Designing & Optimizing
the DNA of a Killer App
Dan Olsen, CEO & Founder, YourVersion
Startonomics ∙ San Francisco ∙ Oct 2,...
Building the DNA of a Killer App with 
      Metrics and Optimization
How to integrate metrics & optimization
Using metric...
Adding Metrics and Optimization to 
             your Product Process
Optimization through Iteration:
  Continuous Improvement
                  the metric

Business Value Creation 
     with Metrics

                Copyright © 2008 Olsen Solutions LLC
Approaching Business as an 
    Optimization Exercise

Given reality as it exists today,
optimize our business results
Define the Equation of your Business
          “Peeling the Onion”
Profit = Revenue ‐ Cost

   Unique Visitors x  Ad Reven...
How to Track Your Metrics
Track each metric as daily time series
           Unique     Page       Ad      New User 
Sample Signup Page Yield Data
                                                Daily Signup Page Yield vs. Time
Using Metrics to Optimize the 
           Equation of your Business
  What are the metrics for your business?
  Where is c...
Case Study:
                Optimizing Viral Loop Metrics
   % of users
    sending = 15%     Invites per                 ...
Maximum Upside Potential of a Metric

Doubling Number of Invitations Sent per Sender by 
         Adding Address Book Importer

Customer Value Creation 
     with Metrics

               Copyright © 2008 Olsen Solutions LLC
The Fuzzy Math of Customer Value
 You create customer value with a product that
   Satisfies customers’ needs
   Is easy t...
What is Your Value Proposition?
  Which user benefits are most important?
  How well does your product deliver?
Return (Value Created)   Analyzing Product Ideas by ROI

Return (Value Created)   Prioritizing Product Ideas by ROI

                                                 Idea C
The UI Design Iceberg
  What most
  people see
  and react to                       Visual
Approaching UI Design Analytically
 Typical UI design question:
 “When using web pages, do users scroll down?”
   ‐ Yes
Put Key Conversion Actions Above The Fold
          Landing Page A                 Landing Page B

The Fold Isn’t Binary Either

                                               768 px

Case Study: Account Signup Process Redesign

Analysis of Sign In/Registration Flow
Redesigned User Flow Improved 
                                                           Registration Conversion Rate
Summary: Building the DNA of a Killer App
  Define what success means
    Customer value proposition
    Equation of your ...
               Copyright © 2008 Olsen Solutions LLC
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Designing and Optimizing the DNA of a Killer App by Dan Olsen - Startonomics


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Best practices in applying metrics to optimizing your product and your business by Dan Olsen from the Startonomics Conference in San Francisco, October 2, 2008

Published in: Business, Technology
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Designing and Optimizing the DNA of a Killer App by Dan Olsen - Startonomics

