4th Feb 2012
@STUECCLES
LEAN STARTUP METRICS
I NEVER FELT LIKE I WAS LEARNING
ANYTHING IMPORTANT
“An actionable metric is one that ties specific and
repeatable actions to observed results.”
ASH MAURYA http://www.ashmaurya.com/
EVENT BASED TRACKING
FUNNELS
SIMPLE SIGN-UP FUNNEL
EXTENDED SIGN-UP FUNNEL
A/BTESTING
+152%
A/B TESTING USER MAP ON HOMEPAGE
GOOGLE BING
“THAT BLUE WAS WORTH $80M AT LEAST”
PAUL RAY - PRODUCT MANAGER BING
LOCALMAXIMA
AN INTUITIVE LEAP
PROPS @BOKARDO FOR LAST FEW SLIDES
@37SIGNALS
WHAT TO A/B TESTShort Answer: Everything
Longer Answer: That you have enough traffic to see significant results that are not trival optimisations (HINT you are not Bing/Google)
WHAT TO A/B TESTEvery new feature should go into A/B testing.
If has negative or no real effect, pull it.
Optimise existing features/copy/design (80% existing 20% new)
FRAMEWORK
ACQUISITION
ACTIVATION
RETENTION
REFERRAL
REVENUE
Dave McClure http://500hats.typepad.com/
DON’T TRY TO MEASURE TOO MUCH
EXAMPLES
SAY HELLO TO OUR 3 FICTIONAL STARTUPS
Social Network for Dog Lovers.
Makes money through advertising and affiliate sales of lush dog collars.
DOGGIECOLR
Key business drivers are:
Advertising and affiliates need large traffic/page views so growth and retention are key
DOGGIECOLR
SIGN-UP
COMMENT
VISIT
INVITE FRIENDS
POST PICTURES
BUY COLLAR
CREATE PROFILE
SHARE PICTURES
ACQUISITION
ACQUISITION
ACTIVATION
ACTIVATION
REFERRAL
REVENUE
Project management tool for Agile startups.
Makes money through monthly subscriptions. Has a free trial period.
AGILESAMBA
Key business drivers are:
Conversion to paid usage and cancelation rates
AGILESAMBA
SIGN-UP
VISIT
CREATES PROJECT
UPGRADES PAID
ACQUISITION
ACQUISITION
ACTIVATION
REVENUE
CANCELS ACCOUNT
REVENUE
Marketplace to rent/buy drills from your neighbour (AirBnB for drills)
Takes a small percentage of the transaction between two parties
RENTMYDRILL
RENTMYDRILL
Key business drivers are:
Two sided business model means acquisition of both lenders and borrowers and transactions per user
LENDER SIGN-UP
VISIT
SEARCHES BORROWERS
BORROW DRILL
ACQUISITION
ACQUISITION
ACTIVATION
REVENUE
BORROWER SIGN-UP
SEARCHES LENDERS
ONE KEY METRICThere is generally only one key metric you need to concentrate on at a time. Such as referral or sign-up conversion or cancellation rate.
ACQUISITION
TRACKING MARKETING CHANNELSGoogle AdwordsBannersSocial MediaPartnershipsPRBloggingAnything that links to your site!
TRACKING MARKETING CHANNELSUse unique urls (tracking parameters) on every url you create/give-out/pay for
Use bit.ly
Use HTTP referrers to group PR
MEASURING COST OF VISITSCost per click (site visit)
Cost of campaign / traffic generated
(Social media) Cost of effort / traffic generated
MEASURING COST OF ACQUISITIONCost of one visit / conversion rate = Cost of an acquisition
Acquisition could be paid for acquisition or free sign-up
Unfortunately not that simple
DIFFERENT CHANNELS CAN HAVE DIFFERENT CONVERSION RATES
MARKETING CHANNELSPer channel track:
Scale CostConversion
Optimise and scale channels with best Cost of Acquisition (CoA) and potential to Scale
ACQUISITIONCost of Acquisition < Customer Lifetime Profit
Then scale acquisition at a similar or lower rate
A/B test acquisition channels to optimise
ACQUISITION INCLUDING REFERRALIf it costs £3 to acquire a customer through advertising
But that customer brought in 2 other customers through referral
The COA of that channel is £1
ACTIVATION
SURE THEY SIGNED-UP BUT DID THEY LIKE IT?
