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KPIs & Metrics - Innlab TN 2013

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Slide KPIs & Metrics - Innlab TN 13-03-2013

KPIs & Metrics - Innlab TN 2013

  1. 1. KPIs & metrics @matteopanfilo matteopanfilo@gmail.com InnLab TN 2013
  2. 2. About meWhat I’ve done until 2012:I studied economics at LUISSI wrote a thesis on the VCI published a research on the VC that has ended up on the IlSole24OreI won InnovAction Lab 2011I went to Silicon ValleyI worked @ Principia SGR (8 of the last investments ≅ 15mln)What Im doing since the beginning of 2013I work @ Boox Venture IncubatorI’m a member of several professional associations promoting entrepreneurshipI continue research activitiesI continue to study (a lot) 1
  3. 3. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate5. A/B test6. Source channels, email/DEM7. CRMConclusion 2
  4. 4. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate5. A/B test6. Source channels, email/DEM7. CRMConclusion 3
  5. 5. 1. Different businesses, different metrics Airbnb Number of house with HD picsFiendfinder Viral factor (K) Blogo Pages per user 6sicuro.it Generated quotes (lead) Privalia Cost per shoting 4
  6. 6. Hundreds of different metrics PV Page Views UV Unique Visitors CPM Cost per Thousand BR Bounce Rate CTR Click Trough Rate CPR Cost Per Registration CPL Cost Per Lead CPA Cost Per Acquisition (or Cost per Action) CPC Cost Per Click LTV Lifetime Value CR Conversion Rate Churn Churn Rate 5
  7. 7. Scalability (basic formulas) CPA < LTV “LTV is the projected profit that a customer will generate during his lifetime” CPC Depends on the customer satisfaction, CRM, biz model, %CR etc General CPA = $ Adv cost / # Customers acquired CPA based on CPM campaign: (CPM x Impressions /1000)/ # Customer acquired LTV formulas •  LT Revenues: # Purchases x $ Avg. basket •  LT Revenues: $ Avg. basket / % Churn rate •  LT Gross Profit: # Purchases x $ Avg. basket x % gross profit margin •  LT Gross Profit: $ Avg. basket / % Churn rate x % gross profit margin •  LT DCF: ($ Avg. basket margin x Life Expectancy) x (Customer retention rate / 1 + discount rate – Customer retention rate) CPA = Cost Per Acquisition (or Cost per Action), CPC = Cost per Click, LTV = Lifetime Value LTV Starbucks: http://blog.kissmetrics.com/wp-content/uploads/2011/08/calculating-ltv.pdf LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/ 6
  8. 8. Scalability (basic formulas) CPA < LTV Small numbers, huge impact: CPC CPC = 0,4€ CPC = 0,4€ %CR %CR = 4% %CR = 2,5% CPA = 10€ CPA = 16€ CPA = Cost Per Acquisition (or Cost per Action), CPC = Cost per Click, LTV = Lifetime Value LTV Starbucks: http://blog.kissmetrics.com/wp-content/uploads/2011/08/calculating-ltv.pdf LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/ 7
  9. 9. Scalability, make it happen! Note: CAC = CPA 8 Source: David Skok - http://www.forentrepreneurs.com/startup-killer/
  10. 10. Scalability, how you can do it? Note: CAC = CPA 9 Source: David Skok - http://www.forentrepreneurs.com/startup-killer/
  11. 11. Conversion CPC CPA = %CRDefine what are you looking to measure!i.e.: define who you consider a customer; define the difference betweenCPL and CPA (if there is)What’s the meaning of conversion rate?What’s the meaning of funnel? 10
  12. 12. The Funnel .. <offline mode> 1.  A lot of people see the adv wall 2.  Some people recognize it walking in front of a sunglasses shop 3.  Some of them decide to go in and try them 4.  One of them want to buy it 11
  13. 13. The Funnel .. <online mode - ie. ecommerce> 1.  I paid to have some users on my website 100 2.  They arrive on the landing page50% 50 3.  They leave their email 4.  They put one product in the basket 40% 20 5.  They start the checkout process 5 40% 6.  They complete all the payment info 3 38% 7.  They pay 1 1% 33% 12
  14. 14. The Funnel .. <online mode - ie. ecommerce> Some drivers: Paid users •  Pictures 100 Landing page •  Copy/text button •  Info required 50 Leave the email •  Password •  Email confirm Product on the basket •  Add button 20 •  Related product •  Info required 5 Checkout process •  Shipping days •  Delivery cost 3 Payment info •  Payment gateway •  Invoice/legal info •  CC circuit 1 They pay •  PIN request 13
