Lean analytics 40 minute intro

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  • If you ’ re tracking a number that doesn ’ t have the possibility of changing the way you behave it ’ s a bad metric. So think about what you ’ re tracking and ask yourself that simple question.
  • Here you see our 5 stages and the related gates you have to go through in order to go from one stage to the next. Generally, we believe all startups need to go through these steps. The definition of some things - like Virality - may be different for different startups, because an enterprise software company isn ’ t necessarily going to go viral like we think a consumer application - but the stages are the same. * I ’ ve also put in the corresponding funding buckets that I think make sense. There ’ s some gaps in-between, and this is a broad generalization, but it helps me think about what stage I need to be, what do I have to have had accomplished in order to go out and raise the right money.
  • We have a lot of case studies in the book. Buffer is a good example of a company that ’ s gone through the Lean Analytics stages in a fairly prescriptive order. Buffer is a social sharing app. Now they're focused primarily on customer acquisition, but it didn't start that way.
  • Building a more advanced purchasing system that sacrificed first- purchase simplicity for long-term ease of repeat purchases seemed like a good idea, but it was premature. This early in the company ’ s life, the question was “ Will people buy prints? ” and not “ Will we have loyal buyers? ” The feature the team had built was de-risking the wrong question. Always know what risk you ’ re eliminating, and then design the minimum functionality to measure whether you ’ ve overcome it.
  • Not every startup goes through things in the exact same order, we get that. But we ’ve seen a lot of startups try and jump ahead and screw themselves. Often times with consumer applications they focus on viral growth and user acquisition before they know if what they’re doing is even going to work, if it’s Sticky. * Again, I think investors share some of the blame here because of the pressure for consumer applications to grow widly. And in some cases, even when they do, people don ’t believe it’s real -- they see something as a fad -- and so they won’t invest or continue to invest. It’s a catch 22 spot for entrepreneurs.
  • change to Moz
  • As you move through the stages of Lean Analytics, the KPI you ’ re trying to fix will shift. Here are some examples.
  • Lean analytics 40 minute intro

    1. 1. Upcoming Networking Events 1 Detailed Schedule and registrations as well as past session videos now available www.productleadership.in “5 things every Product Leader should know about UX July 20th, Bangalore Speaker: Jay, Head of User Experience Design Adobe “Webinar: Global Customer Insights from India Product Management – Can it be done? Aug 7th, Online Speaker: Muthu. R, Director Product Management, SAP Labs “5 ways in how Product Management is different in Agile July 25th, Pune Speaker: Dr. Adrian (Hong Kong), Faculty Institute of Product Leadership
    2. 2. Implementing Lean Analytics Ben Yoskovitz @byosko
    3. 3. 1111 2222 Basics of Analytics One Metric That Matters 3333 Lean Analytics Cycle What We’ll Cover
    4. 4. 1The Basics of Analytics
    5. 5. Analytics is the measurement of movement towards business goals.
    6. 6. In a startup, the purpose of analytics is to iterate to product/market fit before the money runs out.
    7. 7. http://www.flickr.com/photos/pseudonomad/5955268183/sizes/l/in/photostream/ WhatWhat’’s a good metric?s a good metric?WhatWhat’’s a good metric?s a good metric?
    8. 8. Good Metrics are: 1111 Understandable 4444 Behavior Changing 2222 Comparative Active Users vs. Active Users/month 3333 Ratio / Rate % Monthly Active Users
    9. 9. If it won’t change how you behave, it’s a bad metric. If a metric won’t change how you behave, it’s a http://www.flickr.com/photos/circasassy/7858155676/
    10. 10. http://www.flickr.com/photos/mattimattila/3822631755/ Types of MetricsTypes of MetricsTypes of MetricsTypes of Metrics
    11. 11. Warm and fuzzy. Cold and hard. Unstructured,Unstructured, anecdotal,anecdotal, revealing, hard torevealing, hard to aggregate.aggregate. Unstructured,Unstructured, anecdotal,anecdotal, revealing, hard torevealing, hard to aggregate.aggregate. Numbers and stats;Numbers and stats; hard facts but lesshard facts but less insight.insight. Numbers and stats;Numbers and stats; hard facts but lesshard facts but less insight.insight. Qualitative vs. Quantitative
    12. 12. Discover qualitatively. Prove quantitatively. Quantitative vs. qualitative data
    13. 13. Do hosts withDo hosts with professionalprofessional photography getphotography get more business?more business? Do hosts withDo hosts with professionalprofessional photography getphotography get more business?more business? Airbnb experiments...
