Introduction to Lean Analytics for Lean Startup Circle SF

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An introduction to Lean Analytics for the Lean Startup Circle SF event. Covers the basic topics of analytics, Lean Analytics framework, and a number of case studies from companies such as Circle of …

An introduction to Lean Analytics for the Lean Startup Circle SF event. Covers the basic topics of analytics, Lean Analytics framework, and a number of case studies from companies such as Circle of Friends, Localmind, Static Pixels and more.

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  • 1. http://leananalyticsbook.comAn Introductionto Lean AnalyticsBen Yoskovitz@byosko
  • 2. A bit about me...http://instigatorblog.com1996 - 20062007 - 20102010 - 20112011 - ....
  • 3. Why did I write it?h"p://loreindustries.com/wp-­‐content/uploads/2012/05/Monkeys-­‐typing.jpg
  • 4. We’re all liars.
  • 5. The basics of Lean StartupEveryone’s idea isthe best right?People lovethis part!(but that’s not always agood thing)This is where thingsfall apart.No data, nolearning.
  • 6. Analytics is the measurement ofmovement towards yourbusiness goals.What is analytics?
  • 7. In a startup, the purpose of analyticsis to iterate to product/market fitbefore the money runs out.And for startups?
  • 8. Good Metrics are:1 Understandable4 Behavior Changing2 ComparativeActive Users vs.Active Users/month3 Ratio / Rate% MonthlyActive Users
  • 9. If it won’t changehow you behave,it’s abadmetric.If a metric won’t change howyou behave, it’s ah"p://www.flickr.com/photos/circasassy/7858155676/
  • 10. h"p://www.flickr.com/photos/maCmaCla/3822631755/Types of Metrics
  • 11. Warm and fuzzy. Cold and hard.Unstructured,anecdotal,revealing, hard toaggregate.Numbers and stats;hard facts but lessinsight.Qualitativevs.Quantitative
  • 12. Discover qualitatively.Prove quantitatively.Quantitative vs. qualitative data
  • 13. Speculative, tries tofind unexpected orinteresting insights.Predictable, keepsyou abreast ofnormal, day-to-dayoperations.The cool stuff. The necessary stuff.Exploratory Reportingvs.
  • 14. Finding the answer in the data•Started as Circle of Friends•Leveraged Facebook early•Grew to 10M usersBut engagement sucked!
  • 15. Moms are crazy!(in a good way)Engagement solved!• Messages to one another were on average 50% longer.• 115% more likely to attach a picture to a post they wrote.• 110% more likely to engage in a threaded (i.e. deep) conversation.• Friends, once invited, were 50% more likely to become engaged users.• 180% more likely to click on Facebook news feed items.• 60% more likely to accept invitations to the app.
  • 16. Historical metricthat shows youhow you’re doing:reports the news.Number today thatshows a metrictomorrow: makesthe news.Try and get here.Start here.Lagging Leadingvs.
  • 17. h"p://www.flickr.com/photos/bloke_with_camera/401812833/sizes/o/in/photostream/Analytical Superpowers(or what the heck is growth hacking?)
  • 18. 110100100010000Ice cream consumption DrowningsJan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
  • 19. SummerIce creamconsumptionDrowningCorrelatedCausalCausalTwo variables thatchange in similar ways,perhaps becausethey’re linked tosomething else.CorrelatedAn independent factorthat directly impacts adependent one.Causalvs.
  • 20. Correlation lets youpredict the futureCausality lets youchange the future“I will have 420 engaged usersand 75 paying customers nextmonth.”“If I can make more first-timevisitors stay on for 17 minutes Iwill increase sales in 90 days.”Find correlation Test causalityOptimize thecausal factorCausality is a superpower, because it letsyou change the future.
  • 21. Lean Analytics Frameworkh"p://www.flickr.com/photos/ikhlasulamal/2331176652/
  • 22. Your Business + StageWhat businessare you in?What stageare you at?•E-Commerce•SaaS•Free Mobile App•2-Sided Marketplace•Media•User-Generated Content•Empathy•Stickiness•Virality•Revenue•Scale
  • 23. business models
  • 24. The 2-Sided Market Customer LifecycleVisitsSELLERSSellervisitsAccount createdListings createdListing countNew listings/dayFraud rateFraudulent / FlaggedResults% blank searchesAdditional ServicesOther revenueConversion ratesDeliveryTransactionClick-throughsGood resultsConversionsShortlistBuyer rates SellerRatings, rateRepeat SellerAccount Cancelled Listing Expired DisengagementChurn RateSeller churnSeller lifetime valueVisitsBUYERSSignup rateAccount createdNotificationsDisengagement /opt-outRepeat BuyerBuyer lifetime valueEmail bounceOpenClicksBuyerchurnClick-through rateSearchesSearches / visitSeller ratesBuyerRatings, rateOne-timepurchaseGross revenueNet revenue
