced plan of action requires that CAC is significantly less than LTV. 
 
To be a business person requires incredible positive thinking, and an extremely solid belief in how much customers will love your product. Sadly this same property can likewise lead entrepreneurs to believe that customers will beat a path to their way to buy the product. This as often as possible causes them to terribly belittle the cost it will take to get customers.

Know the cost of acquiring customers. Don’t overspend and
kill your startup

To grow your business, you need more sales. For more sales, you must have the answer the most crucial question: “Why does my customer buy from me?” Every successful company has answered this question. It’s time you found it for your business too. Customers generally buy for one (or all) of three reasons: a.The offering addresses their pain point, b.It makes your customer gain intangible value, c.It gets things done, thus giving customers a leg up on competition. When you know ‘why’ your customer buys from you, you can develop a robust offer. But the offer doesn’t stand alone. It must be clubbed with 5 metrics which increase your sales and. These metrics are: 1. Urgency How badly does your customer want it? The urgency of your offering in the customer’s eyes is directly proportional to your sales. The more urgently he wants what you offer, the shorter is your sales cycle. Which aspects of your offering create an urgency in your customer’s mind? 2. Pricing What will they pay you for your offering? Along with urgency, price plays an important role in determining your sales. The more a customer pays you, the faster you can achieve your sales targets. This, in turn, means you can scale up faster. For instance, your product might be worth ₹5 lakhs, and you aim for an annual turnover of ₹100 crore. How many units must you sell? 200. But if your product costs ₹5 thousand, you’ve got to sell 20,000 units to achieve the same turnover. Does your offering convince your customer to pay you more than he currently does? 3. Cost of Acquisition What do you spend to get a customer? The cost of acquiring customers (CAC) is a key metric to determine your pricing. Every action your organization takes to get a sale has an associated cost. Every investment you make to acquire customers contributes to your CAC. Even activities like networking, guest speaking, seminars and other events are incurred costs. These costs must be taken into account while calculating the cost of acquiring your customer. The lower your CAC, the higher your profitability. Hence, it’s important for you to implement a system which makes your sales process efficient. This system should also enable your company to lower your CAC in each quarter. What can you do today to lower your CAC? 4. Cost of Value Delivered How much do you spend in keeping your promise? The Cost of Value Delivered (CVD) is what you spend to give your customer what he paid for. Delivering your offering to the customer, and services rendered after sales are part of CVD. For instance, you manufacture and sell your private label of garments in retail stores. How much does manufacturing the garments cost you? Account for material costs, worker wages, overheads and everything else. Also, how much does the retailer charge you? This generally is a fixed cost since the retailer worries about his overheads. When you add these two costs (manufacturing costs and retailer fees), you come upon your Cost of Value Delivered. Like CAC, CVD is a significant metric to determine your business’ profitability. Here, your garment’s maximum retail price minus your CVD is your profit. This is another avenue where you must deploy a system to bring down cost each quarter without compromising on value.<a name="_GoBack"></a> Can you keep your promises to customers for a lesser cost? 5. Market Size What's the size of your market? The last, and most important metric to affect sales, is market size. Ideally, the market should be of two types. One, a mature market ready to purchase what you offer. Or two, a nice market with low with an unfulfilled pain, gain or yearning for an edge. The former will get you sales on the basis of volumes, while the latter will get you more profit per sale. If your systems can tap into organizational efficiency to bring CAC and CLD down then, other factors staying constant, you can grab market share quickly. You can retain your price even when your competition has to increase prices to stay afloat. How much of your market can you capture? (100% is not a realistic answer.) Grow Your Business the Right Way Sales and profitability play important roles in scaling a business. Without these, your business is just smoke - it will change direction with the wind. You’ll have little control over how your business functions. In such cases, scaling is almost impossible. But you can, with a little help, achieve your business dreams of scaling. You can take your company to levels higher than you had imagined. You can enjoy a good night’s sleep for years, knowing your business will sustain even without your involvement. All you have to answer is one question: Why does my customer buy from me? Once you’ve got the answer and placed effective systems to replicate your best sales, growth and stability are just a matter of time. (The article is authored by Hardik Harsora, Co-founder, Effex Business Solutions)

