Mike has grown FreshBooks from a one-man startup to a 30-person Web app company. He's going to teach you six essential terms that you need to understand in order to succeed with your app: 'Lifetime Value', 'Average Revenue per User', 'Churn', 'Gross Cost per Acquisition', 'Sales Funnel' and 'Customer Vintages'. He's then going to give an example with a real-life case study. This is one you can't afford to miss.
9. Now for Web Apps!
Recurring billing managed inside your app
Accept credit cards inside your own app
Real-Time payment notifications ( WEBHOOKS! )
http://developers.freshbooks.com/
10. Users Over 1,000,000 Users Since May 2004
Month
12. Key Metrics for Web Apps
• “How much do we spend to get a customer?”
• Cost Per Acquisition ($) CPA
• “How much do our customers pay us?”
• Average Revenue Per User ARPU
• “At what rate are customers cancelling?”
• Churn (%) Churn
• “How much is a customer worth over time?”
• Lifetime Value Per Customer ($) LTV
14. Why is not enough.
Less accurate
Less flexible (can’t slice and dice)
Can’t correlate to app usage/events
Too important to outsource
Tied to a vendor
Besides…It’s easy!
15. Three systems to rule them all.
Cookie Tracking
DB Storage
Reporting
17. What to Track ( barebones ) and why.
Referring Domain ( who sent them here? )
Ref URL ( what are their interests? )
Landing URL ( campaign, partner, ad unit? )
18.
19.
20.
21. Data Base Storage
Add a
table to
your
Database
Store
alongside
user
profile
31. Case Study Assumptions
Web Application
Business model is “Freemium”
$10,000 per month marketing budget
6 month campaign
32. Gross New Customers Acquired by Month
100
75
50
25
0
Jan Feb Mar Apr May Jun
33. Gross New by Marketing Spend (Vintages)
100
75
50
25
0
Jan Feb Mar Apr May Jun
34. What we learned
100 customers per vintage
CPA of $100 ($10,000/100)
6 month close <- MASSIVE INSIGHT!!!
50% / 25% / 10% / 5% / 5% / 5%
What else could we know?
ARPU, LTV
35. Parting Thoughts on Flight Systems
Too important to outsource
It’s about data collection, not reporting
It’s easy
37. Questions? Bring em!
Twitter: @mikemcderment
Email: mike@freshbooks.com
Check out FreshBooks if you are building a web app!
http://developers.freshbooks.com