  1. 1. Designing & Optimizing the DNA of a Killer App Dan Olsen, CEO & Founder, YourVersion Startonomics ∙ San Francisco ∙ Oct 2, 2008  Copyright © 2008 Olsen Solutions LLC
  2. 2. Building the DNA of a Killer App with  Metrics and Optimization How to integrate metrics & optimization Using metrics to optimize value creation Business Value Customer Value UI Design Illustrate with real world examples Copyright © 2008 Olsen Solutions LLC
  3. 3. Adding Metrics and Optimization to  your Product Process Site Level Business Product Prioritized  Plan Objectives Objectives Feature List Scoping Feature  Level Requirements  Design & Design Code Test Launch Develop Metrics & User  Optimize Feedback Copyright © 2008 Olsen Solutions LLC
  4. 4. Optimization through Iteration: Continuous Improvement Measure the metric Analyze Learning the metric Gaining knowledge: • Market Identify top  • Customer opportunities to improve • Domain • Usability Design & develop   the enhancement Launch the enhancement Copyright © 2008 Olsen Solutions LLC
  5. 5. Optimizing Business Value Creation  with Metrics Copyright © 2008 Olsen Solutions LLC
  6. 6. Approaching Business as an  Optimization Exercise Given reality as it exists today, optimize our business results subject to our resource constraints. Copyright © 2008 Olsen Solutions LLC
  7. 7. Define the Equation of your Business “Peeling the Onion” Profit = Revenue ‐ Cost Unique Visitors x  Ad Revenue per Visitor Impressions/Visitor x  Effective CPM / 1000 Visits/Visitor  x  Pageviews/Visit  x  Impressions/PV New Visitors + Returning Visitors Invited Visitors + Uninvited Visitors # of Users Sending Invites  x  Invites Sent/User  x  Invite Click‐through Rate Copyright © 2008 Olsen Solutions LLC
  8. 8. How to Track Your Metrics Track each metric as daily time series Unique  Page  Ad  New User  … Date Visitors views Revenue Sign‐ups 4/24/08 10,100 29,600 25 490 4/27/08 10,500 27,100 24 480 … Create ratios from primary metrics:  X / Y Example: How good is your registration page? Okay: # of registered users per day Better: registration conversion rate = # registered users / # uniques to reg page Copyright © 2008 Olsen Solutions LLC
  9. 9. Sample Signup Page Yield Data Daily Signup Page Yield vs. Time New Registered Users divided by Unique Visitors to Signup Page 100% 90% 80% Daily Signup Page Yield 70% 60% 50% 40% 30% Started requiring registration 20% Changed Added questions messaging to signup page 10% 0% 1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/1 0 Copyright © 2008 Olsen Solutions LLC
  10. 10. Using Metrics to Optimize the  Equation of your Business What are the metrics for your business? Where is current value for each metric?  How many resources to “move” each metric? Developer‐hours, time, money Which metrics have highest ROI opportunities? Metric A Metric B Metric C Good ROI Bad ROI Great ROI Return Return Return Investment Investment Investment Copyright © 2008 Olsen Solutions LLC
  11. 11. Case Study: Optimizing Viral Loop Metrics % of users sending = 15% Invites per Invite invites sender = 2.3 click-through rate Active Invite Prospective Click Registration Fail Users Users Process % of users who are Succeed Don’t active Click Conversion rate = 85% Users • Multiplied together, these metrics determine your viral ratio • Which metric has highest ROI opportunity? Copyright © 2008 Olsen Solutions LLC
  12. 12. Maximum Upside Potential of a Metric ? 100% 100% 85% 15% 2.3 0 0 0 Registration % of users sending Avg # of invites conversion rate invitations sent per sender Max possible 0.15 / 0.85 = 18% 0.85 / 0.15 = 570% ? / 2.3 = ?% improvement Copyright © 2008 Olsen Solutions LLC
  13. 13. Doubling Number of Invitations Sent per Sender by  Adding Address Book Importer Copyright © 2008 Olsen Solutions LLC
  14. 14. Optimizing Customer Value Creation  with Metrics Copyright © 2008 Olsen Solutions LLC
  15. 15. The Fuzzy Math of Customer Value You create customer value with a product that Satisfies customers’ needs Is easy to use Has a good price Is better than other alternatives Customer value = customer satisfaction Not fuzzy: # of users and frequency of use Understanding user needs and satisfaction Quantitative: site analytics, usage metrics, surveys Qualitative: support emails, usability sessions (best) Copyright © 2008 Olsen Solutions LLC
  16. 16. What is Your Value Proposition? Which user benefits are most important? How well does your product deliver? Importance Current User Upside User Benefit to User Satisfaction Potential Low High – + Benefit 1 High Benefit 2 High Benefit 3 Low ? opportunity Benefit 4 Med Benefit 5 Low ? opportunity Benefit 6 Low Doesn’t matter Copyright © 2008 Olsen Solutions LLC
  17. 17. Return (Value Created) Analyzing Product Ideas by ROI ? 4 Idea D 3 Idea A Idea B 2 Idea C 1 Idea F 1 2 3 4 Investment (developer-weeks) Copyright © 2008 Olsen Solutions LLC
  18. 18. Return (Value Created) Prioritizing Product Ideas by ROI Idea C 8 7 Idea B 6 5 4 Idea A 3 2 1 1 2 3 4 5 Investment (developer-weeks) Copyright © 2008 Olsen Solutions LLC
  19. 19. The UI Design Iceberg What most people see and react to Visual Design What good PMs and Designers Interaction think about Design Information Architecture Conceptual Design Recommended reading: Jesse James Garrett’s “Elements of User Experience” chart, free at Copyright © 2008 Olsen Solutions LLC
  20. 20. Approaching UI Design Analytically Typical UI design question: “When using web pages, do users scroll down?” ‐ Yes ‐ No UI questions are never yes/no! (not binary) Should ask: “What percentage of users …?” UI changes impact your metrics Impact can be positive, negative, small, large Seek high‐ROI UI changes Copyright © 2008 Olsen Solutions LLC
  21. 21. Put Key Conversion Actions Above The Fold Landing Page A Landing Page B The Fold Key conversion action is above the fold Key conversion action is below the fold Copyright © 2008 Olsen Solutions LLC
  22. 22. The Fold Isn’t Binary Either 768 px The chrome steals  % of Users about 170 pixels 600 px 1024 px Data courtesy of ClickTale Free trial at Copyright © 2008 Olsen Solutions LLC
  23. 23. Case Study: Account Signup Process Redesign 100% 100% Biggest  80% drop % of Users 62.3% 58.8% 60% 50.9% 40% 34.4% 32.7% 20% 0% Sign in / Account  Cash vs. 5 Partner 3 Partner Registration Type Margin Pages Pages Copyright © 2008 Olsen Solutions LLC
  24. 24. Analysis of Sign In/Registration Flow Open Account 55% 44% Register Registration  (24% of Total) Process 45% drop off 64% (20% of total) of Total Account  36% overall  Selection 83% 30% drop off for  56% (46% of Total) (14% of Total) this step Sign in Forget  70% Change  80% Password (32% of Total) Password (26% of Total) 17% drop off  20% drop off (10% of total) (6% of total) Copyright © 2008 Olsen Solutions LLC
  25. 25. Redesigned User Flow Improved  Registration Conversion Rate Abandonment Rate (7 Day Moving Average) Steps 1-2 80% 70% Abandonment Rate (7 Day Moving Average) 60% 50% 40% 30% Released 37% improvement New Design in conversion rate 20% 10% 0% 10/14/02 10/21/02 10/28/02 11/11/02 11/18/02 11/25/02 12/16/02 12/23/02 12/30/02 10/7/02 11/4/02 12/2/02 12/9/02 1/13/03 1/20/03 1/6/03 Copyright © 2008 Olsen Solutions LLC
  26. 26. Summary: Building the DNA of a Killer App Define what success means Customer value proposition Equation of your business Instrument your site and track key metrics Identify opportunities and prioritize by ROI Launch, learn, and iterate Copyright © 2008 Olsen Solutions LLC
  27. 27. Questions? Copyright © 2008 Olsen Solutions LLC
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