  15. 15. Why measure the funnel You need to identify the bottleneck and solve it! Examples: -  Pictures -  Checkout process -  Payment gateway 14
  16. 16. The Funnel .. (flash sales ecommerce) Unique users Measure your CPL/CPA! Users that complete The CPA initially refers only to the form the traffic resulting from paid campaigns is the main KPI to be monitored in an Registered users ecommerce / SaaS, but in Users that the medium term it should arrive till be monitored along with the checkout metrics of the traffic that 1%-0,5% came from other channels Paying users (email, facebook page, etc. ) 15
  17. 17. Customer journey Awareness Consideration Conversion Loyalty Desire Information Choiche CustomersUsers Source: IAB Seminar 2013, Ilaria Zampori Managing Director QUISMA, Individual Conversion Attribution 16 http://www.iabseminar.it/wp-content/uploads/2013/02/9_QUISMA.pdf
  18. 18. Customer journey Awareness Consideration Conversion Loyalty Desire Information Choiche instruments instruments instrumentsSource: IAB Seminar 2013, Marco Caradonna Simple Agency Dynamic Customer Journey 17http://www.slideshare.net/mcarado/4-iab-seminar-performance-2013-simple-agency
  19. 19. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis, measure customer behaviour4. Churn rate5. A/B test6. Source channels, email/DEM7. CRMConclusion 18
  20. 20. Cohort Analysis referral source analysis “A cohort is a group of people who share a common characteristic over a certain period of time” Customer spending by referral source Direct Facebook Google Blog 19 Source: www.cohortanalysis.com/
  21. 21. Cohort Analysis time-period analysisHow much revenue do the users that I’ve acquired on the second monthsgenerate?How many users that I’ve acquired on the second month will I probably stillhave on the ninth month? Time period 1 2 3 4 5 6 7 8 9 10 11 12 1 513 410 328 263 210 168 134 108 86 69 55 44 2 923 739 591 473 378 303 242 194 155 124 99 3 1.258 1.007 805 644 515 412 330 264 211 169 4 1.537 1.230 984 787 630 504 403 322 258 5 1.777 1.421 1.137 910 728 582 466 373 6 1.987 1.590 1.272 1.017 814 651 521Time-period cohorts 7 2.178 1.742 1.394 1.115 892 714 8 2.355 1.884 1.507 1.206 965 9 2.524 2.020 1.616 1.292 10 2.689 2.151 1.721 11 2.852 2.282 12 3.017 paying users 513 1.334 2.325 3.398 4.495 5.583 6.644 7.671 8.661 9.618 10.547 11.454 20 Source: andrewchenblog.com
  22. 22. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate, do not throw the job done5. A/B test6. Source channels, email/DEM7. CRMConclusion 21
  23. 23. Churn Rate Your churn rate is the amount of customers or subscribers who cut ties with your service or company during given time period. These customers have “churned”Recurring revenues model Traditional Ecommerce # Customers who has not made a # Subscribers lost purchase in 90 days* = % Churn rate = % Churn rate# Starting subscribers # Starting active customers * it depend on business model and offer 22 Source: www.churn-rate.com
  24. 24. Optimize..1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate Analyse   Iterate Change Learning process Consolidate Learn 23
  25. 25. Why you need to optimize..•  You have 0-8 seconds to make a compelling headline and landing page. After 8 seconds, the majority of visitors leave.•  Approximately 96% of visitors that come to your website are not ready to buy.•  The more landing pages you have, the more leads you are likely to get.•  Product videos can increase purchases of the product by 144%.•  A 1 second delay in your site speed can result in a 7% reduction in conversions.•  A/B testing is becoming the preferred method that has brought a lot of the companies the most success. Source: http://blog.kissmetrics.com/what-converting-websites-do/ 24
  26. 26. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate5. A/B test, what do customers prefer?6. Source channels, email/DEM7. CRMConclusion 25
  27. 27. A/B test…•  Elaborate 2 different versions (text, colors, font, layout, etc)•  Propose versions to the target sample (with the same content)•  Measure conversion rate•  Profile users based on conversion rates (male/female, addicted, etc)•  (Visualize where the users click on the pages) The same process could be applicable to web pages, email/DEM, games dynamics, etc! 26
  28. 28. Headline.. Original +30% +15% Fonte: http://37signals.com/svn/posts/1525-writing-decisions-headline-tests-on-the-highrise-signup-page 27
