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The 7 Metrics of Highly Effective Marketers by Dan Olsen
 

The 7 Metrics of Highly Effective Marketers by Dan Olsen

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Talk on the key Marketing metrics to track and analyze that I gave at Silicon Valley Product Camp on March 23, 2013.

Talk on the key Marketing metrics to track and analyze that I gave at Silicon Valley Product Camp on March 23, 2013.

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    The 7 Metrics of Highly Effective Marketers by Dan Olsen The 7 Metrics of Highly Effective Marketers by Dan Olsen Presentation Transcript

    • My#Background#!  Educa/on# !  BS,#Electrical#Engineering,#Northwestern# !  MS,#Industrial#Engineering,#Virginia#Tech# !  MBA,#Stanford#!  20#years#of#Product#Management#Experience# !  5#years#at#Intuit,#led#Quicken#Product#Management# !  Led#Product#Management#at#Friendster# !  CEO#&#Cofounder#of#YourVersion,# Pandora#for#your# realM/me#news # !  Product#consultant:#Box,#YouSendIt,#Epocrates# !  Speaker,#Author#“42#Rules#of#Product#Marke/ng”# # Will#post#slides#to#hTp://slideshare.net/dan_o##
    • Quick#Audience#Poll #!  Do#you#work#in:# !  Analy/cs#Tools# !  B2B# !  Google#Analy/cs# !  B2C# !  Omniture#!  Size/stage#of#company# !  KISS#Metrics# !  Small/early#stage# !  Others?# !  MidMsize/stage# !  Other# !  Large/later#stage# !  GA#conversion#goals#!  Marke/ng#Channels# !  Landing#page#op/miza/on# !  SEM# !  A/B#tes/ng# !  Display#Ads# !  Cohort#analysis# !  Affiliate# # !  Social#Media# Copyright#©#2013#Olsen#Solu/ons#
    • 7#Marke/ng#Metrics#Framework# Acquisi/on# Conversion# Mone/za/on# Reten/on#1.  New visitors2.  Cost per acquisition 3. Conversion rate 4. Customer acquisition cost 5. Retention rate 6. Average revenue/user 7. Lifetime value (LTV) Copyright#©#2013#Olsen#Solu/ons#
    • Equa/on#of#Your#Business # !  (see#my#other#talks#on#SlideShare)# !  Profit#=#Revenue#–#Cost# !  To#op/mize#marke/ng,#best#to#look#at#this# on#a#“per#customer”#basis# !  Profit/customer=Revenue/customer#–#Cost/customer# !  We#want#to#maximize#profit/customer# !  We#want#to#acquire#new#customers#in#a#profitable#way#5# Copyright#©#2013#Olsen#Solu/ons#
    • The#Customer#Conversion#Funnel # New# Customers# Visitors# (revenueM(prospects)# genera/ng)#
    • Metric##1:#New#Visitors #!  Job##1#for#Marke/ng#is#to#get#new# visitors#(prospec/ve#customers)#to#learn# about#our#product#!  Unique#Visitors#vs.#Visits# !  Unique#=#mul/ple#visits#by#same#person# only#count#once#(for#that#/me#period)# Copyright#©#2013#Olsen#Solu/ons#
    • Unique#Visitors#vs.#Visits # !  Graph#of#visits# &#visitors# !  Note:#2#yMaxis# scales# !  25,044#Visits# !  By#5,878# Unique#Visitors# !  =#4.26#visits# per#visitor# Copyright#©#2013#Olsen#Solu/ons#
    • New#vs.#Returning#Visitors #!  You#want#to#separate#New#vs.#Returning#Visitors#!  Click#“Advanced#Segments”#in#Google#Analy/cs# Copyright#©#2013#Olsen#Solu/ons#
    • Sources#of#New#Visitors # Free •  Press# Organic#Search# New#Visitors# •  •  Word#of#Mouth#&#Viral# •  Social#Media# •  Referral#/#barter# •  Display#ads# Paid •  Search#engine# marke/ng#(SEM)# •  Affiliate# •  Conferences#10# Copyright#©#2013#Olsen#Solu/ons#
    • Metric##2:#Cost#per#Acquisi/on# Copyright#©#2013#Olsen#Solu/ons#
