Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers
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Transcript of Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers
![Page 1: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/1.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
![Page 2: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/2.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Todd Wyder, CEO of Pathfinder Software, is obsessed with creating great software that users love, and he is also very passionate about building the Chicago-tech community, currently serving as organizer for both the Chicago Product Management Association and the Chicago Lean Startup Circle.
Over a decade of delivering successful software applications, providing clients with the technology to enable business breakthroughs and competitive advantage. Companies hire Pathfinder to design, develop and deliver Healthcare software products faster and better than they can do themselves.
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
You have found a really painful problem
![Page 4: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/4.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
You discovered a target market who has that problem
![Page 5: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/5.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
You have created a solution that customers tell you really solves the problem
![Page 6: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/6.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
So, you build your MVP and invite your first customers to use it
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Then what happens?
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Nothing
![Page 9: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/9.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
So, you buy some Adwords and get more sign ups. Then, what happens?
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
1 2 3 4 5 6 70
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Product Usage
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Why?
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Your product sucks & you don’t know why
![Page 13: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/13.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
The Trough of Sorrow
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Most startup founders focus heavily on product but most of a startup's risk lies in distribution
Dave McClure
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Marketing
CustomerDevelopment Data
GrowthHacker
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
AcquisitionBring prospective customers to your site
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
ActivationSign up
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
RetentionEngage users
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Referral
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Seven Steps to become a Growth
Hacker
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
1. No Beta!!!
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
2. Install Analytics
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Google Analytics is Worth What You Pay For It
People, not page views, buy software
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Don’t Focus on Acquisition When Activation and Retention are Low
Visited Site Signed Up Activation Billed
2,177
14 3 1
0.6% 21.4% 33.3%0.0%
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
3. Create a Dashboard
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
4. Perform A/B testing
LinkBaitPro
Get Started
LinkBaitPro
Get Started
A B
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
What to/Not to Test
LinkBaitPro
Get Started
For recreational use only. Do not staple or paper clip. All models over 18 years of age. Prize not redeemable for cash value. If condition persists, consult your physician. No user-serviceable parts inside.
Test theHeadline
Image vs.Video
Call to actiontext and color
Don’t spend alot of timetestingthe copy
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Classic A/B Testing
I’m on Twitter Follow me on Twitter
Follow me on Twitter You should follow me On twitter
You should follow me On twitter
You should follow me On twitter here
You should follow me On twitter here
56%
38%
27%
115%173%
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
User States
1.Login
2.Upload Photos
3.Tag Photos
4.Share Photos
5.Comment on Others photos
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
5. Create Interventions
Signed Up Login Uploaded Photos
TagPhotos
2,177
366
413
16.8% 11.2% 7.3%0.0%
• In App
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
![Page 33: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/33.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
![Page 34: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/34.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
![Page 35: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/35.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Bugsnag captures errors from your web and mobile applications. The first email they send to new signups is very simple, but has been yielding great results.
Hey {{ first_name }},
I'm James, CEO of Bugsnag. I wanted to reach out to see if you need any help getting started.
Cheers,
James
Surprise Personal Email
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Bad
We've missed you on CouchSurfing! It's been a long time since we've seen you around! The last time you logged into CouchSurfing was four months ago.
Props to Segment.io
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
The Last Email You Will Ever Send
A lot has changed since you left – so we'd like to offer you another FREE trial!
Come back to Netflix and enjoy newly added TV shows & movies – for free. Now including Wii, PS3, Xbox 360, iPhone, iPad,
Android and more.
Questions? 1-888-357-1516 / 24 hours a day
![Page 38: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/38.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
In App Intervention
![Page 39: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/39.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
![Page 40: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/40.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
6. Preform Cohort Analysis
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Track User States Across Cohorts
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Onboarding
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
7. Determine the OMTM
At least 7 friends within 10 days of signing up
Getting a new user to link a device and add a file
Once a user follows 30 people, they’re more or less active forever
If someone comes back a day after signing up for a game, that is a leading indicator of them becoming an engaged and paying user.
