Startup Metrics for Pirates (SeedCamp 2008)

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  • + dmc500hats Dave Mcclure 9 months ago
    latest version is here:
    http://www.slideshare.net/Startonomics/startup-metrics-fo...
  • + dmc500hats Dave Mcclure 9 months ago
    @DAG: KissMetrics, early screen shot. they're still in alpha right now i believe.
  • + dangreenberg dangreenberg 9 months ago
    what is that graphic from on page 41?

    DAG
  • + dmc500hats Dave Mcclure 9 months ago
    note: although AAARR 5-step model is presented with 'Acquisition' first, the typical order i recommend startups to use is to focus on Activation & Retention first, *then* Acquisition & Referral, *then* Revenue.
  • + dmc500hats Dave Mcclure 9 months ago
    slide 19 is still WAAAAY too much text, too hard to read... will update this soon & simplify.
  • + dmc500hats Dave Mcclure 9 months ago
    slide 17 is a simplified version of an earlier one... i think this is easier to digest.
  • + dmc500hats Dave Mcclure 9 months ago
    whoops... looks like the circles with priorities '1/2/3' didn't show up very well... need to fix that. each cell should show conversion priority 1, 2, or 3 within the column that represents each user type.
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Startup Metrics for Pirates (SeedCamp 2008) - Presentation Transcript

