Metrics that Matter Poornima Vijayashanker
EIR @ 500 Startups April 30, 2014 1

• What are metrics and
analytics • Methods of collecting metrics • Types of metrics • One metric that matters Agenda 2

What are metrics?
3

A business metric is any
type of measurement used to gauge some quantifiable component of a company’s performance such as ROI, churn rate, etc. “ ” 4

“ ” Analytics is the
discovery and communication of meaningful patterns in data. 5

Why do we need analytics
& metrics? 6

Uncertainty.
7

A startup is an experiment.
8

Experiments needs a hypothesis &
results! 9

Vanity metrics.
10

Almost anything you read on
TechCrunch. 11

We send out 10M emails
daily! We received 1M likes overnight! ”“ “ ” 12

What are good
metrics?
13

1. Comparative 2. Understandable 3.
Ratio 14

What will I do differently
based on this information? - Lean Analytics ” “ 15

Total sign ups - Vanity
Metric vs. Total active user - Actionable Metric 16

Qualitative vs. Quantitative
17

Sometimes you have to pick
up the phone! 18

KPIs: Key Performance Indicator
19

Leading vs. Lagging
20

Cohort A/B Multivariate Similar groups
over time. Lots of data. Testing all variables at once. 21

January February March April May
Total Customers 1,000 2,000 3,000 4,000 5,000 Avg Revenue Per Customer $5.00 $4.50 $4.33 $4.25 $4.50 Figure 2-1 from Lean Analytics. Average revenue for 5 months as we add features, and refine product. 22

What is this data telling
us? 23

Cohort Analysis Month of UseMonth
of UseMonth of UseMonth of UseMonth of Use Cohort 1 2 3 4 5 January $5.00 $3.00 $2.00 $1.00 $0.50 February $6.00 $4.00 $2.00 $1.00 March $7.00 $6.00 $5.00 April $8.00 $7.00 May $9.00 Averages $7.00 $5.00 $3.00 $1.00 $0.50 Figure 2-3 from Lean Analytics. Cohort Analysis of revenue data. Horizontal axis are cohorts (e.g. January cohort). Spending less initially. Spending increases. 24

AARRR
25

Marketing Metrics Product Metrics Customer
Metrics Pricing Metrics 26

Marketing Metrics Product Metrics Customer
Metrics Pricing Metrics 27

website Need to figure out
appropriate metric for each. e-mail campaigns offline social media Market Channels 28

Possible Reach in Channel Actual
Reach Sign Up for Trial Active Paying Long Term Paying Funnel per Channel 29

Marketing Metrics Product Metrics Customer
Metrics Pricing Metrics 30

Sign up for product Try
out product Actively use product Convert to Paid Refer more users Funnel for Product 31

Funnel depends on type of
product. 32

Services that are used constantly
but with a specific purpose. Daily 33

Frequently used products with a
number of use cases. Daily 34

Less frequently used product with
a specific use case. Yearly? Possibly monthly. 35

Frequency of use (engagement), use
case, and appeal impact adoption. 36

What features trigger
conversions?
37

How can you create an
experience that will set off those triggers? 38

39

1. Understand place of features
in your product. 2. Look at the frequency of their usage. 3. Does one feature lead to the usage of another? 4. How might you constrain a user’s experience or provide a certain workflow to adopt Feature X? 5. Can issues reported or enhancements requested be monetized? 40

Marketing Metrics Product Metrics Customer
Metrics Pricing Metrics 41

•# of customers •Recency •Retention
Rate (churn rate) •LTV (lifetime value) •Customer Acquisition Costs •Customer Profitability •Net Promoter Score 42

•Prospects •First-time Buyers •Early Repeat
Buyers •Core Customers •Core Defectors 43

One metric that matters.
44

• Most important question you
have. • Draw a line. • Focuses entire company. • Encourages a culture of experimentation & small failures. 45

• How many new customers
do you need? • How many new customers per week (per acquisition channel) do you think define a level of success? • Level of success being that which gets you to the next stage. 46

Take a snapshot today! Marketing
& product. 47

$0 $1K $5K $10K $10K
$100K Marketing activities change. Customer costs change. 48

Appendix.
49

• What are metrics and
analytics • Methods of collecting metrics • Types of metrics • One metric that matters Review 50

• E-Commerce Site • Get
to shopping cart. • Reduce abandonment! • SaaS • Monthly subscription • Conversion v. cancellation rate • Marketplace • transaction fee • connecting buyers & sellers • Mobile App • discovery • in-app purchases • upgrading to paid app • Media • engagement with content Metrics based on business model 51