    14. 14. Professional photography helps Airbnb’s business Gut instinct Concierge MVP 20 photographers in the field Test results Two to three times more bookings! Back to the beginning Use additional data to keep experimenting
    15. 15. 5,000 shoots / month in Feb. 2012
    16. 16. Historical metricHistorical metric that shows you howthat shows you how youyou’’re doing:re doing: reports the news.reports the news. Historical metricHistorical metric that shows you howthat shows you how youyou’’re doing:re doing: reports the news.reports the news. Number today thatNumber today that shows a metricshows a metric tomorrow:tomorrow: makesmakes the news.the news. Number today thatNumber today that shows a metricshows a metric tomorrow:tomorrow: makesmakes the news.the news. Try and get here.Start here. Lagging Leading vs.
    17. 17. 2The One Metric That Matters
    18. 18. Pick one metric that matters to your business right now.
    19. 19. The metric will change over time, but right now you need to FOCUS.
    20. 20. So how do you do it?So how do you do it?So how do you do it?So how do you do it? http://www.flickr.com/photos/horiavarlan/4290549806/sizes/l/in/photostream/
    21. 21. Your Business + Stage What business areWhat business are you in?you in? What business areWhat business are you in?you in? What stage areWhat stage are you at?you at? What stage areWhat stage are you at?you at? • E-Commerce • SaaS • Free Mobile App • 2-Sided Marketplace • Media • User-Generated Content • Empathy • Stickiness • Virality • Revenue • Scale
    22. 22. GROWTHRATEGROWTHRATEGROWTHRATEGROWTHRATE Lean Analytics Stages II’’ve found a real, poorly-met need that ave found a real, poorly-met need that a reachable market faces.reachable market faces. II’’ve found a real, poorly-met need that ave found a real, poorly-met need that a reachable market faces.reachable market faces. II’’ve figured out how to solve the problemve figured out how to solve the problem in a way they will adopt and pay for.in a way they will adopt and pay for. II’’ve figured out how to solve the problemve figured out how to solve the problem in a way they will adopt and pay for.in a way they will adopt and pay for. II’’ve built the rightve built the right product/features/functionality that keepsproduct/features/functionality that keeps users around.users around. II’’ve built the rightve built the right product/features/functionality that keepsproduct/features/functionality that keeps users around.users around. The users and features fuel growthThe users and features fuel growth organically and artificially.organically and artificially. The users and features fuel growthThe users and features fuel growth organically and artificially.organically and artificially. II’’ve found a sustainable, scalableve found a sustainable, scalable business with the right margins in abusiness with the right margins in a healthy ecosystem.healthy ecosystem. II’’ve found a sustainable, scalableve found a sustainable, scalable business with the right margins in abusiness with the right margins in a healthy ecosystem.healthy ecosystem. “Gates” needed to move forward EMPATHYEMPATHYEMPATHYEMPATHY STICKINESSSTICKINESSSTICKINESSSTICKINESS VIRALITYVIRALITYVIRALITYVIRALITY REVENUEREVENUEREVENUEREVENUE SCALESCALESCALESCALE
    23. 23. • Stage: Empathy / Stickiness • Model: E-Commerce • Eco-friendly prints of your photos • Originally tied specifically to Instagram and built a custom InstaOrder feature Jumping the gun on product development
    24. 24. Optimize for 1st time orders or repeat purchases? 2x transactions lower bounce rate sign-in goals increased with InstaOrder Click checkoutClick checkoutClick checkoutClick checkout Sign into PayPalSign into PayPalSign into PayPalSign into PayPal Confirmation pageConfirmation pageConfirmation pageConfirmation page Confirm orderConfirm orderConfirm orderConfirm order Back to PayPalBack to PayPalBack to PayPalBack to PayPal Authorize pre-Authorize pre- approved paymentsapproved payments Authorize pre-Authorize pre- approved paymentsapproved payments Success pageSuccess pageSuccess pageSuccess page without InstaOrder Click checkoutClick checkoutClick checkoutClick checkout Sign into PayPalSign into PayPalSign into PayPalSign into PayPal Confirmation pageConfirmation pageConfirmation pageConfirmation page Confirm orderConfirm orderConfirm orderConfirm order Success pageSuccess pageSuccess pageSuccess page
    25. 25. skip steps at yourskip steps at your own riskown risk skip steps at yourskip steps at your own riskown risk
    26. 26. Six sample business models • E-commerce • SaaS (freemium?) • Mobile app (gaming) • Two sided marketplace • Media • User generated content