5 key metrics that will propel your business to the next level

Blue ApronBlue Apron doesn't mention "subscription" once in its S-1 filing.Nikhil Basu Trivedi is a <a href="http://www.shastaventures.com/team/nikhil_basu_trivedi">principal at Shasta Ventures</a>. He has no financial stake in Blue Apron, but invests in other consumer businesses as disclosed in this article. His post originally appeared <a href="https://medium.com/@nbt/how-blue-apron-compares-to-other-subscriptions-in-one-graph-6404a74ccf2d">on Medium</a> and is republished here with permission.When <a href="http://www.blueapron.com/" target="_blank" rel="nofollow noopener noreferrer">Blue Apron</a>'s <a href="https://www.sec.gov/Archives/edgar/data/1701114/000104746917003765/a2232259zs-1.htm" target="_blank" rel="nofollow noopener noreferrer">S-1</a> dropped at the beginning of the month, there was a lot of excitement, and rightly so. This is one of the fastest growing consumer businesses in the United States over the last few years, poised to do over $1 billion in revenue in just its 6th year since launch.It should go without saying that the team at Blue Apron has executed at a very high level to get the business to where it is today. The company has improved the way so many people cook and eat!<a href="https://stratechery.com/2017/blue-apron-files-for-ipo-network-effects-and-customer-acquisition-costs-uber-concerns/" target="_blank" rel="nofollow noopener noreferrer">Others</a> <a href="https://seekingalpha.com/article/4078625-blue-apron-ipo-takeaways-sminus-1" target="_blank" rel="nofollow noopener noreferrer">have</a> <a href="https://medium.com/startup-traction/blue-apron-s-1-meals-on-your-doorstep-923499bcaf45" target="_blank" rel="noopener noreferrer">done</a> a great job summarizing the details about the business revealed in the S-1, including honing in on the key set of questions: what is the true customer lifetime value (LTV) and cost of acquiring a customer (CAC)? How are these key metrics changing? And what does that imply about the business's long-term prospects? Blue Apron's filing reveals limited data to answer this question. One <a href="https://docs.google.com/spreadsheets/d/14bUyuLTrvs6wPwb2gr7gKhCh8Nuf9V3jyqMsUX5WGLU/edit#gid=289089537" target="_blank" rel="nofollow noopener noreferrer">helpful analysis</a> indicates an implied LTV:CAC ratio of 3:1.What most intrigues me, though, is the language that Blue Apron uses to describe its own business. As investors at <a href="http://www.shastaventures.com/" target="_blank" rel="nofollow noopener noreferrer">Shasta Ventures</a> in several consumer transactional businesses that have subscription models (e.g. <a href="http://www.thefarmersdog.com/" target="_blank" rel="nofollow noopener noreferrer">The Farmer's Dog</a>, <a href="http://www.imperfect.com/" target="_blank" rel="nofollow noopener noreferrer">Imperfect Produce</a>, <a href="http://www.dollarshaveclub.com/" target="_blank" rel="nofollow noopener noreferrer">Dollar Shave Club</a>, <a href="http://www.smule.com/" target="_blank" rel="nofollow noopener noreferrer">Smule</a>, <a href="http://www.canva.com/" target="_blank" rel="nofollow noopener noreferrer">Canva</a>, <a href="http://www.frame.io/" target="_blank" rel="nofollow noopener noreferrer">Frame.io</a>, <a href="http://www.zwift.com/" target="_blank" rel="nofollow