  1. Startup Metrics for Pirates AARRR! SeedCamp 2008 University College London 09/16/08 Dave McClure, Master of 500 Hats http://500hats.typepad.com/ http://www.500hats.com/ http://slideshare.net/dmc500hats/
  2. AARRR!: 5-Step Startup Metrics Model Website.com R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce A CQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains R etention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
  3. Disclaimer
    • I’m not rich
    • I’m lazy
    • I’m easily distracted (ADD)
    • I’ve failed more than succeeded
    • I’m a crappy (but entertaining) blogger
    • I’m often wrong (but never in doubt)
  4. 500 Startups (500=13)
  5. Web 2.0: What’s So Special?
    • Startup Costs = lower
    • # Users, Bandwidth = bigger
    • Online Adv / E-Com = still growing
    • Collect Usage Metrics in Real-Time
    • Make Decisions based on User Behavior
  6. Startup Metrics: An Overview
    • Business Plans are BULLSHIT
    • Revenue Projections are Hockey Stick Delusions
    • Features Don’t Matter … [Measured] Conversion Matters
    • Offline PR, “Big-Bang” Launches are Stupid & Expensive
    FAIL. WIN!
    • Reality = Conversion Events => Measured User Behavior
    • Conversion + Usability => Design + Development (not vice versa)
    • Success = Evolution not Revolution (modify, measure, iterate)
  7. Startup Metrics: An Overview
    • What Really Matters:
    • Passion for Problem/Solution + Hypothesis of Customer Lifecycle
    • 1-pg Business Model : Prioritized Matrix of (User Types + Conversion Events)
    • Critical, Few, Actionable Metrics + Dashboard of (Measured User Behavior)
    • 1-pg Marketing Plan : (Channels + Campaigns) * (Volume, Cost, Conv %)
    • Velocity of (Product Execution + Cycle Time of Testing ) * Iteration
    • 20% Inspiration + 80% Perspiration
    • Long-term: Audacity + Creative Inspiration
    • Short-term: Humility + Analytic Rigor
  8. Startup Metrics: Passion vs Precision
    • “ Solve a Problem” = Passion
    • “ Optimize the Solution” = Precision
    • On the Other Hand…
      • “ Precision” is Illusion
      • Data is fuzzy
      • Collecting data takes time & effort
      • Keep Metrics Simple & Actionable
  9. What’s The Best Metric ? Users, Pages, Clicks, Emails, $$$
    • Q: Which Would You Prefer?
      • 1,000,000 one-time, unregistered unique visitors
      • 500,000 visitors who view 2+ pages / stay 10+ sec
      • 200,000 visitors who clicked on a link or button
      • 20,000 registered users w/ email address
      • 1,000 monthly subscribers @ $10/mo
      • 200 passionate fans who refer 5+ users / month
  10. Startup Metrics for Pirates
    • A cquisition: users come to site from various channels
    • A ctivation: users enjoy 1 st visit: " happy ” experience
    • R etention: users come back , visit site multiple times
    • R eferral: users like product enough to refer others
    • R evenue: users conduct some monetization behavior
    AARRR !
  11. AARRR!: 5-Step Startup Metrics Model Website.com R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce A CQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains R etention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
  12. Q: What’s My Business Model?
    • Can be one of the following:
      • Get Users (= Acquisition, Referral)
      • Drive Usage (= Activation, Retention)
      • Make Money (= Revenue*)
        • * ideally profitable revenue
    • Note: eventually need to turn Users/Usage -> Money
  13. Role: Founder/CEO
    • Q: Which Metrics? Why?
    • A: Focus on Critical Few Actionable Metrics
      • (if you don’t use the metric to make a decision, it’s not actionable)
    • Hypothesize Customer Lifecycle
    • Target ~3-5 Conversion Events (tip: Less = More)
    • Test, Measure, Iterate to Improve
  14. The 1-Page Business Model (Users + Conversions + Priorities)
    • Q1: What types of people use your website?
      • Visitor = Average User / Buyer
      • Contributor = Content Contributor / Seller
      • Distributor = Passionate Fan (unpaid) / Affiliate (paid)
    1 2 3
  15. The 1-Page Business Model (Users + Conversions + Priorities) Q2: What actions could they take to help you or them ? 1 2 3 1 2 3 1 3 2 1 3 2
  16. Role: Product / Engineering
    • Q: What to Build? Why?
    • A: Build Features that Increase Conversion
    • Wireframes = Conversion Steps
    • Measure, A/B Test, Iterate FAST (daily/weekly)
    • Optimize for Conversion Improvement
      • 80% on existing feature optimization
      • 20% on new feature development
  17. Example Conversion Metrics (note: *not* actuals… your mileage may vary) Stage Conversion Status Conv. % Est. Value (*not* cost) Acquisition Visitors -> Site/Widget/Landing Page (2+ pages, 10+ sec, 1+ clicks = don’t abandon) 60% $.05 Activation “ Happy” 1 st Visit; Usage/Signup (clicks/time/pages, email/profile reg, feature usage) 15% $.25 Retention Users Come Back; Multiple Visits (1-3x visits/mo; email/feed open rate / CTR) 5% $1 Referral Users Refer Others (cust sat >=8; viral K factor > 1; ) 1% $5 Revenue Users Pay / Generate $$$ (first txn, break-even, target profitability) 2% $10
  18. Role: Marketing / Sales
    • Q: What channels? Which users? Why?
    • A: High Volume (#), Low Cost ($), High Conv (%)
    • Design & Test Multiple Marketing Channels + Campaigns
    • Select & Focus on Best-Performing Channels & Themes
    • Optimize for conversion to target CTAs, not just site/landing page
    • Match/Drive channel cost to/below revenue potential
    • Low-Hanging Fruit:
      • Blogs
      • SEO/SEM
      • Landing Pages
      • Automated Emails
  19. Example Marketing Channels disclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business
  20. Startup Priorities
    • Diff’rent Strokes for Diff’rent Folks:
      • Make a Good Product : Activation & Retention
      • Market the Product : Acquisition & Referral
      • Make Money : Revenue & Profitability
  21. Startup Metrics Activation
  22. Website.com
    • Activation Criteria:
    • 10-30+ seconds
    • 2-3+ page views
    • 3-5+ clicks
    • 1 key feature usage
    do LOTS of landing page & A/B tests – make lots of dumb guesses & iterate FAST Activation SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
  23. Activation What do users do on their first visit?
    • Example Activation Goals
      • Click on something!
      • Account sign up / Emails
      • Referrals / Tell a friend
      • Widgets / Embeds
      • Low Bounce Rate
    • Activation Tips
      • Less is more
      • Focus on user experience / usability
      • Provide incentives & call to actions