    • Cost#Per#Acquisi/on:#Display#Ads #!  Cost#per#Acquisi/on#(CPA*)#is#how#much#you# pay#to#get#a#new#visitor#to#your#site#!  Say#you#buy#100,000#banner#ad#impressions# for#$100# !  That’s#a#CPM#(cost#per#thousand)#of#$1# !  Say#those#100,000#banner#ad#impressions#lead#to# 1,000#people#clicking#through#to#your#site:# clickthrough#rate#(CTR)#of#1%# !  Your#CPA#would#be#$100#/#1,000#visitors#=#$0.10# !  CPA#for#display#ads#=#CPM#/#(CTR#*#1000)## *Note:#CPA#can#also#mean#“Cost#per#Ac/on”# Copyright#©#2013#Olsen#Solu/ons#
    • Cost#Per#Acquisi/on:#PPC#!  Google#AdWords#lets#you#“pay#per#click”#(PPC)#!  So#your#CPA#is#your#“cost#per#click”#(CPC)#!  Due#to#AdWord’s#dynamic#pricing,#need#to#look#at# your#Average#CPC##!  CPC#can#vary#by#keyword,#ad#copy#&#landing# Copyright#©#2013#Olsen#Solu/ons#
    • Metric##3#Conversion#Rate# 100%# x%#Prospects# Customers# Copyright#©#2013#Olsen#Solu/ons#
    • Landing#Page#Op/miza/on# !  A/B#Tes/ng#tools# !  Google#Website#Op/mizer# !  Op/mizely# !  Visual#Website#Op/mizer# !  Others?#15# Copyright#©#2013#Olsen#Solu/ons#
    • Osen#Track#Conversion#Rates#for# Different#Ac/ons #!  Most#businesses#don’t#just#have#“new# visitors”#and#“revenueMgenera/ng# customers”#!  You#may#have# !  “Free#users”:#registered#but#using#free#/er# !  A#prospect#gives#you#their#email#address#!  Can#track#the#conversion#rate#for#each# ac/on# Copyright#©#2013#Olsen#Solu/ons#
    • Google#Analy/cs #Goal#Funnel#Visualiza/on# Copyright#©#2013#Olsen#Solu/ons#
    • Metric##4:#Customer#Acquisi/on#Cost #!  “CAC”#for#short#!  CAC#is#the#average#cost#for#a#revenueM genera/ng#customer#!  So#it#takes#into#account#both#your#cost#of# acquiring#a#prospect#and#your#conversion# rate#for#conver/ng#prospects#to#revenueM genera/ng#customers#!  CAC#=#CPA#/#Conversion#Rate# Copyright#©#2013#Olsen#Solu/ons#
    • Metric##5:#Reten/on#Rate#!  Reten/on#rate#tracks#what#%#of#your# customers#are#s/ll#ac/ve#over#/me# ~80% never use app again Curve eventually flattens out Copyright#©#2013#Olsen#Solu/ons#
    • Cohort#Analysis #20# Copyright#©#2013#Olsen#Solu/ons#
    • Cohort#Analysis:#Data# Copyright#©#2013#Olsen#Solu/ons#
    • Churn#!  Churn#is#just#an#alterna/ve#way#of#talking# about#customer#reten/on#!  Reten/on#=#customers#staying#ac/ve#!  Churn#=#customers#leaving#!  Churn#rate#=#1#–#Reten/on#Rate#!  So#if#90%#of#your#customers#remain# ac/ve#monthMtoMmonth,#your#monthly# churn#rate#is#10%# Copyright#©#2013#Olsen#Solu/ons#
    • Metric##6:#Average#Revenue#Per#User #!  “ARPU”#for#short#!  Measured#over#a#specific#/meframe,#e.g., # calendar#month#!  Take#total#revenue#for#the#month#and# divide#it#by#the#number#of#customers#you# had#that#month#!  Say#you#had#$100k#in#revenues#and#50k# users,#your#ARPU#would#be#$2/user# Copyright#©#2013#Olsen#Solu/ons#
    • Annual#ARPU#for#Tech#Companies # Copyright#©#2013#Olsen#Solu/ons#
    • ARPU#for# Adver/sing/Publishing#Model ##Profit#=#Revenue#M#Cost## #Unique#Visitors##x##Ad#Revenue#per#Visitor# ### ## # # #Impressions/Visitor##x##Effec/ve#CPM#/#1000# ### ## # # #Visits/Visitor##x##Pageviews/Visit##x##Impressions/PV# ### #### ### ## ## Copyright#©#2013#Olsen#Solu/ons#
