Social Metrics

Mike McDerment announced a new feature for Freshbooks, that will allow active users to benchmark their stats against industry norms as gathered in an anonymized way by the Freshbooks web service:

[from Gathering Data For The Greater Good.

All the users that profile themselves (e.g. tell us “I am a web designer”) will begin receiving useful comparative business metrics they can use to benchmark their business. For example, a web designer might like to learn:

• What is the average invoice size for web designers?
• How long does the average web designer take to get paid?
• What is the average monthly revenue of other web designers?

[...]

We’re going to take things one step further too. We’re going to scour our records for the best performers for various metrics and interview them to get tips. We will then feature them as experts so other businesses can learn how to run their own businesses more effectively.

One of the latent advantages of social tools is that user information can be aggregated and then used as a benchmark for individuals. In the Freshbooks case, the users' information is financial or operational: checking your accounts receivable mean-time-to-pay against others may be a very critical metric for business health, for example. But in other domains, similar aggregation may lead to similar business indicators: a human resources service could provide baselines on salary data, or the average number of interviews for hiring various positions, while a graphic designer network could determine the average turnaround on designs, or the average price for various sorts of design projects.

Small businesses and soloists are the least likely to have access to these sorts of metrics, since larger companies are likely to purchase industry reports or to work with larger accounting firms that can provide this sort of insight. Freshbooks approach to social, bottom-up benchmarking is likely to be something we will see a lot of in the future.

[Full disclosure: I am an advisor to Freshbooks, and have a financial interest in the company.]

tags: michael+mcderment, freshbooks, bottom+up+metrics, social+metrics, industry+metrics

Comments

[Ryan Williams]

It's great to see the idea of social metrics getting some more exposure. I've been doing this on the personal finance side with NetworthIQ (http://www.networthiq.com), and had some ideas about doing it for business as well. It's cool to see the idea in use.

[Mary]

No man loves his fetters, be they made of gold. Mary.