Startup Metrics + Case studies 11-16-2015

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Metrics

Metrics for pirates… AARRR!

MAARRRketing for startups

ACQUISITION

Users come to the site; you have their attention

ACTIVATION

User performs some key activity that indicates a good first visit

RETENTION

User continues to do that key activity indicating they like your product

REFERRAL

User gets other users to join

REVENUE

User pays you

AARRR Funnel: Customer Lifecycle / Conversion Behavior

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Emails &

Alerts

Blogs, Conten

System Events

& Time-‐

based Featur

Biz Dev

Ads, Lead Gen,

SubscripBons, etc

Emails &

widgets

Campaigns,

Contests

Homepage / Landin

Product

Features

SEO SEM

Apps & Widgets

Affiliates

PR Biz Dev

Campaigns, Contests

Direct, Tel, TV

Social Networks Blogs

Domains

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BLOG EXAMPLE

Acquisition -‐ users come to the site from a search engine

Activation -‐ user signs up for RSS/newsletter or stays for at least 5 minutes

Retention -‐ user reads at least one post a week or opens the newsletter

Referral -‐ user promotes your blogs contests and drives traffic

Revenue -‐ user buys your ebook

SAAS EXAMPLE

Acquisition – user comes to our landing from a FB ad

Activation -‐ user successfully makes a document

Retention -‐ user continues to make documents. As long as they're

successfully making documents they will continue to use the service.

Referral – Users send other users to our web, possibly with a coupon code

Revenue -‐ yay! money!

(﴾Web-‐based app to convert HTML to PDF or Excel documents)﴿

MOBILE EXAMPLE (﴾Smartphone videogame)﴿

Acquisition Activation Retention Revenue

Referral Social Share 10%

AND…

if CLV > CAC, then PROFIT

Emails &

Alerts

Blogs, Conten

t System

Events & Tim

based Featur

Biz Dev

Ads, Lead Gen,

SubscripBons, etc

Emails &

widgets

Campaigns,

Contests

Homepage / Landin

Product

Features

SEO SEM

Apps & Widgets

Affiliates

Biz Dev Campaigns, Contests

Direct, Tel, TV

Social Networks Blogs

Domains

@polvallssoler!

AARRRP!

Example Conversion Metrics (note: your mileage may vary…)

Category User Status Conv % Est. Value Acquisition Visit Site

(or landing page, or external widget) 100% $.01

Acquisition Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks)

70% $.05

Activation Happy 1st Visit (views X pages, stays Y sec, Z clicks)

30% $.25

Activation Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit)

Activation Acct Signup (includes profile data)

Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor

(3+ visits in first 30 days) 2% $5

Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25

70% $.05

30% $.25

70% $.05

30% $.25

KEY METRICS TO TRACK

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ACQUISITION Key Metrics To Track:

•  Volume(﴾#)﴿ •  Cost (﴾$)﴿ •  Conversion (﴾%)﴿

Acquisition tips (﴾for the top 10 -‐ 100 words)﴿ •  Your brand / Products •  Customer needs / Benefits •  Competitor ’s brand / Products (﴾Steal traffic)﴿ •  Semantic equivalents •  Misspellings

ACQUISITION

ACQUISITION Extra tip: Reverse Engineered App Store’s ranking algorithm

(﴾approximation)﴿

AppStore Ranking = H + D + R + E + S

H = # of installs weighted for the past few hours D = # of installs weighted for the past few days R = Reviews (﴾star rating + number of reviews)﴿ E = Engagement (﴾# of times app opened etc.)﴿ S = Sales (﴾$)﴿

Extra tip: Reverse Engineered App Store’s ranking algorithm (﴾approximation)﴿

Luck? AppStore Bot? Dark pattern?

ACQUISITION

ACQUISITION Extra tip: How to get your first 100 users

1)﴿ What existing solution do you believe your product is better than?

2)﴿ Where can you find a critical mass of people who use the existing solution?

3)﴿ Go there. Talk to them. Show them your product.

ACTIVATION Key metrics to track:

•  Pages per visit (﴾2-‐3+ page views)﴿ •  Time on site (﴾10-‐30+ seconds)﴿ •  Conversions (﴾1 key feature usage)﴿ •  Clicks (﴾3-‐5+ clicks)﴿ •  Bounce rate (﴾low)﴿

Activation Tips: •  Less is more •  Focus on UX / Usability •  Provide incentives & call to actions •  Perform A/B tests and iterate fast

ACTIVATION

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ACTIVATION

RETENTION Key metrics to track:

•  Source (﴾email, RSS, affiliates…)﴿ •  Volume (﴾Low spam rating)﴿ •  Conversions (﴾20% open rate / CTR)﴿ •  Visitor Loyalty (﴾1–3+ visits per month)﴿ •  Session Length •  Long customer life cycle / Low decay •  Identify fanatics and cheerleaders