      • Test and iterate continuously
  24. Activation What do users do on their first visit?
    • Key Metrics to Track
      • Pages per visit
      • Time on site
      • Conversions
  25. Activation
    • Tools
      • Crazy Egg (Visual Click Mapping)
      • crazyegg.com
      • Google Website Optimizer (A/B & Multivariate Testing)
      • google.com/websiteoptimizer
      • Marketo.com (B2B Lead Generation Management)
      • marketo.com
    • Resources
      • Experimentation and Testing: A Primer
      • kaushik.net/avinash/ 2006/ 05/experimentation-and-testing-a-primer.html
      • Landing Page Tutorials and Case Studies
      • copyblogger.com/landing-pages/
      • 101 Easy Easy to use Google Website Optimizer
      • conversion-rate-experts.com/articles/101-google-website-optimizer-tips/
  26. Startup Metrics Retention
  27. Website.com
    • Automated emails:
    • lifecycle emails @ +3, +7, +30d
    • status / “best of” weekly/monthly
    • “ something happened” emails
    • BUT:
    • make it easy to unsubscribe
    • Tip on emails:
    • > 80% or more on SUBJECT LINE
    • < 20% or less on BODY TEXT
    Retention SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
    • Cohort Analysis:
    • Distrib of Visits over Time
    • Rate of Decay
    • Effective Customer Lifecycle
    • Retention Methods
    • Automated Emails
      • * Track open rate / CTR / Quantity
    • RSS / News Feeds
      • * Track % viewed / CTR / Quantity
    • Widgets / Embeds
      • * Track impressions / CTR / Quantity
    Retention How do users come back? How often?
    • Example Retention Goals
      • 1 - 3+ visits per month
      • 20% open rate / 2% CTR
      • High deliverability / Low spam rating
      • Long customer life cycle / Low decay
      • Identify fanatics and cheerleaders
    • Retention Tips
      • Email is simple and it works
      • BUT make unsubscribe easy
      • 80% subject line / 20% body text
      • ACTUALLY 99% subject line / 1% body text
      • Fanatics = virality + affiliate channel (bloggers?)
    Retention How do users come back? How often?
  28. Retention How do users come back? How often?
    • Key Metrics to Track
      • Source
      • Quantity
      • Conversions
      • Visitor Loyalty
      • Session Length
  29. Retention
    • Tools
      • Campaign Monitor / MailChimp (email newsletter software)
      • campaignmonitor.com / mailchimp.com
      • TriggerMail (site-centric email management)
      • triggermail.net
      • Litmus (email and website design testing - clients / browsers)
      • litmusapp.com
    • Resources
      • 30 free HTML email templates
      • campaignmonitor.com/resources/templates.aspx
      • Best Practices in Writing Email Subject Lines
      • mailchimp.com/resources/best-practices-in-writing-email-subject-lines.phtml
      • Learning Viral: Viral Emails of Tagged.com
      • okdork.com/2008/04/10/learning-viral-studying-taggedcom/
  30. Startup Metrics Acquisition
  31. Website.com
    • Marketing Channels:
      • largest-volume (#)
      • lowest-cost ($)
      • best-performing (%)
    Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
  32. Acquisition Where are users coming from?
    • Acquisition Methods
    • SEO / SEM
    • Blogs
    • Email
    • Social Media & Social Networks
    • Domains
  33. Acquisition Keyword Vocabulary
    • Top 10 - 100 words
      • Your Brand / Products
      • Customer Needs / Benefits
      • Competitor’s Brand / Products
      • Semantic Equivalents
      • Misspellings
    • Things to analyze
      • Sources
      • Volume
      • Cost
      • Conversion
  34. Acquisition Where are users coming from?
    • Key Metrics to Track
      • Quantity (#)
      • Cost ($)
      • Conversions (%)
    Example
  35. Acquisition
    • Tools
      • Google Analytics (web analytics)
      • google.com/analytics
      • Google Keyword Tool (keyword research tool)
      • adwords.google.com/select/KeywordToolExternal
      • SEO Book Tools (SEO related tools)
      • tools.seobook.com
    • Resources
      • SEO Book Blog
      • seobook.com/blog
      • The Social Media Manual: Read Before You Play
      • searchengineland.com/071120-144401.php
      • Strategies to ruthlessly acquire users
      • andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html
  36. Startup Metrics Referral
  37. Website.com Focus on driving referrals * after * users have a “ happy ” experience; avg score >= 8 out of 10 Referral Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
  38. Referral How do users refer others?
    • Referral Methods
    • Send to Friend: Email / IM
    • Social Media
    • Widgets / Embeds
    • Affiliates
  39. Referral Viral Growth Factor
    • Viral Growth Factor = X * Y * Z
    • X = % of users who invite other people
    • Y = average # of people that they invited
    • Z = % of users who accepted an invitation
    A viral growth factor > 1 means an exponential organic user acquisition.
  40. Referral
    • Tools
      • Gigya (social media distribution & tracking tool)
      • gigya.com
      • ShareThis / AddThis (sharing buttons)
      • sharethis.com / addthis.com
      • GetMyContacts (PHP contacts importing & invitation software)
      • getmycontacts.com
    • Resources
      • Seven Ways to GO VIRAL
      • lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/
      • What’s your viral loop? Understanding the engine of adoption
      • andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your-vira.html
      • Metrics: Where Users Come From
      • slideshare.net/guest2968b8/rockyou-snap-summit-32508
  41. Startup Metrics Revenue
  42. Website.com Revenue This is the part *you* still have to figure out… (we don’t know jack about your business) R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
  43. Revenue How do you make money?
    • Revenue Tips
      • Don’t Rely on AdSense (only)
      • Start Free => 2% “ Freemium ”
      • Subscription / Recurring transactions
      • Qualify your customers -> Lead generation (arbitrage)
      • Sell something! (physical or virtual)
  44. Links & Resources
    • Additional References:
    • “ Influence: The Psychology of Persuasion ”, Robert Cialdini (book)
    • “ Putting the Fun in Functional ”, Amy Jo Kim (etech 2006 preso)
    • “ Futuristic Play ”, Andrew Chen (blog)
    • “ Don’t Make Me Think ”, Steve Krug (book)
    • “ A Theory of Fun ”, Raph Koster (book, website)
    • “ Designing for the Social Web ”, Joshua Porter (book, website)

+ Dave McclureDave Mcclure, 9 months ago

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