    • Your#ARPU#Will#Vary#by#Customer # !  Look#at#Quality#vs.#Quan/ty# !  May#have#to#pay#more#to#acquire#higher#ARPU#users# !  Try#to#iden/fy#how#your#high#ARPU#customers#are# different#from#your#low#ARPU#customers:# channel,#industry,#product#usage,#demographics#25# Copyright#©#2013#Olsen#Solu/ons#
    • Life/me#Value#(LTV) #!  Life/me#value#of#a#customer#represents# how#much#value#the#average#customer#will# generate#for#your#company#!  LTV#=#ARPU#x#Avg#Customer#Life/me#x#Gross#Margin# !  Average#Customer#Life/me# !  How#long#your#average#customer#is#ac/ve#and#generates# revenue# !  Equals#1#/#churn#rate.#5%#monthly#churn#M>#avg#life#20#months# !  Gross#Margin:#the#%#of#revenues#les#over#aser# subtrac/ng#the#cost#of#providing#the#product/service# Note:#for#simplicity,#this#LTV#equa/on#ignores#the#“cost#of#capital”# Copyright#©#2013#Olsen#Solu/ons#
    • LTV#Example#!  ARPU#=#$10#/#customer#per#month#!  Monthly#reten/on#rate#is#80%#M>#churn#rate# is#20%#M>#avg#customer#life#=#5#months#!  Gross#margin#=#40%#!  LTV#=#ARPU#x#Avg#Customer#Life/me#x#Gross#Margin#!  LTV#=#$10/mo#x#5#months#x#40%#!  LTV#=#$50#x#40%#=#$20#!  So#the#average#customer#is#worth#$20#to#us## Copyright#©#2013#Olsen#Solu/ons#
    • You#Want#LTV#>#CAC#!  Say#LTV#is#$20# !  But#it#cost#us#$30#(CAC)#to#get#the#user:# LTV#–#CAC#=#20#–#30#=#M10###no#good!# !  If#it#only#costs#$10#CAC:# LTV#–#CAC#=#20#–#10#=#+10###good#!  Knowing#your#LTV#can#help#you#jus/fy# marke/ng#budget#!  Average#profit/customer#=#LTV#–#CAC#!  So#we#want#LTV#>#CAC#!  Many#companies#use#the#ra/o#LTV/CAC# Copyright#©#2013#Olsen#Solu/ons#
    • What#You’d#Like#to#See#Over#Time#!  LTV#increasing#as#you#improve#your#value# proposi/on,#pricing,#&#customer#reten/on#!  CAC#decreasing#as#you#op/mize#your#marke/ng:# segments,#channels,#messaging# Copyright#©#2013#Olsen#Solu/ons#
    • Ra/o#of#LTV#to#CAC: # Real#data#from#HubSpot#30# Copyright#©#2013#Olsen#Solu/ons#
    • 7#Marke/ng#Metrics#Framework# Acquisi/on# Conversion# Mone/za/on# Reten/on#1.  New visitors2.  Cost per acquisition 3. Conversion rate 4. Customer acquisition cost 5. Retention rate 6. Average revenue/user 7. Lifetime value (LTV) Copyright#©#2013#Olsen#Solu/ons#
    • How#to#Track#Your#Metrics#!  Track#each#metric#as#daily#/me#series# # New# New# Conv# Ad# …# Date# Visitors# Customers# Rate# Spend# CPA# CAC# 10/8/12# 10,000# 200# 2.0%# $200# $0.02# $1.00# 10/9/12# 10,000# 300# 3.0%# $600# $0.03# $2.00# …#!  Ra/o#metrics#make#it#easy#to#compare# applesMtoMapples#over#/me#(Conversion#rate,# CPA)# Copyright#©#2013#Olsen#Solu/ons#
    • Iden/fying#the#“Cri/cal#Few”#Metrics#!  What#are#the#metrics#for#your#business?#!  Where#is#current#value#for#each#metric?##!  How#many#resources#to#“move”#each#metric?# !  Employee#/me,#money#!  Which#metrics#have#highest#ROI#opportuni/es?# Metric#A# Metric#B# Metric#C# Good#ROI# Bad#ROI# Great#ROI# Return# Return# Return# Investment# Investment# Investment# Copyright#©#2013#Olsen#Solu/ons#
    • Op/miza/on#through#Itera/on: # Con/nuous#Improvement # Measure# the#metric# Analyze# Learning# the#metric# Gaining#knowledge:# • #Messaging# Iden/fy#top# • #Channel# opportuni/es# to#improve# • #Customer# • #Acquisi/on#costs# Design#&#develop## the#enhancement# Implement#the# enhancement#34# Copyright#©#2013#Olsen#Solu/ons#
    • Op/mizing#Signup#Page#Conversion#Rate# 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 10/1 035# Copyright#©#2013#Olsen#Solu/ons#