  • 25. 2-Sided Marketplaces1 Do things that don’t scale2 Focus on the money5 The scale has to be enormous3 Seller quality matters4 Find extra revenue sources
  • 26. lean analytics stages
  • 27. EMPATHYSTICKINESSGROWTHRATEVIRALITYREVENUESCALELean AnalyticsStagesI’ve found a real, poorly-met need thata reachable market faces.I’ve figured out how to solve theproblem in a way they will adopt andpay for.I’ve built the right product/features/functionality that keeps users around.The users and features fuel growthorganically and artificially.I’ve found a sustainable, scalablebusiness with the right margins in ahealthy ecosystem.“Gates” needed tomove forward
  • 28. •Stage: Empathy•Model: UCG/Mobile•Real-time Q&A platform tied to locations•Needed to find out if a core behavior--answering questions about a place--happenedenough to make the business realLocalmind hacks Twitter
  • 29. Localmind hacks Twitter•Before writing a line of code, they wanted to answer this question•This was their biggest risk: if questions went unanswered, the experience would suckWould people answer questions?Test results•The response rate to tweeted questions was very high•Good enough proxy to de-risk the solution and convince the team to continueRan an experiment on Twitter•Tracked geolocated tweets in Time Square•Sent @ messages to people who had just tweeted, asking a question about the area
  • 30. •Stage: Empathy / Stickiness•Model: E-Commerce•Eco-friendly prints of your photos•Originally tied exclusively to Instagram andbuilt a custom InstaOrder featureStatic Pixels simplifies to focus onimmediate success
  • 31. ★ 2x transactions★ lower bounce rate★ sign-in goals increasedwith InstaOrderClick checkoutSign into PayPalConfirmation pageConfirm orderBack to PayPalAuthorize pre-approved paymentsSuccess pagewithout InstaOrderClick checkoutSign into PayPalConfirmation pageConfirm orderSuccess pageOptimize for 1st time purchases orrepeat orders?
  • 32. skip steps at yourown risk
  • 33. One MetricThat Matters.How It All Comes TogetherThe business you’re inE-Com SaaS Mobile 2-Sided Media UCGEmpathyStickinessViralityRevenueScaleThestageyou’reat
  • 34. •Stage: Scale•Model: SaaS•SEO toolkit (product suite)•Reduced KPIs to focus on Net AddsSEOMoz reduces the KPIs ittracks
  • 35. If Net Adds: Why & Next Steps:Net Adds = “business health”indicator•Was a marketing campaign successful?•Were customer complaints lowered?•Was a product upgrade valuable?• Can we acquire more valuable customers?•What product features can increase engagement?• Can we improve customer support?•Are the new customers not the right segment?• Did a marketing campaign fail?• Did a product upgrade fail somehow?• Is customer support falling apart?
  • 36. Choose only one metric anddraw a line in the sand.Choosing your OMTM isn’t enough...
  • 37. •Stage: Virality•Model: Mobile app•Social network around the past•Focused on virality (but not theviral coefficient)Timehop aims for virality throughcontent sharing
  • 38. • Focused on % of daily active users thatshare content• Aiming for 20-30% of daily active usersto share content“All that matters now is virality. Everything else—be itpress, publicity stunts or something else—is likepushing a rock up a mountain: it will never scale. Butbeing viral will.” - Jonathan Wegener, co-founderThe One Metric That Matters:Content sharing
  • 39. Some interesting benchmarksGrowth5% / week (revenue or activeusers)Churn2% / monthEngaged visitors30% monthly users10% daily usersTime on site17 minutesPage load time< 5 secondsCLV:CAC3:1Mobile file size< 50MBFree to paid2% of free users
  • 40. Lean Analytics cycleh"p://www.flickr.com/photos/jrodmanjr/4728457415/
  • 41. Identify a key business problem,pick the OMTM, draw a line in thesand, and get started.Time to experiment
  • 42. Draw a new linePivot orgive upTry againSuccess!Did we move theneedle?Measure theresultsMake changes inproductionDesign a testHypothesisWith data:find acommonalityWithout data:make a goodguessFind a potentialimprovementDraw a linePick a KPIThe Lean Analytics Cycle
  • 43. Thank you.byosko@gmail.com@byoskoORDER!follow me.instigatorblog.comleananalyticsbook.comsubscribe.email me.