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Successful Online Business = Product Quality + Audience Growth

Stored in: Website Management and tagged:
Online business success

Building a successful online business is similar to solving a set of math problems.

Add product quality and product quantity to equal product growth. Add product growth and site promotion to get audience growth. Add audience growth to sales tactics to equal revenue growth. Revenue growth minus expense growth equals website profit.

The three major parts of an effective online business plan are product, promotion and sales.

Each requires the right amount of time and attention. Many businesses have failed because they focused too much on sales without a strong product or promotional effort.

Others fail because they had a great product but did not spend enough time promoting it to build an audience, which leads to sales and profits. The Netscape browser is a good example of too much focus on that single product.

Still others failed or faltered because they focused too much on promotion. America Online, which once dominated online publishing, comes to mind. It was too busy trying to get subscribers of its dial up business to notice the arrival of website publishing.

1st Priority: Product

So first build a great product. The quality of the product is critical in setting the right impression with both site visitors and advertisers and in getting them to return.

Site quality is a matter of opinion as well as analytics. Good opinions are based on logic, experience, common sense and good judgment. Analytics will usually prove if that opinion is right or wrong.

It’s helpful to know that opinion leads and analytics follow. It means that an opinion on how to improve a product starts with an idea and the execution of the idea. Analytics will reveal if the idea works. What data doesn’t do is come up with the idea in the first place.

Once that great product is in place, figure out how to maintain continuous improvement when it comes time to focus more on marketing and sales.

2nd Priority: Marketing

Once a great product is in place, learn how to be effective at promoting that product.

It is a simple fact that even a great website won’t generate sales if no one is aware of it. Search engine optimization by itself won’t bring enough customers.

Even worse, a site that depends entirely on SEO may lose a big chunk of audience when search engines change their algorithms. Many major sites have vanished for that reason. One good example is About.com, which died quickly after Google moved against generic content sites.

Effective promotion requires at least five or six tactics to drive large audiences. Beyond SEO, they include social media, video publishing, email marketing, brand management and especially banner and pay per click advertising.

3rd Priority: Sales

Sales is the third focus on a brief timeline only because the other two requirements are necessary for selling.

When effective promotion is in place, it is much easier to grow revenue because a quality product and effective promotion create large quantities of high quality ad inventory. One million ad impressions a month on a small to mid-sized website drives a lot more revenue than 100,000 a month.

A highly quality product with high quality promotional standards — not spamming, not making unfounded promises — will lead to credibility with the sales customer and a better chance at clicks and purchases. It also attracts higher-paying clicks from a network such as AdSense if the site fills unsold inventory with it.

Putting the 3 Together

By this point, site managers should balance product, promotion and sales in a constant effort to drive growth in all three areas.

The business will have phases when one area outgrows another. Sometimes one or more of the three may decline. But a careful juggling act is more likely to limit a decline and increase the chance of growth.

Online business management is measured with the bottom line. The bottom line is achieved through a balanced, methodical plan of attack in building an online business.

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