Metrics-Driven Marketing Strategy


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Metrics-oriented approach on how to design [internet] marketing strategy, how to select customer acquisition channels. Plus a little bit on product strategy too.

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Metrics-Driven Marketing Strategy

  1. 1. Metrics-Driven Marketing Strategy (+ a little Product Strategy too) Dave McClure Visiting Lecturer Stanford Facebook Class (CS377W) 11/15/07
  2. 2. Summary <ul><li>Marketing Plan / Strategy = Target Customer Acquisition Channels </li></ul><ul><ul><li>3 Important Factors = Volume, Cost, Conversion </li></ul></ul><ul><ul><li>Focus on conversion to target customer lifecycle actions </li></ul></ul><ul><ul><li>Measure as deep down the conversion funnel as possible </li></ul></ul><ul><li>Estimate Customer Lifecycle, Conversion, Revenue Potential </li></ul><ul><ul><li>Hypothesize Customer Lifecycle & Critical Conversion Points </li></ul></ul><ul><ul><li>Estimate Conversion , Revenue Potential when designing marketing plan </li></ul></ul><ul><ul><li>Understand “Annual Rev. Per User” (ARPU) & “Customer Lifetime Value” (CLV) </li></ul></ul><ul><li>Match Marketing Channel Costs to Customer Revenue Potential </li></ul><ul><ul><li>Design channels that costs <20-50% of target ARPU / CLV </li></ul></ul><ul><ul><li>*NOTE: “Cost” has multiple meanings </li></ul></ul><ul><ul><ul><li>actual dollars </li></ul></ul></ul><ul><ul><ul><li>marketing costs </li></ul></ul></ul><ul><ul><ul><li>product development time & resources </li></ul></ul></ul><ul><ul><ul><li>time </li></ul></ul></ul><ul><ul><ul><li>profit vs cashflow </li></ul></ul></ul>
  3. 3. Agenda <ul><li>Quick Review of Pirate Metrics </li></ul><ul><li>Example Mktg Channels </li></ul><ul><li>Brainstorm 3 Scenarios </li></ul>
  4. 4. Customer Lifecycle: 5 Steps <ul><li>A cquisition : users come to the site/page/app from various channels </li></ul><ul><li>A ctivation : users enjoy 1 st visit: &quot;happy&quot; user experience </li></ul><ul><li>R etention : users come back, visit site multiple times </li></ul><ul><li>R eferral : users like product enough to refer others </li></ul><ul><li>R evenue : users conduct some monetization behavior </li></ul>AARRR!
  5. 5. Facebook App / User Conversion Your App 3. RETENTION Emails Feeds, Profiles 4. REFERRAL Passive: Feeds & Profiles Active: Initial App Invites Invites App Directory Feeds App Cross-Marketing Profile Ads 5. Revenue $$$ Ads, Lead Gen, Subscriptions, etc Canvas Pages App Cross-Marketing 2. Activation CTA, Copy & Graphics 1. ACQUISITION
  6. 6. Conversion Dashboard (example below; customize for your use) $2 3% Email Open / RSS view -> Clickthru Retention $10 1% Refer 1+ users who activate Referral $3 2% Refer 1+ users who visit site Referral $5 2% Repeat Visitor (3+ visits in first 30 days) Retention $25 1% User generates break-even revenue Revenue $3 2% Acct Signup (includes profile data) Activation $1 5% Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit) Activation User generates minimum revenue Happy 1 st Visit (views X pages, stays Y sec, Z clicks) Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks) Visit Site (or landing page, or external widget) User Status $5 2% Revenue $.25 30% Activation $.05 70% Acquisition $.01 100% Acquisition Est. Value Conv % Category
  7. 7. Questions / Focus by Role <ul><li>Founder / CEO: </li></ul><ul><ul><li>What do you measure & why? Who’s responsible? </li></ul></ul><ul><li>Product Manager / Developer: </li></ul><ul><ul><li>How do you choose what to build? </li></ul></ul><ul><li>Marketing </li></ul><ul><ul><li>What channels do you choose / who do you target? </li></ul></ul>
