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Wednesday, November 7, 2007

Visits per Day: Not so impressive.

What's interersting is that once you have a number like visits per day, you can start to build the business model.  You can take the three or four major income streams and create ratios—so many people are needed to generate this kind of revenue, so many visits are needed to generate that kind of revenue, for so many page views you can expect to have this level of e-commerce of this or that type.  

Then you can go in the other direction: what would it take to raise the level of traffic and repeat visits and page views to that level?  And you can start to fill in some of the missing pieces of the business model on both the revenue and the expense side.

One of the books I've been thinking about describes innovation as a process through which you gradually reduce uncertainty. You take something that you don't know much about—you don't know if people will want this, you don't know how much it will cost to make or market, you don't know what the competition will be.  And through a deliberate process you gradually, step by step reduce uncertainties.  As you reduce the uncertainties, you can begin to use more and more standard business tools to evaluate the "innovation."  You can create realistic budgets, you can forecast sales cycles, you can have progressively more accurate estimates of costs and revenues. 

This single tool will help us along that curve.  We can begin to look at dozens of stations at different points along their evolutionary path.  Each one is investing some money and employing staff.  Each one is promoting its service in a slightly different way.  Ultimately, the service has to attract customers of the whole thing goes puff.  So, we can see—this level of investment in those kinds of features generates this level of interest and that, in turn, can lead to this kind of revenue.  The thing is sustainable or not.  If it's not sustainable, you subsidize it or you look for another model that is sustainable (meaning pays for itself).

That's why I'm so pleased that we're finally getting this information.

Before this, I had to listen to hour after hour of presentations by all sorts of people with what seem like good ideas.  But I would have no sense of the efficacy of the product: do people really use that thing?  Does anyone visit that page or is it just a  beautiful screen shot?

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