noopener noreferrer">Zwift</a>, <a href="http://www.hinge.co/" target="_blank" rel="nofollow noopener noreferrer">Hinge</a>), the Blue Apron meal kit business model and metrics associated with it are of particular interest. One surprise?The words "Subscription" and "Churn" just don't get used in the S-1!Of course, customer retention is key to understanding the long term prospects for Blue Apron's business. A cohort analysis is a very helpful way to understand how customers subscribe and are retained over time, but the S-1 does not include such analysis.Fortunately, we have tools like <a href="http://www.secondmeasure.com/" target="_blank" rel="nofollow noopener noreferrer">Second Measure</a>, which uses anonymized credit card transaction data to gain visibility on the performance of public and private companies.Here's a comparison for what Blue Apron's customer retention looks like (in blue) versus that of Hello Fresh (green), one of its competitors, versus subscription services Dollar Shave Club (orange) and Netflix (red):Second MeasureThis data is not representative of true customer retention for Blue Apron, Hello Fresh, Dollar Shave Club, and Netflix, for it is based on a population % of U.S. consumers. However, it gives us a sense for what true retention looks like. Monthly retention is calculated as a median % for all cohorts based on if the customer transacted in a given month or in the prior month.I find this data very revealing. There is a large amount of churn in the first six months for Blue Apron, albeit at a less stark level than that for Hello Fresh. About 1/3 of subscribers are retained at month 6 for Blue Apron versus over 3/4 for Netflix and Dollar Shave Club. It's important to note that where Netflix and DSC customers typically make one transaction per month, the average Blue Apron customer is purchasing 2-3 times per month, which makes the stark contrast in retention a bit more palpable. There is some leveling off in churn, but the retention asymptotes at a much lower level for Blue Apron and Hello Fresh versus for Netflix and DSC.So maybe this is why Blue Apron doesn't use the word "subscription" to describe its business in its S-1. Given its retention versus other subscription businesses, Blue Apron likely won't get valued by the public markets at the kind of multiples that subscription businesses command. For example, Netflix is valued in the public markets at 6-7X trailing twelve month revenue. We can reasonably expect Blue Apron to be valued at a lower multiple than this given its retention vis-a-vis Netflix, despite its higher annual growth rate and very impressive early traction.Blue Apron has clearly struck a chord with consumers, and many people love the service. But they get tired of being subscribers, and the majority move on after a few months.The big question for its long-term performance is how Blue Apron will address this significant churn. At some point, many U.S. consumers will have tried it out, cooked a bunch of meals, and no longer be subscribers. What happens then? It will be fascinating to see the story of Blue Apron unfold. <h3>NOW WATCH: <a href="http://www.businessinsider.com/blue-apron-cooking-time-instructions-video-2017-6">What it's really like to cook a Blue Apron meal</a></h3> Please enable Javascript to watch this video

