Startup Metrics (Ignite Velocity)

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Startup Metrics for Pirates / Startup Metrics 101, presented at Ignite / Velocity Conference (June 2008)

Startup Metrics for Pirates / Startup Metrics 101, presented at Ignite / Velocity Conference (June 2008)

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  • 1. Startup Metrics for Pirates •  Acquisition: users come to site from various channels •  Activation: users enjoy 1st visit: quot;happy” experience •  Retention: users come back, visit site multiple times •  Referral: users like product enough to refer others •  Revenue: users conduct some monetization behavior AARRR! 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 SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Tel, Widgets Email TV Domains 1. ACQUISITION  Viral  Loops  Emails & Alerts  Homepage / Emails & widgets Landing Page Product Blogs, RSS,  on Affiliates,  News Feeds  e t enti Features Contests  3. R Ads, Lead Gen,  Biz Dev System Events &  Subscriptions,  Time‐based Features  ECommerce  Website.com
  • 3. Why Be a Web 2.0 Entrepreneur? •  Low Cost •  Lots of Users •  Online Advertising / E-Commerce •  Online Metrics •  It’s Cool. •  Make MONEY.
  • 4. Q: What’s My Business Model? Can be one of the following: 1.  Get Users (= Acquisition, Referral) 2.  Drive Usage (= Activation, Retention) 3.  Make Money (= Revenue*) * ideally profitable revenue Note: eventually need to turn Users/Usage -> Money
  • 5. 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 Metrics (tip: Less = More) •  Test, Measure, Iterate to Improve •  Delegate Each Key Metric to someone to OWN
  • 6. 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
  • 7. Example Conversion Metrics (note: *not* actuals… your mileage may vary) Category Conversion Status Conv % Est. Value Acquisition Visit Site 100% $.01 (or landing page, or external widget) Acquisition Doesn't Abandon 70% $.05 (views 2+ pages, stays 10+ sec, 2+ clicks) Activation Happy 1st Visit 30% $.25 (views X pages, stays Y sec, Z clicks) Activation Email/Blog/RSS/Widget/Acct Signup 5% $2 (anything that could lead to repeat visit) Retention Length of Session / # of Clicks 10% $1 (length/intensity of engaged visit, >180s) Retention Email Open/ RSS view -> Click/Repeat Visit 3% $5 (3+ visits in first 30 days) Referral Refer 1+ users who visit site 2% $1 Referral Refer 10+ users who activate 0.2% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25
  • 8. Role: Marketing / Sales Q: What channels? Which users? Why? A: High Volume (#), Low Cost ($), 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 •  Grab the Low-Hanging Fruit: –  Blogs –  SEO/SEM –  Landing Pages –  Automated Emails
  • 9. Example Marketing Channels disclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business Channel Volume Cost/user Time to implement Mktg Prod Effort Effort Viral / depends on CTA; size of accessible low/zero Low for FB social networks; low low/med Referral social networks / # users med/hi for normal sites Email depends on CTA, size of your house low/med Low low/med low/med lists, email signups (med = create templates) Blogs / Depends on # blogs in your low/med Low (if just you blogging); low/med low/zero Bloggers segment, competitive scenario med (if you're setting up big CMS / (med = CMS, prof evangelizing to other bloggers) design) SEO depends on your keywords Low/zero Medium low/zero med/hi (depends on your search geeks) SEM depends on your keywords Depends Low/med Low/med low/med (depends on your marketing) (landing pages = med) Contest small unless big prize $ low/med low/med Med low/zero (don’t, keep it under $5K) (depends on contest, site, campaign) (med = prof contest site) Widget Depends on CTA; size of accessible low/med Low/med med med/hi (depends on sites, level of adoption + bloggers complexity) domains depends on keywords, domain costs depends low low Low (redirects/co- brand?) PR depends on your business & Med/hi medium (develop story, build contacts) med low/zero audience & news Biz Dev / depends on partner, size of med-high med/hi (capture metrics, generate Med/hi med/hi Partner customer base, conversion reports) (reports, co-branding) Affiliate / depends on economics Med/hi med/hi (need to build affiliate program, med/hi med/hi (depends on rqd Lead Gen capture metrics, generated reports) tracking & reporting) Direct / radio depends on geography Med/hi medium Med/hi low/zero Telemktg depends on target demographics med-high med-high High low/zero if no system; Med/hi if integrated SFA TV Potentially large (if you spend) High Med-high High Med/hi (production cost)
