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Analytics for Startups
Lars Lofgren - April 2014
Hit me up
@larslofgren
1 The data problems that startups face
We’ll cover…
2 Gateway metrics
3 4 gateways and the metrics for each
#KISSwebinar
I’m not going to spend
any time on Google
Analytics.
How healthy is this business?
1 MRR, Churn, LTV, acquisition cost
It’d be great to track metrics like these:
2 Virality, DAU, MAU
3 Average order value, repurchase rate
#KISSwebinar
4 Funnels and conversions
But you don’t have any data yet
Your data is in a constant rate of decay
You data is messy
Use metrics that measure
your biggest problem.
Ignore the rest.
Gateway
Metrics
When picking metrics, always ask yourself:
What’s my biggest constraint right
now and which metric will tell me
if I’m making progress?
You need to do the right
things in the right order.
Gateway #1: Is your idea any good?
Your main constraint:
Getting anyone to care about your
idea.
Your main metric:
Get someone to pay or use your
product regularly.
Bad metrics for this gateway:
1 Asking people if they’ll pay
2 AdWords clicks
3 Beta or waiting list signups
4 Traffic
Gateway #2: Is your product good enough?
Your main constraint:
Having a product that’s good
enough to build a business on.
Your main metric:
Ask 500 users the Product/Market
Fit Question
What is the P/M Fit Question?
1 Very disappointed
2 Somewhat disappointed
3 Not disappointed (it isn’t really that useful)
How would you feel if you could no
longer use [your product]?
Your goal for the P/M Fit Question:
At least 40% of users should say
“Very disappointed.”
*Sean Ellis and Hiten Shah get credit for this one.
How do you get to the first 500 users/customers?
Hustle.
The P/M Fit Question isn’t
perfect, verify with a
retention metric.
Gateway #3: Can you grow?
Your main constraint:
Acquiring customers consistently
from at least one channel.
You have plenty of options to choose from:
1 Inbound (Google, Content, Social)
2 Paid (PPC, Affiliates)
3 Virality (Invites, Referrals)
Pick just one to start
Work on your channel for at least 3
months. Assume it’ll work and get
the resources needed to execute.
Your main metrics:
Your main business metric and
acquisition funnel.
Main business metrics:
1 SaaS: Monthly Recurring Revenue
2 Ecommerce: Monthly Revenue
3 Consumer Tech: Monthly Active Users
SaaS Funnel
Ecommerce Funnel
Consumer Tech Funnel
Why not cost per acquisition or lifetime value?
You have no idea how much it
costs to acquire customers or how
much they’ll spend (yet).
Gateway #4: Do you have a stable model?
Your main constraint:
In order to keep scaling, you need
a stable model for your business.
Your main metrics:
Depends entirely on what business
model you have.
The SaaS Model
1 LTV is at least 3x acquisition cost
2 Recover acquisition cost within 12 months
3 Get monthly churn below 2%
The Ecommerce Model
1
2
3
It’s all about profit margin.
The Consumer Tech Model
1 Virality > 1
2 Usage 3 out of 7 days
3 30% of users active day after signup
4 Organic growth of 100s signups/day.
5 Clear path to 100,000+ users
*Andrew Chen’s “Zero to Product/Market Fit”
Find someone in your
industry that knows the
key benchmarks.
Finally, get serious with data.
If you have a sales team,
pile data into your CRM.
If consumer tech, do
everything in-house.
Google Analytics plus an
internal database will
take you far.
Start with constraints,
hack together what you
need to measure them.
How to get data you really need:
1 One team owns data quality.
2 Hire a data engineer.
3 Clean up and integrate your data.
4 Use customer analytics.
5 Build a Growth Team.
Q&A Time!
Lars Lofgren
@larslofgren
llofgren@kissmetrics.com

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