![Page 45: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/45.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Post Launch Stages
1. Stickiness
USER
DISENGAGED USER
ENGAGEDUSER
REACTIVATE
TRIAL OVER
PAYING CUSTOMER
DISSATISFIED
RESOLUTION
DISENGAGED
REACTIVATE
CANCEL CANCELACCOUNT CANCELLED OR
BILLING INFO EXPIRES
Free userdisengagement
PaidConversion
SupportData
ReactivatonRate
FreemiumChurn
TrialAbandonment
Rate
Disengagement
![Page 46: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/46.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Post Launch Stages
1. Stickiness
2. Traffic
USER
DISENGAGED USER
ENGAGEDUSER
REACTIVATE
TRIAL OVER
PAYING CUSTOMER
DISSATISFIED
RESOLUTION
DISENGAGED
REACTIVATE
CANCEL CANCELACCOUNT CANCELLED OR
BILLING INFO EXPIRES
Free userdisengagement
PaidConversion
SupportData
ReactivatonRate
FreemiumChurn
TrialAbandonment
Rate
Disengagement
PAID DIRECT SEARCH WOM
Customer Acquisition Cost
VISITOR
FREEMIUM/TRIAL OFFER
ENROLLMENT
Long funnel health
INHERENTVITALITY
INVITE OTHERS
Viral coefficientViral rate
![Page 47: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/47.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Post Launch Stages
1. Stickiness
2. Traffic
3. Revenue
USER
DISENGAGED USER
ENGAGEDUSER
REACTIVATE
TRIAL OVER
PAYING CUSTOMER
DISSATISFIED
RESOLUTION
DISENGAGED
REACTIVATE
CANCEL CANCELACCOUNT CANCELLED OR
BILLING INFO EXPIRES
Free userdisengagement
PaidConversion
SupportData
ReactivatonRate
FreemiumChurn
TrialAbandonment
Rate
Disengagement
PAID DIRECT SEARCH WOM
Customer Acquisition Cost
VISITOR
FREEMIUM/TRIAL OFFER
ENROLLMENT
Long funnel health
INHERENTVITALITY
INVITE OTHERS
Viral coefficientViral rate
UPSELLING
CAPACITY LIMIT
FORMER USERS FORMER CUSTOMERS
Tiering
UpsellingRate
Unpaid Churn Rate Paid Churn Rate
User Lifetime Value Customer Lifetime Value
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Post Launch Stages
1. Stickiness
2. Traffic
3. Revenue
PAID DIRECT SEARCH WOM INHERENTVITALITY
Customer Acquisition Cost
VISITOR
FREEMIUM/TRIAL OFFER
ENROLLMENT
USER
INVITE OTHERS
DISENGAGED USER
ENGAGEDUSER
REACTIVATE
TRIAL OVER
PAYING CUSTOMER
UPSELLING
CAPACITY LIMIT
DISSATISFIED
RESOLUTION
DISENGAGED
REACTIVATE
CANCEL CANCELACCOUNT CANCELLED OR
BILLING INFO EXPIRES
FORMER USERS FORMER CUSTOMERS
Long funnel health
Free userdisengagement
PaidConversion Tiering
UpsellingRate
SupportData
ReactivatonRate
FreemiumChurn
TrialAbandonment
Rate
Disengagement
Unpaid Churn Rate Paid Churn Rate
User Lifetime Value Customer Lifetime Value
Viral coefficientViral rate
![Page 49: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/49.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
• Measure engagement
• DAU/WAU – What does active mean?
• Segment
• New Functionality• Does it improve stickiness?• How do we measure that?
• Lazy registration
Stickiness
![Page 50: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/50.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Talk to the Customers
![Page 51: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/51.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Viral Coefficent
Number of Active Users: 1,000
Number of Invites Sent: 100
Invitation Rate (Invites Sent/Active Users) 10%
Acceptance rate (Invites accepted/Invites Sent) If 3 invitees sign up,30%
Viral Coefficient = Multiply Invitation Rate X Acceptance Rate (.1 X .3 = o.o3)
Ideally Viral Coefficient > 1
Necessary for B2C, likely not a good metric for B2B
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Virality Inherent
Collaboration
CommunicationPS: I love you,get your free emailfrom http://hotmail.com
Incentivized
Embeddable
Signature
Word of Mouth
Social
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Use Platforms
![Page 54: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/54.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
![Page 55: Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers](https://reader036.fdocuments.us/reader036/viewer/2022081412/5441b22bafaf9f36248b4787/html5/thumbnails/55.jpg)
©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Segmentation
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Video
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Unit Economics
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
BasicsCAC – Customer Acquisition Cost
• Marketing cost/# paying customers
• Costs you spend on marketing
• Include labor
LTV – Life Time Value
• Amount of money you receive while the customer is paying you
• LTV = ARPU * (1/Churn Rate)• 1,000 Customers (not free trial users)• $25,000 Revenue• ARPU is $25• 20% Churn Rate (average length of relationship is 5 months)• LTV = $25 * (1 – 0.02) = $125
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Rules of Thumb
LTV > 3 * CAC
CAC needs to be recovered in less than a year (ideally 3 months)
Churn should be 5-7% annually- 0.42-0.58 monthly
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
How Churn affects Lifetime
1% 2% 5%0
20
40
60
80
100
120
100
50
20
Lifetime vs Churn RateMonths
Monthly ChurnSource: David Skok Matrix Partners
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
How Churn affects LTVLifetime Value
Monthly Churn
Source: David Skok Matrix Partners
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Impact of Lowering Churn
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
$(400,000)
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Net Profit
Churn 1.25% Churn 2.5%
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
$(4,000,000)
$(2,000,000)
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
Cumulative Net Profit
Churn 1.25% Churn 2.5%
• Impact of lowering the churn rate is felt more heavily in the later years, as expected• It has a significant impact on the long term profitability of the business
Source: David Skok Matrix Partners
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
A Well Balanced Business Model
Monetization(LTV)
Cost toAcquire aCustomer
(CAC)
Source: David Skok Matrix Partners
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
The Balancing Act
Monetization(LifeTime Value LTV)
Cost to Acquire a Customer (CAC)
• Viral effects• Inbound Marketing• Free or Freemium• Open Source• Free Trials• Touchless conversion• Inside Sales• Channels• Strategic partnerships
• Scalable Pricing• Cross Sell/Upsell• Product line expansion• Lead Gen for 3rd parties
Source: David Skok Matrix Partners
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
The Balancing Act
Monetization(LifeTime Value LTV)
Cost to Acquire a Customer (CAC)
• Viral effects• Inbound Marketing• Free or Freemium• Open Source• Free Trials• Touchless conversion• Inside Sales• Channels• Strategic partnerships
• Field Sales• Outbound
Marketing
• Scalable Pricing• Cross Sell/Upsell• Product line expansion• Lead Gen for 3rd parties
• High Churn Rates• Low customer
satisfaction
Source: David Skok Matrix Partners
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Questions
?
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Get Hacking!
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©2013 Pathfinder Software
www.PathfinderSoftware.com888-986-2914
@PathSoftpathfinder-software
Need help with the design, development, and launch of your Healthcare or Medical software application? We leverage our experience with FDA and HIPAA compliance to rapidly align your product with government regulations. We increase the rate of success of our clients’ products leveraging Lean Startup + UX + Agile. Call Us Today - 888-986-2914