  • 10. Acquisition SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Tel, Widgets Email TV Domains 1. ACQUISITION  Marketing Channels: •  largest-volume (#) •  lowest-cost ($) •  best-performing (%) Website.com
  • 11. Acquisition Where are users coming from? Acquisition Methods  SEO / SEM  Blogs  Email  Social Media & Social Networks  Domains
  • 12. Activation SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Activation Criteria: Apps & Direct, Tel, Widgets Email TV •  10-30+ seconds 1. ACQUISITION  Domains •  2-3+ page views •  3-5+ clicks •  1 key feature usage Homepage / Landing Page Product Features do LOTS of landing page & A/B tests – make lots of dumb guesses & iterate FAST Website.com
  • 13. 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
  • 14. Retention SEO Campaigns, Automated emails are simple & easy SEM PR Contests Biz Social retention (but don’t overdo it) Networks Dev Blogs Affiliates •  lifecycle emails @ +3, +7, +30d Apps & Direct, Tel, Widgets Email TV •  status emails weekly/monthly Domains 1. ACQUISITION  •  event-based emails as they occur BUT: •  make it easy to unsubscribe Emails & Alerts  Homepage / Landing Page Product Blogs, RSS,  on News Feeds  et enti Features 3. R Tip on emails: •  > 80% or more on SUBJECT LINE System Events &  •  < 20% or less on BODY TEXT Time‐based Features  Website.com
  • 15. Retention How do users come back? Retention Methods   Automated Emails * Track open rate / CTR / Quantity   RSS / News Feeds * Track % viewed / CTR / Quantity   Widgets / Embeds * Track impressions / CTR / Quantity
  • 16. Referral SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Tel, Widgets Email TV Viral  Domains 1. ACQUISITION  Loops  Emails & widgets Emails & Alerts  Homepage / Landing Page Affiliates,  Product Contests  Blogs, RSS,  n News Feeds  e tentio Features 3. R Focus on driving referrals System Events &  Time‐based Features  *after* users have a “happy” experience; Website.com avg score >= 8 out of 10
  • 17. Referral How do users refer others? Referral Methods  Send to Friend: Email / IM  Social Media  Widgets / Embeds  Affiliates
  • 18. 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.
  • 19. Revenue SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Tel, Widgets Email TV Domains 1. ACQUISITION  Viral  Loops  Emails & Alerts  Homepage / Emails & widgets Landing Page Product Blogs, RSS,  on Affiliates,  News Feeds  e t enti Features Contests  3. R Ads, Lead Gen,  Biz Dev System Events &  Subscriptions,  Time‐based Features  ECommerce  This is the part *you* Website.com still have to figure out… (we don’t know jack about your business)
  • 20. Revenue How do you make money? Revenue Tips •  Don’t rely on AdSense •  Start Free -> Go Freemium •  Subscription / Recurring transactions •  Qualify your customers -> Lead generation (arbitrage) •  Sell something! (physical or virtual)
  • 21. AARRR! Any Questions, Ye Scurvy Dogs? 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)
  • 22. Dave McClure, Master of 500 Hats http://500hats.typepad.com/ http://www.500hats.com/ http://slideshare.net/dmc500hats/ Hiten Shah, CrazyEgg / ACS / KISSmetrics http://crazyegg.com http://acsseo.com http://KISSmetrics.com
  • 23. 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
  • 24. Acquisition Where are users coming from? Key Metrics to Track Example  Quantity (#)  Cost ($)  Conversions (%)
  • 25. 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
  • 26. Activation What do users do on their first visit? Key Metrics to Track  Pages per visit  Time on site  Conversions Before After
  • 27. 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/2005/05/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/
  • 28. Retention How do users come back? 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?)
  • 29. Retention How do users come back? Key Metrics to Track Example   Source   Quantity   Conversions   Visitor Loyalty   Session Length
  • 30. 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/
  • 31. 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