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Alistaire croll lean analytics - montreal lean startup circle - september 2018
The document discusses lean analytics within the context of startups, emphasizing the importance of data-driven decision-making to achieve product/market fit. It covers various metrics and analytical methods, such as A/B testing and cohort analysis, which can inform strategies for customer acquisition, retention, and revenue generation. Additionally, it highlights the significance of identifying a single key performance indicator (KPI) to maintain focus in a startup environment.
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Alistaire croll lean analytics - montreal lean startup circle - september 2018
- 1. Lean Analytics, the goodbits. Lean Startup Circle - Sept 18, 2018 Alistair Croll @acroll
- 3. Steve Blank says “Anorganization formed to search for a sustainable, repeatable business model.”
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- 5. Everyone’s idea is thebest right? People love this part! (but that’s not always a good thing) This is where things fall apart. No data, no learning.
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- 10. What’s the biggest problem in ahair salon?
- 11. The empty chair. Knowingthis, how might you change the client/customer relationship?
- 12. How Lean UXdid it
- 13. Analytics is themeasurement of movement towards your business goals.
- 14. In a startup,the purpose of analytics is to iterate to product/market fit before the money runs out.
- 15. The simplest rule bad metric. If a metricwon’t change how you behave, it’s a h"p://www.flickr.com/photos/circasassy/7858155676/
- 16. Metrics help youknow yourself. Acquisition Hybrid Loyalty 70% of retailers 20% of retailers 10% of retailers You are just like Customers that buy >1x in 90d Once 2-2.5 per year >2.5 per year Your customers will buy from you Then you are in this mode 1-15% 15-30% >30% Low acquisition cost, high checkout Increasing return rates, market share Loyalty, selection, inventory size Focus on (Thanks to Kevin Hillstrom for this.)
- 17. MayAprMarFeb Slicing and dicingdata Jan 0 5,000 Activeusers Cohort: Comparison of similar groups along a timeline. (this is the April cohort) A/B test: Changing one thing (i.e. color) and measuring the result (i.e. revenue.) Multivariate analysis Changing several things at once to see which correlates with a result. ☀ ☁ ☀ ☁ Segment: Cross-sectional comparison of all people divided by some attribute (age, gender, etc.) ☀ ☁
- 18. Which of thesetwo companies is doing better?
- 19. January FebruaryMarch April May Rev/customer $5.00 $4.50 $4.33 $4.25 $4.50 Is this company growing or stagnating? Cohort 1 2 3 4 5 January $5 $3 $2 $1 $0.5 February $6 $4 $2 $1 March $7 $6 $5 April $8 $7 May $9 How about this one?
- 20. January FebruaryMarch April May Rev/customer $5.00 $4.50 $4.33 $4.25 $4.50 Is this company growing or stagnating? Cohort 1 2 3 4 5 January $5 $3 $2 $1 $0.5 February $6 $4 $2 $1 March $7 $6 $5 April $8 $7 May $9 How about this one?
- 21. Cohort 1 23 4 5 January $5 $3 $2 $1 $0.5 February $6 $4 $2 $1 March $7 $6 $5 April $8 $7 May $9 Averages $7 $5 $3 $1 $0.5 Look at the same data in cohorts
- 22. Eric’s three enginesof growth Virality Make people invite friends. How many they tell, how fast they tell them. Price Spend money to get customers. Customers are worth more than they cost. Stickiness Keep people coming back. Approach Get customers faster than you lose them. Math that matters
- 23. Dave’s Pirate Metrics AARRR Acquisition Howdo your users become aware of you? SEO, SEM, widgets, email, PR, campaigns, blogs ... Activation Do drive-by visitors subscribe, use, etc? Features, design, tone, compensation, affirmation ... Retention Does a one-time user become engaged? Notifications, alerts, reminders, emails, updates... Revenue Do you make money from user activity? Transactions, clicks, subscriptions, DLC, analytics... Referral Do users promote your product? Email, widgets, campaigns, likes, RTs, affiliates...