  8. 8. Founder/CEO <ul><li>Q: What metrics do you watch? WHY? Who’s responsible? </li></ul><ul><li>Hypothesize Customer Lifecycle & Refine </li></ul><ul><ul><li>Choose 5-10 conversion steps </li></ul></ul><ul><li>Less, not More is better </li></ul><ul><ul><li>Q: minimal necessary & sufficient metrics rqd to make decisions? </li></ul></ul><ul><ul><li>can you simplify to top 3? just 1? </li></ul></ul><ul><li>Delegate each Metric to someone (not you) to OWN </li></ul><ul><li>Focus on conversion improvement; measure & iterate </li></ul><ul><li>NOTE: if you measure something, it should tell you something… </li></ul><ul><ul><li>Use “Is it Actionable?” test to determine whether or not to track a metric </li></ul></ul>
  9. 9. Product <ul><li>Q: how do you choose what to build (or NOT build) ? </li></ul><ul><li>Choose features for conversion improvement </li></ul><ul><ul><li>80% on existing feature optimization </li></ul></ul><ul><ul><li>20% on new feature development </li></ul></ul><ul><li>Just guess, then A/B test … A LOT </li></ul><ul><li>Measure conversion improvement </li></ul><ul><li>Rinse & Repeat </li></ul>
  10. 10. Marketing <ul><li>Q: what channels / who do you market to? </li></ul><ul><li>Design & Test Multiple Mktg Channels </li></ul><ul><li>Select & Focus on Channels with: </li></ul><ul><ul><li>High Volume </li></ul></ul><ul><ul><li>High Conversion </li></ul></ul><ul><ul><li>Low Cost </li></ul></ul><ul><li>Measure *deeper* down the conversion funnel, not just to website / landing page </li></ul><ul><li>Segment & Select channels & customers by conversion @ deepest possible level (ideally $$$) </li></ul>
  11. 11. Agenda <ul><li>Quick Review of Pirate Metrics </li></ul><ul><li>Example Mktg Channels </li></ul><ul><li>Brainstorm 3 Scenarios </li></ul>
  12. 12. Example Marketing Channels disclaimer: these estimates of vol, cost/user, time & effort are highly subjective & very dependent on your specific business med/hi (reports, co-branding) Med/hi med/hi (capture metrics, generate reports) med-high depends on partner, size of customer base, conversion Biz Dev / Partner low/zero (med = prof contest site) Med low/med (depends on contest, site, campaign) low/med small unless big prize $ (don’t, keep it under $5K) Contest low/zero if no system; Med/hi if integrated SFA High med-high med-high depends on target demographics Telemktg low/zero Med/hi medium Med/hi depends on geography Direct / radio Med/hi (production cost) High Med-high High Potentially large (if you spend) TV low/med low Low for FB social networks; med/hi for normal sites low/zero depends on CTA; size of accessible social networks / # users Viral / Referral low/med (landing pages = med) Low/med Low/med (depends on your marketing) Depends depends on your keywords SEM med/hi (depends on complexity) med Low/med low/med Depends on CTA; size of accessible sites, level of adoption + bloggers Widget med/hi (depends on rqd tracking & reporting) med/hi med/hi (need to build affiliate program, capture metrics, generated reports) Med/hi depends on economics Affiliate / Lead Gen low/zero med medium (develop story, build contacts) Med/hi depends on your business & audience & news PR Low (redirects/co-brand?) low low depends depends on keywords, domain costs domains med/hi low/zero Medium (depends on your search geeks) Low/zero depends on your keywords SEO low/zero (med = CMS, prof design) low/med Low (if just you blogging); med (if you're setting up big CMS / evangelizing to other bloggers) low/med Depends on # blogs in your segment, competitive scenario Blogs / Bloggers low/med (med = create templates) low/med Low low/med depends on CTA, size of your house lists, email signups Email Prod Effort Mktg Effort Time to implement Cost/user Volume Channel
