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Analytics for startups

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  • 1. Analytics for Startups Lars Lofgren - April 2014
  • 2. Hit me up @larslofgren
  • 3. 1 The data problems that startups face We’ll cover… 2 Gateway metrics 3 4 gateways and the metrics for each #KISSwebinar
  • 4. I’m not going to spend any time on Google Analytics.
  • 5. How healthy is this business?
  • 6. 1 MRR, Churn, LTV, acquisition cost It’d be great to track metrics like these: 2 Virality, DAU, MAU 3 Average order value, repurchase rate #KISSwebinar 4 Funnels and conversions
  • 7. But you don’t have any data yet
  • 8. Your data is in a constant rate of decay
  • 9. You data is messy
  • 10. Use metrics that measure your biggest problem. Ignore the rest.
  • 11. Gateway Metrics
  • 12. When picking metrics, always ask yourself: What’s my biggest constraint right now and which metric will tell me if I’m making progress?
  • 13. You need to do the right things in the right order.
  • 14. Gateway #1: Is your idea any good?
  • 15. Your main constraint: Getting anyone to care about your idea.
  • 16. Your main metric: Get someone to pay or use your product regularly.
  • 17. Bad metrics for this gateway: 1 Asking people if they’ll pay 2 AdWords clicks 3 Beta or waiting list signups 4 Traffic
  • 18. Gateway #2: Is your product good enough?
  • 19. Your main constraint: Having a product that’s good enough to build a business on.
  • 20. Your main metric: Ask 500 users the Product/Market Fit Question
  • 21. What is the P/M Fit Question? 1 Very disappointed 2 Somewhat disappointed 3 Not disappointed (it isn’t really that useful) How would you feel if you could no longer use [your product]?
  • 22. Your goal for the P/M Fit Question: At least 40% of users should say “Very disappointed.” *Sean Ellis and Hiten Shah get credit for this one.
  • 23. How do you get to the first 500 users/customers? Hustle.
  • 24. The P/M Fit Question isn’t perfect, verify with a retention metric.
  • 25. Gateway #3: Can you grow?
  • 26. Your main constraint: Acquiring customers consistently from at least one channel.
  • 27. You have plenty of options to choose from: 1 Inbound (Google, Content, Social) 2 Paid (PPC, Affiliates) 3 Virality (Invites, Referrals)
  • 28. Pick just one to start Work on your channel for at least 3 months. Assume it’ll work and get the resources needed to execute.
  • 29. Your main metrics: Your main business metric and acquisition funnel.
  • 30. Main business metrics: 1 SaaS: Monthly Recurring Revenue 2 Ecommerce: Monthly Revenue 3 Consumer Tech: Monthly Active Users
  • 31. SaaS Funnel
  • 32. Ecommerce Funnel
  • 33. Consumer Tech Funnel
  • 34. Why not cost per acquisition or lifetime value? You have no idea how much it costs to acquire customers or how much they’ll spend (yet).
  • 35. Gateway #4: Do you have a stable model?
  • 36. Your main constraint: In order to keep scaling, you need a stable model for your business.
  • 37. Your main metrics: Depends entirely on what business model you have.
  • 38. The SaaS Model 1 LTV is at least 3x acquisition cost 2 Recover acquisition cost within 12 months 3 Get monthly churn below 2%
  • 39. The Ecommerce Model 1 2 3 It’s all about profit margin.
  • 40. The Consumer Tech Model 1 Virality > 1 2 Usage 3 out of 7 days 3 30% of users active day after signup 4 Organic growth of 100s signups/day. 5 Clear path to 100,000+ users *Andrew Chen’s “Zero to Product/Market Fit”
  • 41. Find someone in your industry that knows the key benchmarks.
  • 42. Finally, get serious with data.
  • 43. If you have a sales team, pile data into your CRM.
  • 44. If consumer tech, do everything in-house.
  • 45. Google Analytics plus an internal database will take you far.
  • 46. Start with constraints, hack together what you need to measure them.
  • 47. How to get data you really need: 1 One team owns data quality. 2 Hire a data engineer. 3 Clean up and integrate your data. 4 Use customer analytics. 5 Build a Growth Team.
  • 48. Q&A Time! Lars Lofgren @larslofgren llofgren@kissmetrics.com