Thursday, March 8, 2007

COCA: The Driving Force of Commerce

COCA (Cost of Customer Acquisition) is the number one determining factor if your online business is successful. So with that said when I was developing our business plan that was a major could we reach our target audience in a way that our competitors couldn't.

Our business model is effectively giving us a competitive advantage over our competitors...

Ray Deck makes a great point below...

This is true for more than just web services. Geoffrey Moore says in Dealing with Darwin that particularly in a volume operation, innovating the business model is crucial to success. (He contrasts this with a complex systems environment, where s 10x improvement from the technology is the focus of innovation.) Cost of customer acquisition (COCA) is usually the most crucial lever to pull in the business model, because that is how dollars come in. Especially when the back-end is built on commodities, the ability to generate top-line either at lower cost or at a higher effectiveness is going to be critical.

For web services that essentially want to operate like media properties, they have two issues: getting readership, and selling inventory. So 2/3 of the business is really about getting customers (either indirect, as readers, or direct, as advertisers).

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