The document outlines a metrics-driven marketing strategy focusing on customer acquisition through understanding customer lifecycle and critical conversion points. It emphasizes the importance of measuring and refining conversion metrics, with advice for founders, product managers, and marketers to prioritize channels based on volume, cost, and conversion. Additionally, it presents three marketing scenarios for different consumer websites, highlighting respective challenges and strategic considerations.

1. Metrics-Driven Marketing Strategy (+ a little Product Strategy too) Dave McClure Visiting Lecturer Stanford Facebook Class (CS377W) 11/15/07

2. Summary Marketing Plan / Strategy = Target Customer Acquisition Channels 3 Important Factors = Volume, Cost, Conversion Focus on conversion to target customer lifecycle actions Measure as deep down the conversion funnel as possible Estimate Customer Lifecycle, Conversion, Revenue Potential Hypothesize Customer Lifecycle & Critical Conversion Points Estimate Conversion , Revenue Potential when designing marketing plan Understand “Annual Rev. Per User” (ARPU) & “Customer Lifetime Value” (CLV) Match Marketing Channel Costs to Customer Revenue Potential Design channels that costs <20-50% of target ARPU / CLV *NOTE: “Cost” has multiple meanings actual dollars marketing costs product development time & resources time profit vs cashflow

3. Agenda Quick Review of Pirate Metrics Example Mktg Channels Brainstorm 3 Scenarios

4. Customer Lifecycle: 5 Steps A cquisition : users come to the site/page/app from various channels A ctivation : users enjoy 1 st visit: &quot;happy&quot; user experience R etention : users come back, visit site multiple times R eferral : users like product enough to refer others R evenue : users conduct some monetization behavior AARRR!

5. Facebook App / User Conversion Your App 3. RETENTION Emails Feeds, Profiles 4. REFERRAL Passive: Feeds & Profiles Active: Initial App Invites Invites App Directory Feeds App Cross-Marketing Profile Ads 5. Revenue $$$ Ads, Lead Gen, Subscriptions, etc Canvas Pages App Cross-Marketing 2. Activation CTA, Copy & Graphics 1. ACQUISITION

6. Conversion Dashboard (example below; customize for your use) $2 3% Email Open / RSS view -> Clickthru Retention $10 1% Refer 1+ users who activate Referral $3 2% Refer 1+ users who visit site Referral $5 2% Repeat Visitor (3+ visits in first 30 days) Retention $25 1% User generates break-even revenue Revenue $3 2% Acct Signup (includes profile data) Activation $1 5% Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit) Activation User generates minimum revenue Happy 1 st Visit (views X pages, stays Y sec, Z clicks) Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks) Visit Site (or landing page, or external widget) User Status $5 2% Revenue $.25 30% Activation $.05 70% Acquisition $.01 100% Acquisition Est. Value Conv % Category

7. Questions / Focus by Role Founder / CEO: What do you measure & why? Who’s responsible? Product Manager / Developer: How do you choose what to build? Marketing What channels do you choose / who do you target?

8. Founder/CEO Q: What metrics do you watch? WHY? Who’s responsible? Hypothesize Customer Lifecycle & Refine Choose 5-10 conversion steps Less, not More is better Q: minimal necessary & sufficient metrics rqd to make decisions? can you simplify to top 3? just 1? Delegate each Metric to someone (not you) to OWN Focus on conversion improvement; measure & iterate NOTE: if you measure something, it should tell you something… Use “Is it Actionable?” test to determine whether or not to track a metric

9. Product Q: how do you choose what to build (or NOT build) ? Choose features for conversion improvement 80% on existing feature optimization 20% on new feature development Just guess, then A/B test … A LOT Measure conversion improvement Rinse & Repeat

10. Marketing Q: what channels / who do you market to? Design & Test Multiple Mktg Channels Select & Focus on Channels with: High Volume High Conversion Low Cost Measure *deeper* down the conversion funnel, not just to website / landing page Segment & Select channels & customers by conversion @ deepest possible level (ideally $$$)

11. Agenda Quick Review of Pirate Metrics Example Mktg Channels Brainstorm 3 Scenarios

12. Example Marketing Channels disclaimer: these estimates of vol, cost/user, time & effort are highly subjective & very dependent on your specific business med/hi (reports, co-branding) Med/hi med/hi (capture metrics, generate reports) med-high depends on partner, size of customer base, conversion Biz Dev / Partner low/zero (med = prof contest site) Med low/med (depends on contest, site, campaign) low/med small unless big prize $ (don’t, keep it under $5K) Contest low/zero if no system; Med/hi if integrated SFA High med-high med-high depends on target demographics Telemktg low/zero Med/hi medium Med/hi depends on geography Direct / radio Med/hi (production cost) High Med-high High Potentially large (if you spend) TV low/med low Low for FB social networks; med/hi for normal sites low/zero depends on CTA; size of accessible social networks / # users Viral / Referral low/med (landing pages = med) Low/med Low/med (depends on your marketing) Depends depends on your keywords SEM med/hi (depends on complexity) med Low/med low/med Depends on CTA; size of accessible sites, level of adoption + bloggers Widget med/hi (depends on rqd tracking & reporting) med/hi med/hi (need to build affiliate program, capture metrics, generated reports) Med/hi depends on economics Affiliate / Lead Gen low/zero med medium (develop story, build contacts) Med/hi depends on your business & audience & news PR Low (redirects/co-brand?) low low depends depends on keywords, domain costs domains med/hi low/zero Medium (depends on your search geeks) Low/zero depends on your keywords SEO low/zero (med = CMS, prof design) low/med Low (if just you blogging); med (if you're setting up big CMS / evangelizing to other bloggers) low/med Depends on # blogs in your segment, competitive scenario Blogs / Bloggers low/med (med = create templates) low/med Low low/med depends on CTA, size of your house lists, email signups Email Prod Effort Mktg Effort Time to implement Cost/user Volume Channel

13. Conversion Measurement Conversion Criteria: best-performing (%) channels / campaigns / copy largest-volume (#) channels / campaigns / copy lowest-cost ($) channels / campaigns / copy Measurement Components: Audience Segment (age, region, profession, interest) Channel Source (social network, SEM, organic, PR, etc) Campaign Theme / Brand Promise (“save money”, “get cool stuff”) Landing Page & CTA Copy & Graphics

14. Agenda Quick Review of Pirate Metrics Example Mktg Channels Brainstorm 3 Scenarios

15. Scenario I Example: Lightweight Facebook App Consumer target: people who poke, are frisky ;) Customers are worth: $0-5? currently advertising revenue potential for sponsorship, e-commerce revenue Company has ZERO funding / marketing budget limited ability to raise capital limited budget mostly from ad revenue Questions: how to design marketing channels? Significant viral potential? Conversion to long-term customer potential? Marketing potential off-FB?

16. Scenario II Example: Consumer Website (low-end) Consumer target: pet owners Customers are worth $5-25 mostly advertising, sponsorship revenue some e-commerce revenue Company has modest funding / marketing budget raised $XM in capital / not yet at break-even spending $X00K / year on marketing Questions: how to design marketing channels? Email marketing? SEO/SEM keyword opportunities? Blogging / Affiliate opportunites?

17. Scenario III Example: Consumer Website (high-end) Consumer target: people tracking their money/finances Customers are worth $25-100+ significant lead-gen & advertising potential for lots of e-commerce revenue Company has funding / marketing budget raised $XXM in capital; approaching break-even / profitable significant >$XM spend on marketing; known customer economics Questions: how to design marketing channels? SEO/SEM potential? Direct Marketing potential? Biz Dev opportunities? Viral may be less important if large vol of profitable leads