    27. 27. The SaaS Customer Lifecycle Customer Acquisition Cost paidpaid directdirect searchsearch womwom inherent virality inherent virality VISITORVISITORVISITORVISITOR Freemium/trial offerFreemium/trial offerFreemium/trial offerFreemium/trial offer EnrollmentEnrollmentEnrollmentEnrollment UserUserUserUser Disengaged UserDisengaged UserDisengaged UserDisengaged User CancelCancelCancelCancel Freemium churn Engaged UserEngaged UserEngaged UserEngaged User Free user disengagement ReactivateReactivateReactivateReactivate CancelCancelCancelCancel Trial abandonment rate Invite OthersInvite OthersInvite OthersInvite Others Paying CustomerPaying CustomerPaying CustomerPaying Customer Reactivation rate Paid conversion FORMER USERSFORMER USERSFORMER USERSFORMER USERS User Lifetime Value ReactivateReactivateReactivateReactivate FORMER CUSTOMERSFORMER CUSTOMERSFORMER CUSTOMERSFORMER CUSTOMERS Customer Lifetime Value Viral coefficient Viral rate ResolutionResolutionResolutionResolution Support data Account CancelledAccount CancelledAccount CancelledAccount Cancelled Billing Info Exp.Billing Info Exp.Billing Info Exp.Billing Info Exp. Paid Churn Rate Tiering Capacity LimitCapacity LimitCapacity LimitCapacity Limit Upselling rate UpsellingUpsellingUpsellingUpselling DisengagedDisengagedDisengagedDisengaged DissatisfiedDissatisfiedDissatisfiedDissatisfied Trial OverTrial OverTrial OverTrial Over
    28. 28. One Metric That Matters. One Metric That Matters. How It All Comes Together The business youThe business you’’re inre inThe business youThe business you’’re inre in E-Com SaaS Mobile 2-Sided Media UCG Empathy Stickiness Virality Revenue Scale ThestageyouThestageyou’’reatreatThestageyouThestageyou’’reatreat
    29. 29. • Stage: Scale • Model: SaaS • SEO toolkit (product suite) • Reduced KPIs to focus on Net Adds Moz reduces the KPIs it tracks
    30. 30. If Net Adds:If Net Adds:If Net Adds:If Net Adds: Why & Next Steps:Why & Next Steps:Why & Next Steps:Why & Next Steps: Net Adds = “business health” indicator • Was a marketing campaign successful? • Were customer complaints lowered? • Was a product upgrade valuable? • Can we acquire more valuable customers? • What product features can increase engagement? • Can we improve customer support? • Are the new customers not the right segment? • Did a marketing campaign fail? • Did a product upgrade fail somehow? • Is customer support falling apart?
    31. 31. What’s your OMTM? Empathy Stickines s Virality Revenue Scale E- commerce SaaS Media Mobile app User-gen content 2-sided market Interviews; qualitative results; quantitative scoring; surveysInterviews; qualitative results; quantitative scoring; surveys Loyalty, conversion Loyalty, conversion CAC, shares, reactivation CAC, shares, reactivation Transaction, CLV Transaction, CLV Affiliates, white-label Affiliates, white-label Engagemen t, churn Engagemen t, churn Inherent virality, CAC Inherent virality, CAC Upselling, CAC, CLV Upselling, CAC, CLV API, magic #, mktplace API, magic #, mktplace Content, spam Content, spam Invites, sharing Invites, sharing Ads, donations Ads, donations Analytics, user data Analytics, user data Inventory, listings Inventory, listings SEM, sharing SEM, sharing Transaction s, commission Transaction s, commission Other verticals Other verticals (Money from transactions) Downloads, churn, virality Downloads, churn, virality WoM, app ratings, CAC WoM, app ratings, CAC CLV, ARPDAU CLV, ARPDAU Spinoffs, publishers Spinoffs, publishers (Money from active users) Traffic, visits, returns Traffic, visits, returns Content virality, SEM Content virality, SEM CPE, affiliate %, eyeballs CPE, affiliate %, eyeballs Syndication, licenses Syndication, licenses (Money from ad clicks)
    32. 32. 3The Lean Analytics Cycle
    33. 33. Follow the Lean model, and it becomes increasingly hard to lie, especially to yourself.
    34. 34. Instincts are experiments. Data is proof.
    35. 35. Identify a key business problem, pick the OMTM, and get started.
    36. 36. Pivot or give up Try again Success! Measure the results Make changes in production Design a test Hypothesis With data: find a commonality Without data: make a good guess Find a potential improvement Draw a line in the sand Pick the OMTM The Lean Analytics Cycle Draw a new line Did we move the needle?
    37. 37. Some interesting benchmarks Growth 5% / week (revenue or active users) Churn 2% / month Engaged visitors 30% monthly users 10% daily users Time on site 17 minutes Page load time < 5 seconds CLV:CAC 3:1 Mobile file size < 50MB Free to paid 2% of free users
    38. 38. byosko@gmail.com @byosko ORDER! follow me. instigatorblog.com leananalyticsbook.com subscribe. email me. Thank you!
    39. 39. 39 Have an idea? Have a suggestion on the speaker/topics? Want to know about product events? LinkedIn Group “Adaptive Marketing” engage@productleadership.in www.productleadership.in

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