Startupmetrics101aarrr

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  • 1. Startup Metrics 101 Web 2.0 Expo SF - 04/22/08 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
  • 2. AARRR!: 5-Step Startup Metrics Model SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Widgets Email Tel, TV Domains 1. ACQUISITION Viral Loops A L 2. A E F ERR 4. R Emails & Homepage / Emails & Alerts ctiv widgets atio Landing Page Blogs, RSS, Product Affiliates, io n Features Contests te n t n News Feeds e 3. R Ads, Lead Gen, Biz Dev 5. R System Events & Subscriptions, Time-based ECommerce Features e ve nu Website.com e$ $$
  • 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. Startup Metrics for Pirates: 5 Steps to Web 2.0 Booty! • Acquisition: users come to site from various channels • Activation: users enjoy 1st visit: "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!
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. Example Marketing Channels disclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business
  • 11. Acquisition SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Widgets Email Tel, TV Domains 1. ACQUISITION Marketing Channels: • largest-volume (#) • lowest-cost ($) • best-performing (%) Website.com
  • 12. Acquisition Where are users coming from? Acquisition Methods  SEO / SEM  Blogs  Email  Social Media & Social Networks  Domains
  • 13. 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
  • 14. Acquisition Where are users coming from? Key Metrics to Track Example  Quantity (#)  Cost ($)  Conversions (%)
  • 15. 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
  • 16. Activation SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Activation Criteria: Apps & Direct, Widgets Email Tel, TV • 10-30+ seconds 1. ACQUISITION Domains • 2-3+ page views • 3-5+ clicks • 1 key feature usage 2. A Homepage / ctiv Landing Page atio Product Features n do LOTS of landing page & A/B tests – make lots of dumb guesses & iterate FAST Website.com
  • 17. 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
  • 18. Activation What do users do on their first visit? Key Metrics to Track  Pages per visit  Time on site  Conversions Before After
  • 19. 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/
  • 20. 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, Widgets Email Tel, TV • status emails weekly/monthly 1. ACQUISITION Domains • event-based emails as they occur BUT: • make it easy to unsubscribe 2. A Emails & Homepage / Alerts ctiv Landing Page atio Blogs, RSS, Product io n Features te n t n News Feeds e 3. R Tip on emails: • > 80% or more on SUBJECT LINE System Events & • < 20% or less on BODY TEXT Time-based Features Website.com
  • 21. 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
  • 22. 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?)
  • 23. Retention How do users come back? Key Metrics to Track Example  Source  Quantity  Conversions  Visitor Loyalty  Session Length
  • 24. 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/
  • 25. Referral SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Widgets Email Tel, TV Viral Domains 1. ACQUISITION Loops A L E F ERR 4. R 2. A Emails & widgets Emails & Homepage / Alerts ctiv Landing Page Affiliates, atio Blogs, RSS, Product Contests ti on Features n News Feeds R e te n 3. Focus on driving referrals System Events & *after* users have a Time-based Features “happy” experience; avg score >= 8 out of 10 Website.com
  • 26. Referral How do users refer others? Referral Methods  Send to Friend: Email / IM  Social Media  Widgets / Embeds  Affiliates
  • 27. 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.
  • 28. 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
  • 29. Revenue SEO Campaigns, SEM PR Contests Biz Social Networks Dev Blogs Affiliates Apps & Direct, Widgets Email Tel, TV Domains 1. ACQUISITION Viral Loops A L 2. A E F ERR 4. R Emails & Homepage / Emails & Alerts ctiv widgets atio Landing Page Blogs, RSS, Product Affiliates, io n Features Contests te n t n News Feeds e 3. R Ads, Lead Gen, Biz Dev 5. R System Events & Subscriptions, Time-based ECommerce Features e ve This is the part *you* nu Website.com e$ still have to figure out… (we don’t know jack $$ about your business)
  • 30. 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)
  • 31. 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)