How Blue Apron compares to other subscription services, in one graph

For technology to change the global balance of power, it needn't be new. It must simply be known.Since 2017, the Chinese Communist Party has laid out careful plans to eventually dominate the creation, application, and dissemination of generative artificial intelligence — programs that use massive datasets to train themselves to recognize patterns so quickly that they appear to produce knowledge from nowhere. According to the CCP's plan, by 2020, China was supposed to have "achieved iconic advances in AI models and methods, core devices, high-end equipment, and foundational software." But the release of OpenAI's ChatGPT in fall 2022 caught Beijing flat-footed. The virality of ChatGPT's launch asserted that US companies — at least for the moment — were leading the AI race and threw a great-power competition that had been conducted in private into the open for all the world to see.There is no guarantee that America's AI lead will last forever. China's national tech champions have joined the fray and managed to twist a technology that feeds on freewheeling information to fit neatly into China's constrained information bubble. Censorship requirements may slow China's AI development and limit the commercialization of domestic models, but they will not stop Beijing from benefiting from AI where it sees fit. China's leader, Xi Jinping, sees technology as the key to shaking his country out of its economic malaise. And even if China doesn't beat the US in the AI race, there's still great power, and likely danger, in it taking second place."There's so much we can do with this technology. Beijing's just not encouraging consumer-facing interactions," Reva Goujon, a director for client engagement on the consulting firm Rhodium Group's China advisory team, said. "Real innovation is happening in China. We're not seeing a huge gap between the models Chinese companies have been able to roll out. It's not like all these tech innovators have disappeared. They're just channeling applications to hard science."In its internal documents, the CCP says that it will use AI to shape reality and tighten its grip on power within its borders — for political repression, surveillance, and monitoring dissent. We know that the party will also use AI to drive breakthroughs in industrial engineering, biotechnology, and other fields the CCP considers productive. In some of these use cases, it has already seen success. So even if it lags behind US tech by a few years, it can still have a powerful geopolitical impact. There are many like-minded leaders who also want to use the tools of the future to cement their authority in the present and distort the past. Beijing will be more than happy to facilitate that for them. China's vision for the future of AI is closed-sourced, tightly controlled, and available for export all around the world.In the world of modern AI, the technology is only as good as what it eats. ChatGPT and other large language models gorge on scores of web pages, news articles, and books. Sometimes this information gives the LLMs food poisoning — anyone who has played with a chatbot knows they sometimes hallucinate or tell lies. Given the size of the tech's appetite, figuring out what went wrong is much more complex than narrowing down the exact ingredient in your dinner that had you hugging your toilet at 2 a.m. AI datasets are so vast, and the calculations so fast, that the companies controlling the models <a target="_blank" href="https://www.nytimes.com/2024/05/21/technology/ai-language-models-anthropic.html">do not know why they spit out bad results, and they may never know</a>. In a society like China — where information is tightly controlled — this inability to understand the guts of the models poses an existential problem for the CCP's grip on power: A chatbot could tell an uncomfortable truth, and no one will know why. The likelihood of that happening depends on the model it's trained on. To prevent this, Beijing is feeding AI with information that encourages positive "social construction."China's State Council wrote in its 2017 Next Generation Artificial Intelligence Development Plan that AI would be able to "grasp group cognition and psychological changes in a timely manner," which, in turn, means the tech could "significantly elevate the capability and level of social governance, playing an irreplaceable role in effectively maintaining social stability." That is to say, if built to the correct specifications, the CCP believes AI can be a tool to fortify its power. That is why this month, the Cyberspace Administration of China, the country's AI regulator, launched a chatbot trained entirely on Xi's political and economic philosophy, "Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era" (snappy name, I know). Perhaps it goes without saying that ChatGPT is not available for use in China or Hong Kong.