  29. 29. Layout.. 28
  30. 30. Layout.. 29
  31. 31. Layout.. Is not always a good idea to write more… 30
  32. 32. A/B test are easy but..Consider a site that has 10,000 visitors per month and has a 5 percent conversionrate. The table below shows how long it will take to run a “conclusive” test (95percent confidence) based on how much the change impacts conversion rate. Source: http://techcrunch.com/2013/01/12/current-conversion-rate-and-desired- confidence-interval-will-help-you-avoid-analysis-paralysis-stop-running-stupid-tests/ 31
  33. 33. Other tips..•  Badging up to +50%•  Message consistency up to +100%•  International website up to +100%•  Email sign-up up to +1.000% Fonte: http://www.slideshare.net/Emerce/emerce-performance-bryan-eisenberg 32
  34. 34. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate5. A/B test6. Source channels, email/DEM7. CRMConclusion 33
  35. 35. Email & DEMEmail could become your first traffic source, improve the LTV of yourcustomers, decrease your customer acquisition cost !1.  Choose & Optimize email form2.  Choose & Optimize password request3.  Choose the confirmation process4.  Choose emails’ arguments and style5.  Choose & Optimize email subjects6.  Metrics, metrics, metrics: Drivers: •  Open rate/Unique OR Ø  Subject, time •  Click rate Ø  Content •  Click-through-rate Ø  Layout •  Delivery time Ø  All of the above •  List growth Ø  Too many •  Unsubscribe rate (or churn rate) Ø  Frequency & content •  Spam complaint rate Ø  Too many 34
  36. 36. Email & DEM 35 Source: http://retail-analytics.quora.com/Email-Open-Click-Through-Analytics-from-over-80-Billion-Emails
  37. 37. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate5. A/B test6. Source channels, email/DEM7. CRMConclusion 36
  38. 38. Interact with customers… People now expect the same—if not better— level of service from online storefronts and service channels as they do from a visit to a retail store or a phone conversation with an agent. Source: “ E mail Customer Service in North American Small and Medium Businesses” by BenchmarkPortal, 2005 37
  39. 39. Interact with customers… Source: Communication Preference, Live Chat Effectiveness, A Survey of Internet Shoppers 2012 38
  40. 40. Interact with customers… 83% of small and medium-sized businesses responded with inaccurate or incomplete answers. 41% of consumers expect an e-mail response within six hours. Only 36% of retailers responded that quickly. Source: “Email Customer Service in North American Small and Medium Businesses” by BenchmarkPortal, 2005, Source: Forrester Research Inc., 2008 39
  41. 41. Interact with customers…“Customer experience quality could result in a swing of $184 million for a large Internet retailer. Source: Forrester Research Inc., 2008 40
  42. 42. The power of great video… Video: http://www.youtube.com/watch?feature=player_embedded&v=ZUG9qYTJMsI 41
  43. 43. Agenda1. Metrics & KPIs2. Funnel3. Cohort analysis4. Churn rate5. A/B test6. Source channels, email/DEM7. CRMConclusion 42
  44. 44. Recap & useful tools1. Metrics, measure and understand your KPIs2. Funnel, know the steps to improve your conversion3. Cohort analysis, analyse customer behaviour4. Churn rate, do not throw the job done5. A/B test, what do customers prefer?6. Source channels, email/DEM still a very interestingchannel7. CRM, interact and learn from your customers - Mixpanel -  Jirafe free -  Woopra -  Kissmetrics -  RJ metric -  Geckoboard 43
  45. 45. My 2 centsDo not think that doing a startup is a game.Do not think about raising money, but think of creating aproduct and to have a vision for the next 10 years.Read up and study before taking any decisions, there is ahuge amount of information online, just know what to lookfor. 44
  46. 46. My sources•  Steve blank tools (www.steveblank.com/tools)•  Avinash Kaushik (www.kaushik.net)•  Quora (follow Matthew Caroll)•  Slideshare (xerox, 500startups, etsy)•  Techcrunch•  Angel.co•  Italian Startup Scene•  Indigeni Digitali•  Startupnumbers.com ;) 45
  47. 47. Must read/view:•  Blog etsy (http://mcfunley.com/)•  Blog Fabrice Grinda•  Blog fab.com•  Blog google•  Blog a16z.com•  Foundat.io/n•  ecorner.stanford.edu•  avc.com•  Angel.co 46

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