RETENTION

RETENTION Retention Tips:

•  Email is simple and it works •  But make Unsubscribe easy

•  80% subject line / 20% body text

•  Actually… 99% subject line / 1% body text

•  Status / “best of” weekly/monthly emails

•  “Something happened” emails

•  Lifecycle emails @ +3, +7, +30 days

•  RSS / News feeds

•  Widgets / Embeds

•  Gamification

•  Fanatics = Virality + affiliate channels (﴾like bloggers)﴿

Hooked Canvas by Nir Eyal

RETENTION -‐ THE HOOK

REFERRAL Key metrics to track:

Viral Growth Factor = X * Y * Z

X = % of users who invite other people Y = average # of people that they invited Z = % of users who accepted an invitation

A viral growth factor > 1 means an exponential organic user acquisition.

REFERRAL

REFERRAL Referral Tips:

•  Personal send to friend (﴾Email / IM)﴿ •  Social Media •  Widgets / Embeds •  Affiliates

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RETENTION + REFERRAL

Compound interest applied to user acquisition

REVENUE Key metrics to track:

•  Conversion to revenue (﴾%)﴿

•  Volume (﴾$$$)﴿

Revenue Tips:

•  Don’t just rely on AdSense, iAd…

•  Offer something free (﴾at least when starting out)﴿

•  Subscription / Recurring transactions

•  Qualify your customers / Traffic for lead generation.

•  Sell somethig (﴾physical or virtual)﴿

REVENUE

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PROFIT

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CAC (﴾Customer Acquisition Cost)﴿

Take only a portion of those salaries and expenses in the early days to give a better indication of how

CAC will look when you are at scale.

CLV or LTV (﴾Customer Lifetime Value)﴿

if the Customer Churn rate is a monthly % or yearly %, then the Customer Lifetime will be for the same time period.

CLV or LTV (﴾Customer Lifetime Value)﴿

In most SaaS businesses, the gross margin % is high (﴾above 80%)﴿, and it’s quite common to use the simpler version of

the formula that is not Gross Margin adjusted.

To truly get an accurate picture of LTV, you should take into consideration Gross Margin:

a = initial ARPA per month (﴾ x GM %, if you prefer)﴿ m = monthly growth in ARPA per account c = Customer Churn Rate (﴾in months)﴿

CLV or LTV in a More Complex Scenario (﴾Where you expect ARPA to change over the lifespan

of the customer due to expansion revenue)﴿

(﴾This formula makes an assumption that revenue increases at a roughly fixed rate every month for the entire lifetime of the customer)﴿

if 1 < LTV/CAC < 3 if LTV/CAC < 1

LTV : CAC Ratio Awesomeness

(It’s ok. As a startup, don’t worry iniBally about LTV>3*CAC)

your business model is broken!

Over time, all marketing strategies result in shitty clickthrough rates

Growth Hacking

Less Budget, More Creativity, More Automation -‐> Maximize Output

Growth Hacking

Classic “scam-‐like” scheme

Step 1: Build a product.

Step 2: Release a product.

Step 3: Growth Hack your way to success.

System approach •  No isolated micro metrics

•  Pair every metric with its appropriate counter

metric e.g

– signups with activations

– new paid customers with churn

– new paid customers with total revenue

System approach •  Track what you can…

•  … But focus on few

•  Don’t try to blindly copy competition

•  Track time consuming processes (﴾cashflow,

client satisfaction…)﴿

System approach •  Relate metrics in all levels:

– Financial

– Marketing

– Operations

– Capacity

↳ Financial projections & Strategic Map

Marketing

Operations

Capacity

Financial

Strategic Map

Acquisition

Revenue

Burn Rate

SEO Buzz

Activation

Usability Persuasion

Retention

Value offering

Customer Service

A/B Tests Breadth of

product offerings.

% of deliveries in 2 days

% issues

Technical debt Implemented

user stories

% training plan completed

% recruitment plan completed

Tools for metrics analysis

Growth Hacking Case Studies

Dropbox ACQUISTION Signup driven homepage:

before after

Dropbox REFERRAL Sharing simplicity and availability on Multiple Devices & Platforms:

Dropbox REFERRAL & REVENUE

Get more space

Dropbox ACQUISTION & REFERRAL Dropbox Great Space Race!

Dropbox REFERRAL & REVENUE

Dropbox growth hack in numbers…

1.  September 2008: 100,000 registered users

2.  January 2010 (﴾15 months later)﴿: 4,000,000

3.  Mostly from word-‐of-‐mouth and viral:

• 35% of daily signups from referral program

• 20% from shared folders, other viral features

• Sustained 15-‐20%+ month-‐over-‐month growth since launch

Different landing pages according to traffic source (﴾Search Engines for SEO –> Footer vs Direct Traffic -‐> No footer)﴿

Groupon ACQUISITION

Caution! Use at your own risk! This is cloaking!