<div type="image" title="Xi Jinping" height="1359" width="2000" msid="110639288" hostid="261" sizebytes="132198"></div>For the CCP, finding a new means of mass surveillance and information domination couldn't come at a better time. Consider the Chinese economy. Wall Street, Washington, Brussels, and Berlin have accepted that the model that helped China grow into the world's second-largest economy has been worn out and that Beijing has yet to find anything to replace it. Building out infrastructure and industrial capacity no longer provides the same bang for the CCP's buck. The world is pushing back against China's exports, and the CCP's attempts to drive growth through domestic consumption have gone pretty much nowhere. The property market is distorted beyond recognition, growth has plateaued, and deflation is lingering like a troubled ghost. According to Freedom House, a human-rights monitor, Chinese people demonstrated against government policies in record numbers during the fourth quarter of 2023. The organization logged 952 dissent events, a 50% increase from the previous quarter. Seventy-eight percent of the demonstrations involved economic issues, such as housing or labor. If there's a better way to control people, Xi needs it now.Ask the Cyberspace Administration of China's chatbot about these economic stumbles, and you'll just get a lecture on the difference between "traditional productive forces" and "new productive forces" — buzzwords the CCP uses to blunt the trauma of China's diminished economic prospects. In fact, if you ask any chatbot operating in the country, it will tell you that Taiwan is a part of China (a controversial topic outside the country, to say the least). All chatbots collect information on the people who use them and the questions they ask. The CCP's elites will be able to use that information gathering and spreading to their advantage politically and economically — but the government doesn't plan to share that power with regular Chinese people. What the party sees will not be what the people see."The Chinese have great access to information around the world," Kenneth DeWoskin, a professor emeritus at the University of Michigan and senior China advisor to Deloitte, told me. "But it's always been a two-tiered information system. It has been for 2,000 years."To ensure this, the CCP has constructed a system to regulate AI that is both flexible enough to evaluate large language models as they are created and draconian enough to control their outputs. Any AI disseminated for public consumption must be registered and approved by the CAC. Registration involves telling the administration things like which datasets the AI was trained on and what tests were run on it. The point is to set up controls that embrace some aspects of AI, while — at least ideally — giving the CCP final approval on what it can and cannot create."The real challenge of LLMs is that they are really the synthesis of two things," Matt Sheehan, a researcher and fellow at the Carnegie Endowment for International Peace, told me. "They might be at the forefront of productivity growth, but they're also fundamentally a content-based system, taking content and spitting out content. And that's something the CCP considers frivolous."In the past few years, the party has shown that it can be ruthless in cutting out technology it considers "frivolous" or harmful to social cohesion. In 2021, it barred anyone under 18 from playing video games on the weekdays, paused the approval of new games for eight months, and then in 2023 announced rules to reduce the public's spending on video games.But AI is not simply entertainment — it's part of the future of computation. The CCP cannot deny the virality of what OpenAI's chatbot was able to achieve, its power in the US-China tech competition, or the potential for LLMs to boost economic growth and political power through lightning-speed information synthesis.Ultimately, as Sheehan put it, the question is: "Can they sort of lobotomize AI and LLMs to make the information part a nonfactor?"Unclear, but they're sure as hell going to try.For the CCP to actually have a powerful AI to control, the country needs to develop models that suit its purpose — and it's clear that China's tech giants are playing catch-up.The e-commerce giant Baidu claims that its chatbot, <a target="_blank" href="https://www.businessinsider.com/chinas-chatgpt-reportedly-bans-users-from-mentioning-winnie-the-pooh-2023-5">Ernie Bot</a> — which was released to the public in August — has 200 million users and 85,000 enterprise clients. To put that in perspective, OpenAI generated 1.86 billion visits in March alone. There's also the Kimi chatbot from Moonshot AI, a startup backed by Alibaba that launched in October. But both Ernie Bot and Kimi were only recently overshadowed by ByteDance's Doubao bot, which also launched in August. According to Bloomberg, it's now the most downloaded bot in the country, and it's obvious why — Doubao is cheaper than its competitors."The generative-AI industry is still in its early stages in China," Paul Triolo, a partner for China and technology policy at the consultancy Albright Stonebridge Group, said. "So you have this cycle where you invest in infrastructure, train, and tweak models, get feedback, then you make an app that makes money. Chinese companies are now in the training and tweaking models phase."The question is which of these companies will actually make it to the moneymaking phase. The current price war is a race to the bottom, similar to what we've seen in the Chinese technology space before. Take the race to make <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-crush-tesla-elon-musk-american-ev-industry-2024-2">electric vehicles</a>: The Chinese government started by handing out cash to any company that could produce a design — and I mean any. It was a money orgy. Some of these cars never made it out of the blueprint stage. But slowly, the government stopped subsidizing design, then production. Then instead, it started to support the end consumer. Companies that couldn't actually make a car at a price point