  13. 13. Conversion Measurement <ul><li>Conversion Criteria: </li></ul><ul><ul><li>best-performing (%) channels / campaigns / copy </li></ul></ul><ul><ul><li>largest-volume (#) channels / campaigns / copy </li></ul></ul><ul><ul><li>lowest-cost ($) channels / campaigns / copy </li></ul></ul><ul><li>Measurement Components: </li></ul><ul><ul><li>Audience Segment (age, region, profession, interest) </li></ul></ul><ul><ul><li>Channel Source (social network, SEM, organic, PR, etc) </li></ul></ul><ul><ul><li>Campaign Theme / Brand Promise (“save money”, “get cool stuff”) </li></ul></ul><ul><ul><li>Landing Page & CTA </li></ul></ul><ul><ul><li>Copy & Graphics </li></ul></ul>
  14. 14. Agenda <ul><li>Quick Review of Pirate Metrics </li></ul><ul><li>Example Mktg Channels </li></ul><ul><li>Brainstorm 3 Scenarios </li></ul>
  15. 15. Scenario I <ul><li>Example: Lightweight Facebook App </li></ul><ul><li>Consumer target: people who poke, are frisky ;) </li></ul><ul><li>Customers are worth: $0-5? </li></ul><ul><ul><li>currently advertising revenue </li></ul></ul><ul><ul><li>potential for sponsorship, e-commerce revenue </li></ul></ul><ul><li>Company has ZERO funding / marketing budget </li></ul><ul><ul><li>limited ability to raise capital </li></ul></ul><ul><ul><li>limited budget mostly from ad revenue </li></ul></ul><ul><li>Questions: </li></ul><ul><ul><li>how to design marketing channels? </li></ul></ul><ul><ul><li>Significant viral potential? </li></ul></ul><ul><ul><li>Conversion to long-term customer potential? </li></ul></ul><ul><ul><li>Marketing potential off-FB? </li></ul></ul>
  16. 16. Scenario II <ul><li>Example: Consumer Website (low-end) </li></ul><ul><li>Consumer target: pet owners </li></ul><ul><li>Customers are worth $5-25 </li></ul><ul><ul><li>mostly advertising, sponsorship revenue </li></ul></ul><ul><ul><li>some e-commerce revenue </li></ul></ul><ul><li>Company has modest funding / marketing budget </li></ul><ul><ul><li>raised $XM in capital / not yet at break-even </li></ul></ul><ul><ul><li>spending $X00K / year on marketing </li></ul></ul><ul><li>Questions: </li></ul><ul><ul><li>how to design marketing channels? </li></ul></ul><ul><ul><li>Email marketing? </li></ul></ul><ul><ul><li>SEO/SEM keyword opportunities? </li></ul></ul><ul><ul><li>Blogging / Affiliate opportunites? </li></ul></ul>
  17. 17. Scenario III <ul><li>Example: Consumer Website (high-end) </li></ul><ul><li>Consumer target: people tracking their money/finances </li></ul><ul><li>Customers are worth $25-100+ </li></ul><ul><ul><li>significant lead-gen & advertising </li></ul></ul><ul><ul><li>potential for lots of e-commerce revenue </li></ul></ul><ul><li>Company has funding / marketing budget </li></ul><ul><ul><li>raised $XXM in capital; approaching break-even / profitable </li></ul></ul><ul><ul><li>significant >$XM spend on marketing; known customer economics </li></ul></ul><ul><li>Questions: </li></ul><ul><ul><li>how to design marketing channels? </li></ul></ul><ul><ul><li>SEO/SEM potential? </li></ul></ul><ul><ul><li>Direct Marketing potential? </li></ul></ul><ul><ul><li>Biz Dev opportunities? </li></ul></ul><ul><ul><li>Viral may be less important if large vol of profitable leads </li></ul></ul>
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