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KPI, Metriche e Customer Acquisition
The document is a presentation discussing key performance indicators (KPIs) and metrics essential for managing startups, focusing on topics such as funnel analysis, cohort analysis, churn rate, A/B testing, and customer relationship management (CRM). It highlights the importance of measuring outcomes, understanding customer behavior, and optimizing marketing strategies to improve conversions and customer lifetime value. Various examples and resources, along with practical insights on customer acquisition costs and effective communication, are provided to enhance startup growth and sustainability.
KPI, Metriche e Customer Acquisition
- 1. KPIs & metrics (slidesby Matteo Panfilo) Presenters scarabelli.matteo3@gmail.com @mattepv umbertodefeo@yahoo.it @umbertodefeo GiT Workshop - January 2014
- 2. About us What I’vedone until 2013 I studied economics in Pavia & management in France I wrote a thesis on Angel Investing I attended the AIFI Class for VC professionals in 2011 I worked over two years @ Italian Angels for Growth (11 investments in the period = >4mln) I worked one year @ Fashionis (e-commerce startup) What I'm doing since the beginning of 2014 I co-founded @Fast4ward I keep on promoting local startup ecosystems @ Activators Pavia What I’ve done until 2013 I studied International Business and Finance at LUISS I wrote a thesis on the investment opportunities in the green energy sector in South East Asia I lived and worked in Kiev, London, Rome, Kuala Lumpur and Milan I attended the AIFI Class for VC professionals in 2012 I worked @ Italian Angels for Growth I worked @ Zernike META Ventures What I'm doing since the beginning of 2014 I started working on the international activities @META Group 1
- 3. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 2
- 4. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 3
- 5. 1. Different businesses,different metrics Airbnb Number of house with HD pics Friendfinder Viral factor (K) Blogo Pages per user 6sicuro.it Privalia Generated quotes (lead) Cost per shoting 4
- 6. Hundreds of differentmetrics PV UV CPM BR CTR CPR CPL CPA CPC LTV CR Churn Page Views Unique Visitors Cost per Thousand Bounce Rate Click Trough Rate Cost Per Registration Cost Per Lead Cost Per Acquisition (or Cost per Action) Cost Per Click Lifetime Value Conversion Rate Churn Rate 5
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- 8. Lean Analytics (alcuniesempi) http://www.startuplessonslearned.com/2013/03/lean-analytics.html http://www.slideshare.net/Leananalytics http://www.kaushik.net/avinash/lean-analytics-cycle-metrics-hypothesis-experiment-act/ 7
- 9. Scalability (basic formulas) CPA < LTV “LTVis the projected profit that a customer will generate during his lifetime” CPC %CR Dipende fondamentalmente da: soddisfazione dei clienti, CRM, biz model, 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 8 LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/
- 10. Scalability (basic formulas) CPA CPC < LTV Smallnumbers, huge impact: CPC = 0,4€ %CR = 2,5% CPA = 10€ %CR CPC = 0,4€ %CR = 4% 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 9 LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/
- 11. Scalability, make ithappen! Note: CAC = CPA Source: David Skok - http://www.forentrepreneurs.com/startup-killer/ 10
- 12. Scalability, how youcan do it? Note: CAC = CPA Source: David Skok - http://www.forentrepreneurs.com/startup-killer/ 11
- 13. Conversion CPA = CPC %CR Define whatare you looking to measure! i.e.: define who you consider a customer; define the difference between CPL and CPA (if there is) What’s the meaning of conversion rate? What’s the meaning of funnel? General CPA = $ Adv cost / # Customers acquired CPA based on CPM campaign: (CPM x Impressions /1000)/ # Customer acquired 12
- 14. 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 1. One of them want to buy it 13
- 15. The Funnel ..<online mode - ie. ecommerce> 1. I paid to have some users on my website 100 50 50% 20 40% 2. They arrive on the landing page 3. They leave their email 1. They put one product in the basket 2. They start the checkout process 5 40% 3 38% 1% 33% 1 3. They complete all the payment info 4. They pay 14
- 16. The Funnel ..<online mode - ie. ecommerce> Some drivers: Paid users Landing page • • Pictures Copy/text button 50 Leave the email • • • Info required Password Email confirm 20 Product on the basket • • Add button Related product 5 Checkout process • • • Info required Shipping days Delivery cost 3 Payment info • • Payment gateway Invoice/legal info 1 They pay • • CC circuit PIN request 100 15