that consumers were willing to pay started dropping like flies. Eventually, a few companies started dominating the space, and now the Chinese EV industry is a manufacturing juggernaut. Similar top-down strategies, like China's plan to <a target="_blank" href="https://www.businessinsider.com/china-xi-jiinping-future-tech-global-economy-semiconductors-military-failing-2022-9">advance semiconductor production</a>, haven't been nearly as successful. Historically, DeWoskin told me, party-issued production mandates have "good and bad effects." They have the ability to get universities and the private sector in on what the state wants to do, but sometimes these actors move slower than the market. Up until 2022, everyone in the AI competition was most concerned about the size of models, but the sector is now moving toward innovation in the effectiveness of data training and generative capacity. In other words, sometimes the CCP isn't skating to where the puck's going to be but to where it is.There are also signs that the definition of success is changing to include models with very specific purposes. OpenAI CEO Sam Altman said in a recent interview with the Brookings Institution that, for now, the models in most need of regulatory overhead are the largest ones. "But," he added, "I think progress may surprise us, and you can imagine smaller models that can do impactful things." A targeted model can have a specific business use case. After spending decades analyzing how the CCP molds the Chinese economy, DeWoskin told me that he could envision a world where some of those targeted models were available to domestic companies operating in China but not to their foreign rivals. After all, Beijing has never been shy about using a home-field advantage. <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-crush-tesla-elon-musk-american-ev-industry-2024-2">Just ask Elon Musk</a>.To win the competition to build the most powerful AI in the world, China must combat not only the US but also its own instincts when it comes to technological innovation. A race to the bottom may simply beggar China's AI ecosystem. A rush to catch up to where the US already is — amid investor and government pressure to make money as soon as possible — may keep China's companies off the frontier of this tech."My base case for the way this goes forward is that maybe two Chinese entities push the frontier, and they get all the government support," Sheehan said. "But they're also burdened with dealing with the CCP and a little slower-moving."This isn't to say we have nothing to learn from the way China is handling AI. Beijing has already set regulations for things like deepfakes and labeling around authenticity. Most importantly, China's system holds people accountable for what AI does — people make the technology, and people should have to answer for what it does. The speed of AI's development demands a dynamic, consistent regulatory system, and while China's checks go too far, the current US regulatory framework lacks systemization. The Commerce Department announced an initiative last month around testing models for safety, and that's a good start, but it's not nearly enough. If China has taught us anything about technology, it's that it doesn't have to make society freer — it's all about the will of the people who wield it. The Xi Jinping Thought chatbot is a warning. If China can make one for itself, it can use that base model to craft similar systems for authoritarians who want to limit the information scape in their societies. Already, some Chinese AI companies — like the state-owned iFlytek, a voice-recognition AI — have been hit with US sanctions, in part, for using their technology to spy on the Uyghur population in Xinjiang. For some governments, it won't matter if tech this useful is two or three generations behind a US counterpart. As for the chatbots, the models won't contain the sum total of human knowledge, but they will serve their purpose: The content will be censored, and the checks back to the CCP will clear.That is the danger of the AI race. Maybe China won't draw from the massive, multifaceted AI datasets that the West will — its strict limits on what can go into and come out of these models will prevent that. Maybe China won't be pushing the cutting edge of what AI can achieve. But that doesn't mean Beijing can't foster the creation of specific models that could lead to advancements in fields like hard sciences and engineering. It can then control who gets access to those advancements within its borders, not just people but also multinational corporations. It can sell tools of control, surveillance, and content generation to regimes that wish to dominate their societies and are antagonistic to the US and its allies.This is an inflection point in the global information war. If social media harmfully siloed people into alternate universes, the Xi bot has demonstrated that AI can do that on steroids. It is a warning. The digital curtain AI can build in our imaginations will be much more impenetrable than iron, making it impossible for societies to cooperate in a shared future. Beijing is well aware of this, and it's already harnessing that power domestically, why not geopolitically? We need to think about all the ways Beijing can profit from AI now before its machines are turned on the world. Stability and reality depend on it.<a target="_blank" rel="" href="https://www.businessinsider.com/author/linette-lopez">Linette Lopez</a> is a senior correspondent at Business Insider.

