Ever Elusive Users

Definition: User is a person at the core of the business. User should ideally bring revenue to the company. In some cases, if he is not bringing in the money, he should participate.

A lot of new start-ups and websites boast about million users in few months of operation (and in some cases, existence). They say, they have "almost reached" the critical user mass from where they can take-off to the next paradigm of web enabled services that will enable them to harness the collective intelligence that will empower businesses and solve intricate business problems in a cost effective manner. Sounds like Dilbert Mission Statement Generator at work.

Every successful and not so successful business (especially of the online variety) talks about number of users they have and the percentage of market they command. Ironically, they never talk about number of users actually bringing in cash to the business. Everyone seems to be pushing it under the carpet.

The numbers although are very important, they are more likely to be abused and misused. Every time someone says that they have 20 million of the 40 million Indian Internet Users (or half the universe), there should be questions like

How many use the service on a regular basis?

What is the percentage of repeats?

How often do repeat users come-back?

How many actually contributed to the revenues in last one month?

Obvisouly most of the times, answers are as elusive as the users themselves. It is very very easy to get someone to a website but the hard part is to get the user come back again and again and again. The hardest part, is to get the user to interact with the business. And this interaction actually makes the money for the website. The hook, the stickiness factor, the tipping point is very important.

E-commerce Websites
This is especially pertinent for rapidly springing ecommerce websites. mylatestonlineshop.com might have 100,000 users but

What is the actual number of people who place orders?

How many of these orders are being fulfilled?

Do these users come back with more orders?

Collaborative or User Generated Content
Collaborative websites are growing at the speed of mushrooms in India. With ease of implementation of Web 2.0, increasing bandwidths, and lots of time to spare, quite a few user generated websites (obviously operating in their beta modes) have come up. USP for most of these websites is user reviews, user written articles, user made videos, user stories, user this and user that. The biggest question here is

What percentage of users is actually creating the content?

And how many actually come back on a regular basis (with a frequency of at least once every two days)?

Finally, next time someone comes up with a fancy number for their user base, ask them about their revenue per user. If at all they have a revenue stream (apart from monetizing with Google Adsense), answers would be really surprising.

Someone once said, "With fools and tools anything can be proved". Next time someone pitches a beta version web 2.0 website with 2 million users, please be skeptic before pumping in the money behind the idea and ever elusive users.

Comments? Thoughts? Views?

Related Links
eBay admits they over-paid for Skype (Business Week, Oct 1, 2007)