Groupon ACTIVATION & RETENTION

Groupon RETENTION

Groupon REFERRAL Sharing is in Groupon’s DNA

Linkedin ACTIVATION

Gamification example:

Linkedin RETENTION & REFERRAL

Linkedin REVENUE

Linkedin ACQUISITION & REFERRAL

This person passed away about a year ago. For the majority of her life, she ran a small hardware shop and she barely understood email, let alone LinkedIn.

From Linkedin’s People You May Know page…

(﴾NOT THE BEST THING TO DO… people can hate you)﴿

REVENUE & PROFIT

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REVENUE & PROFIT

Unlock all books is the clear top revenue generator.

Reverse Engineered App Store’s ranking algorithm (﴾approximation)﴿

ACQUISITION

Reverse Engineered App Store’s ranking algorithm (﴾approximation)﴿

Luck? AppStore Bot? Dark pattern?

ACQUISITION

Caution! Use at your own risk! This is cloaking!

-‐> -‐>

ACQUISITION

1-‐ Setup domain with a WordPress news theme. 2-‐ Hire writers to rewrite news articles for $2 each. (﴾Avoid copying to ensure “journalistic quality”.)﴿ 3-‐ Start with 150 back-‐dated articles to show that the site has some momentum. 4-‐ Setup a nice logo and real phone number. 5-‐ Double check that the site complies with the Google webmaster guidelines. 6-‐ Submit for approval.

•  Defining their market space and identifying user pain

•  Nailing the product experience by focusing on doing

a few things exceptionally well

•  Using a freemium model that fueled bottom-‐up word

of mouth growth

ACQUISITION & REFERRAL

ACQUISITION & REFERRAL!!

ACQUISITION, REFERRAL & REVENUE

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Panda victim

Pigeon

It doesn’t need to be online (﴾initially)﴿

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It doesn’t need to be online (﴾initially)﴿ -‐ 1 Private domain (﴾forwarded to affiliate link)﴿ -‐ made a very easy domain name -‐ $23 -‐ 1,000 copies (﴾cut into 4 = 4,000 flyers)﴿ -‐ $40 -‐ 2 custom tshirts -‐ $50 -‐ 2 promo girls (﴾$20/hr each x 4 hrs = 8 hours total)﴿ -‐ $160 -‐ 2 accounts on the hook up site (﴾trial)﴿ -‐ $10 Total Advertising Cost = $283 Hand out all 4,000 flyers + do some heavy flirting

It doesn’t need to be online (﴾initially)﴿ -‐ 1 Private domain (﴾forwarded to affiliate link)﴿ -‐ made a very easy domain name -‐ $23 -‐ 1,000 copies (﴾cut into 4 = 4,000 flyers)﴿ -‐ $40 -‐ 2 custom tshirts -‐ $50 -‐ 2 promo girls (﴾$20/hr each x 4 hrs = 8 hours total)﴿ -‐ $160 -‐ 2 accounts on the hook up site (﴾trial)﴿ -‐ $10 Total Advertising Cost = $283 Hand out all 4,000 flyers + do some heavy flirting Got 118 conversions (﴾2,95% conversion rate)﴿ -‐> 118 x $45 payout = $5,310 Revenue -‐ $283 cost

= $5,027 PROFIT!

It doesn’t need to be online

ACQUISITION

ACQUISTION, ACTIVATION, RETENTION & REFERRAL

ACQUISTION, ACTIVATION & RETENTION

ACQUISITION

ACQUISITION: SEO hacks

From advertising here…

PS: I Love You. Get Your Free Email at Hotmail

To simply writing this footer on each email…

And here are the results:

ACQUISITION & REFERRAL (﴾Through viral content)﴿

ACQUISITION & PROFIT

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REFERRAL

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REFERRAL

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REFERRAL

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REFERRAL -‐> Card design

REVENUE & PROFIT

The $144,146,165 Button

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REVENUE & PROFIT The $144,146,165 Button

When cabs were cash only, the average tip was roughly 10%. After the introduction of this system, the tip percentage jumped to 22%. Those

three buttons resulted in $144,146,165 of additional tips per year.

When Growth Hacking Goes Fail Hacking

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Path Facebook blocked Path’s “Find Friends” access following spam controversy

Path Path texts your entire phonebook

Glide Same…

Tinder Same…

Exploiting Tinder

Rap Genius: No SEO Genius

Rap Genius fell from around 700,000 uniques a day to around 100,000.

Spontaneity

Planned spontaneity

Gracias!

Startup Metrics + Case studies 11-16-2015

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Transcript of Startup Metrics + Case studies 11-16-2015

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