America's tech battle with China is about to get ugly

<ul><li>For organisations on the <keyword id="860946" type="General" weightage="20" keywordseo="digital-transformation" source="Orion">digital transformation</keyword> journey, agility is key in responding to a rapidly changing technology and <keyword id="7890618" type="General" weightage="20" keywordseo="business-landscape" source="Orion">business landscape</keyword>. </li><li>As more and more players adopt the online <keyword id="125920" type="General" weightage="20" keywordseo="marketplace" source="Orion">marketplace</keyword> business model; it becomes extremely important to track key performance metrics to ensure competitiveness. </li><li>These metrics cover usage, transaction and business performance and provide insights that are crucial to build a robust business model.</li></ul>Running an online marketplace is about more than launching it to your first customers and hoping for the best. It is important to monitor the business and regularly assess performance to ensure long-term profitability and growth. We'll examine the most crucial key performance indicators (KPIs) for online marketplaces in more detail to determine the performance of your business. These KPIs can be divided into three distinct subsections, each focusing on specific areas of the business. These are valuable metrics that indicate the number of visitors to the site and what they do there, transaction metrics that ensure that the marketplace mechanics are functioning correctly, and business metrics that provide insights into the financial viability of the business model. Let’s explore these areas in detail and understand how each e-commerce performance metric affects future business decisions. Usage metrics: The traditional ones Usage metrics are not unique to e-commerce marketplaces. These metrics are the traditional metrics that all websites track to monitor their growth. <ul><li>Monthly active users (MAU): Tracking the number of unique visitors to your website each month is a good indicator of your platform’s growth. The number of monthly active users will steadily increase if your site consistently attracts new users. On the other hand, a stagnant or declining number of MAU is a clear sign of trouble.</li><li>Bounce rate: A large number of visitors to your site is meaningless if these visitors don’t engage with the site and leave or bounce immediately. The percentage of visitors who visit your website only to depart is known as bounce rate. Businesses need to maintain the bounce rate as low as possible by ensuring that the website is attractive and engaging.</li><li>Time spent on site: Users who spend time exploring your site are good for your business, as people who spend more time browsing are more likely to buy something. However, customers who spend too much time on a marketplace website can mean they can't locate what they're looking for. This metric is a good indicator of how user-friendly your site is. </li></ul>Transaction metrics: The new realm We’re now entering the realm of e-commerce marketplace–specific metrics. e-commerce sites are designed to facilitate transactions between buyers and suppliers, but merely focusing on the number of transactions doesn’t provide actionable insights that can be directed at ensuring sustainable, long-term growth for the marketplace business model. That’s why we need to look at these relevant KPIs. <ul><li>Liquidity: This metric has two sides — supplier or provider liquidity and the buyer or customer liquidity. Buyer liquidity is the likelihood that a website visit will result in a transaction, and supplier liquidity is the likelihood of selling a product that has been placed for sale. Liquidity is measured in percentage, so supplier liquidity is the percentage of listings that lead to sales. And buyer liquidity is the percentage of website visits that end in transactions. Liquidity is a useful measure of a market's success since it shows the likelihood that users on the supply and demand sides of the market will succeed in their endeavours. </li><li>Supplier-to-customer ratio: Also called the buyer-to-seller ratio, this metric is defined as the number of customers one supplier can serve. The ideal ratio differs across marketplace sectors and provides insights into whether you need to grow your supplier or customer base. </li><li>Repeat purchase ratio: This transactional marketplace metric indicates the percentage of transactions that are repeat purchases from individuals who have already bought products or services from your site. A high repeat purchase ratio indicates that you can afford to direct more resources towards customer acquisitions since each new customer is more likely to make multiple purchases. </li></ul>Business metrics: The futuristic ones Business metrics provide insights into profitability, revenue, and customer acquisition. These KPIs reflect a marketplace’s overall financial health and are useful to assess whether or not the business model is functioning as it should. <ul><li>Gross merchandise volume (GMV): GMV is calculated by the total cost of goods or services sold over a period of time through an online marketplace. GMV is one of the most critical variables to monitor in order to gauge your platform's progress. </li><li>Customer acquisition cost (CAC): CAC is how much you spend to acquire each new customer. In an ideal world, your customer base would grow organically, and your CAC would be negligible. In the real world, this is not the case. Resources directed towards marketing activities and paid ad campaigns contribute towards your CAC. </li><li>Customer lifetime value (CLV): As a measure of the expected revenue, you may expect from each customer, CLV should be larger than CAC for a viable firm. CLV depends primarily on how long a customer is retained, the number of purchases they are expected to make, and the average size of each transaction.</li></ul>For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like living organisms will be imperative for business excellence. A comprehensive yet modular suite of services is doing precisely that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, <a href="https://www.infosysbpm.com/live-enterprise.html">Live Enterprise</a> is building connected organisations that are innovating collaboratively for the future. Disclaimer: This article is authored by Shyam Rao, AVP - Senior Practice Engagement Manager, Infosys BPM. The opinions expressed are those of the author and do not necessarily reflect the views of Business Insider India

You Searched For "How to calculate CAC" and got 5 results

Know the cost of acquiring customers. Don’t overspend and kill your startup

Gaurav Sangwani

5 key metrics that will propel your business to the next level

Guest Author

How Blue Apron compares to other subscription services, in one graph

Nikhil Basu Trivedi, Shasta V…

America's tech battle with China is about to get ugly

Linette Lopez

Are you effectively assessing the impact of marketplace management services?

Shyam Rao

Popular Keywords

Buying Guides