- 24. Stage EMPATHY I’ve found areal, poorly-met need that a reachable market faces. STICKINESS I’ve figured out how to solve the problem in a way they will keep using and pay for. VIRALITY I’ve found ways to get them to tell their friends, either intrinsically or through incentives. REVENUE The users and features fuel growth organically and artificially. SCALE I’ve found a sustainable, scalable business with the right margins in a healthy ecosystem. Gate Thefivestages
- 25. Six business modelarchetypes. E-commerce SaaS Media Mobile app User-gen content 2-sided market The business you’re in
- 26. (Which means eye chartslike these.) Customer Acquisition Cost paid direct search wom inherent virality VISITOR Freemium/trial offer Enrollment User Disengaged User Cancel Freemium churn Engaged User Free user disengagement Reactivate Cancel Trial abandonment rate Invite Others Paying Customer Reactivation rate Paid conversion FORMER USERS User Lifetime Value Reactivate FORMER CUSTOMERS Customer Lifetime Value Viral coefficient Viral rate Resolution Support data Account Cancelled Billing Info Exp. Paid Churn Rate Tiering Capacity Limit Upselling rate Upselling Disengaged DissatisfiedTrial Over
- 27. Model + Stage= One Metric That Matters. One Metric That Matters. The business you’re in E-Com SaaS Mobile 2-Sided Media UCG Empathy Stickiness Virality Revenue Scale Thestageyou’reat
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- 30. In a startup,focus is hard to achieve.
- 31. Having only onemetric addresses this problem.
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- 33. Metrics are likesqueeze toys. http://www.flickr.com/photos/connortarter/4791605202/
- 34. Empathy Stickiness Virality Revenue Scale E- commerce SaaS Media Mobile app User-gen content 2-sided market Interviews; qualitativeresults; quantitative scoring; surveys Loyalty, conversion CAC, shares, reactivation Transaction, CLV Affiliates, white-label Engagement, churn Inherent virality, CAC Upselling, CAC, CLV API, magic #, mktplace Content, spam Invites, sharing Ads, donations Analytics, user data Inventory, listings SEM, sharing Transactions, commission Other verticals (Money from transactions) Downloads, churn, virality WoM, app ratings, CAC CLV, ARPDAU Spinoffs, publishers (Money from active users) Traffic, visits, returns Content virality, SEM CPE, affiliate %, eyeballs Syndication, licenses (Money from ad clicks)
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- 36. Drawing lines inthe sand
- 37. A company losesa quarter of its customers every year. Is this good or bad?
- 38. Baseline: 2-5% monthly churn •The best SaaS get 1.5% - 3% a month. They have multiple Ph.D’s on the job. • Get below a 5% monthly churn rate before you know you’ve got a business that’s ready to grow (Mark MacLeod) and around 2% before you really step on the gas (David Skok) • Last-ditch appeals and reactivation can have a big impact. Facebook’s “don’t leave” reduces attrition by 7%.
- 39. Not knowing whatnormal is makes you do stupid things.
- 40. Who is worthmore? Today A Lifetime: $200 Roberto Medri, Etsy B Lifetime: $200 Visits
- 41. The Lean Analyticscycle
- 42. Draw a newline Pivot or give up Try again Success! Did we move the needle? 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 linePick a KPI
- 43. Do AirBnB hosts getmore business if their property is professionally photographed?
- 44. Gut instinct (hypothesis) Professionalphotography helps AirBnB’s business Candidate solution (MVP) 20 field photographers posing as employees Measure the results Compare photographed listings to a control group Make a decision Launch photography as a new feature for all hosts
- 45. 5,000 shoots permonth by February 2012
- 46. Hang on asecond.
- 47. Gut instinct (hypothesis) Professionalphotography helps AirBnB’s business SRSLY?
- 48. Draw a newline Pivot or give up Try again Success! Did we move the needle? 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 linePick a KPI
- 49. “Gee, those houses thatdo well look really nice.” Maybe it’s the camera. “Computer: What do all the highly rented houses have in common?” Camera model. With data: find a commonality Without data: make a good guess
- 50. (No good deedgoes unpunished.)
- 51. Pic by Twodollaon Flickr. http://www.flickr.com/photos/twodolla/3168857844Pic by Twodolla on Flickr. http://www.flickr.com/photos/twodolla/3168857844
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- 53. Once, a leaderconvinced others in the absence of data.
- 54. Now, a leaderknows what questions to ask.
- 55. Thanks! • Twitter: @acroll •LinkedIn: linkedin.com/in/alistaircroll • Mail: acroll@gmail.com • Web: solveforinteresting.com • Medium: https://medium.com/@acroll • Events: pandemon.io, strataconf.com, startupfest.com • Books: leananalyticsbook.com, tiltthewindmill.com
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- 57. Maybe they don’tlove you like they said they do. N Your offering doesn’t make them want to brag or their contact isn’t really a friend N Advocates can’t learn & convey your message easily N They don’t trust you entirely N Woohoo! Scalable, viral, explainable product! Y Get a meeting Y Grab the phone Y They pitch it Y Call them now? Y Intro to a friend? Interview