ACTIVATION AT FACEBOOK(i) which data points predict whether a user will stay?
(ii) if they stay, which data points predict how active they’ll be after three months?
ACTIVATION AT FACEBOOK(i) having more than one session as a new user, and entering basic profile information.
(ii) how often a user was reached out to by others, frequency of third party application use, and how forthcoming a user was on the site.
ACTIVATION METRICS OFTEN DRIVE OTHER METRICS IN REFERRAL,
RETENTION, REVENUE
RETENTION
RETURNING USERSTracking unregistered users that return often (useful for content sites with advertising)
Tracking registered users that return and take some sort of action.
COHORT METRICS - CREATED PROJECT
COHORT METRICS - CAME BACK
REFERRAL
REFFERAL MECHANISMSSocial Media Sharing
Invite a friend type mechanics
App Reviews
Word of mouth
VIRAL COEFFICIENTThe average number of customers each customer refers
VIRAL COEFFICIENT - EXAMPLEEach Doggiecollr customer invites 5 other customers by email
20 % click on that email link
50 % of those users convert into customers
VIRAL COEFFICIENT - EXAMPLEViral coefficient =
Refferals x click through x conversion
5 x 0.2 x 0.5 = 0.5
VIRAL COEFFICIENTA viral co-effiecient greater than 1 means that every customer gets more than one other customer on average
Therefore your product will grow virally
VIRAL COEFFICIENTMeasure automatically for all your in built referral mechanisms.
Give customers unique invite URLs and track conversions
VIRAL CYCLE TIMEThe average time taken for a referral to turn into a customer
With the viral coeffiecent and viral cycle time you can determine your viral growth
NET PROMOTER SCORE
Number of people who would recommend your product to a friend.
A single question survey
NET PROMOTER SCOREHow likely is it you would recommend AgileSamba to a friend or colleague?
1 2 3 4 5 6 7 8 9 100
NPS = % Promoters - % Detractors
NET PROMOTER SCORE
Survey a small percentage of your customers by email weekly
Record who you sent to so you don’t repeat the same people every week
NET PROMOTER SCORE
NPS is not a direct measurement that translates to key metrics
Can act as a leading indicator of other metrics
REVENUE
MAKING MONEY
Key for any business is to find out how much profit they make for every customer and scaling the number of customers
LIFETIME CUSTOMER VALUE
How much money you make for every customer you acquire
For some this is a single transaction
For subscription businesses it depends on retention
CANCELLATION RATE
Is the percentage number of customers who cancel in any given month compared to total (paying) customers
[Cancellation rate] = [product utility] + [service quality] + [acceptable price]
LIFETIME CUSTOMER VALUE (LTV)
LTV = monthly revenue x no months in lifetime
No months = 1 / cancellation rate
LTV = monthly revenue / cancellation rate
LIFETIME CUSTOMER VALUE (LTV)
For example:
If £20 a month and cancelation rate is 10% a month
LTV = £200
LIFETIME CUSTOMER VALUE (LTV)
Often not that simple. Short term cancellation rates are much higher than long term
Use Cohort Analysis to determine
LIFETIME CUSTOMER VALUE (LTV)
r = short-term cancellation rate (e.g. 0.15)p = long-term cancellation rate (e.g. 0.03)s = number of months in the “short-term” age group (e.g. 3)
(1-r)^s × (s + 1/p) = expected months
TIPS
TIPSConcentrate on macro metrics
Everything you do should be an attempt to change a metric
Measure if it did
Try to use as few tools as possible
TIPSAutomate it and put it in a dashboard
If it can’t be automated make a simple spreadsheet and an easy way to update it
TIPSDon’t forget to measure marketing
Make metrics a habit
THANKS
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