- 17. Why measure thefunnel You need to identify the bottleneck and solve it! Examples: - Pictures - Checkout process - Payment gateway 16
- 18. The Funnel ..(flash sales ecommerce) Measure your CPL/CPA! Unique users Users that complete the form Registered users Users that arrive till checkout Paying users 1%-0,5% The CPA initially refers only to the traffic resulting from paid campaigns is the main KPI to be monitored in an ecommerce / SaaS, but in the medium term it should be monitored along with the metrics of the traffic that came from other channels (email, facebook page, etc. ) 17
- 19. Customer journey Awareness Consideration Conversion Loyalty Desire Information Choiche Users Customers Source: IABSeminar 2013, Ilaria Zampori Managing Director QUISMA, Individual Conversion Attribution http://www.iabseminar.it/wp-content/uploads/2013/02/9_QUISMA.pdf 18
- 20. Customer journey Awareness Consideration Conversion Loyalty Desire Information Choiche instruments instruments instruments Source: IABSeminar 2013, Marco Caradonna Simple Agency Dynamic Customer Journey http://www.slideshare.net/mcarado/4-iab-seminar-performance-2013-simple-agency 19
- 21. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis, measure customer behaviour 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 20
- 22. Cohort Analysis referralsource 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 21 Source: www.cohortanalysis.com/
- 23. Cohort Analysis time-periodanalysis How much revenue do the users that I’ve acquired on the second months generate? How many users that I’ve acquired on the second month will I probably still have on the ninth month? Time period 1 1 2 3 4 5 6 7 8 9 10 11 12 513 410 328 263 210 168 134 108 86 69 55 44 923 739 591 473 378 303 242 194 155 124 99 1.258 1.007 805 644 515 412 330 264 211 169 1.537 1.230 984 787 630 504 403 322 258 1.777 1.421 1.137 910 728 582 466 373 1.987 1.590 1.272 1.017 814 651 521 2.178 1.742 1.394 1.115 892 714 2.355 1.884 1.507 1.206 965 2.524 2.020 1.616 1.292 2.689 2.151 1.721 2.852 2.282 2 3 4 5 Time-period cohorts 6 7 8 9 10 11 12 paying users 3.017 513 1.334 2.325 3.398 4.495 5.583 6.644 7.671 8.661 9.618 10.547 11.454 22 Source: andrewchenblog.com
- 24. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate, do not throw the job done 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 23
- 25. Churn Rate Your churnrate 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 # Subscribers lost # Starting subscribers = % Churn rate Traditional Ecommerce # Customers who has not made a purchase in 90 days* = % Churn rate # Starting active customers * it depend on business model and offer 24 Source: www.churn-rate.com
- 26. Optimize.. 1.Metrics & KPIs 2.Funnel 3.Cohortanalysis 4.Churn rate Analyse Iterate Learning process Consolidate Change Learn 25
- 27. Why you needto 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/ 26
- 28. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate 5. A/B test, what do customers prefer? 6. Source channels, email/DEM 7. CRM Conclusion 27
- 29. A/B test… • Elaborate2 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! 28
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- 33. Layout.. Is not alwaysa good idea to write more… Fonte: http://37signals.com/svn/posts/1525-writing-decisions-headline-tests-on-the-highrise-signup-page 32
- 34. A/B test areeasy but.. Consider a site that has 10,000 visitors per month and has a 5 percent conversion rate. The table below shows how long it will take to run a “conclusive” test (95 percent confidence) based on how much the change impacts conversion rate. Source: http://techcrunch.com/2013/01/12/current-conversion-rate-and-desiredconfidence-interval-will-help-you-avoid-analysis-paralysis-stop-running-stupid-tests/ 33
- 35. Other tips.. • Badging upto +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 34
- 36. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 35
- 37. Email & DEM Emailcould become your first traffic source, improve the LTV of your customers, decrease your customer acquisition cost ! 1. Choose & Optimize email form 2. Choose & Optimize password request 3. Choose the confirmation process 4. Choose emails’ arguments and style 5. Choose & Optimize email subjects 6. Metrics, metrics, metrics: • Open rate/Unique OR • Click rate • Click-through-rate • Delivery time • List growth • Unsubscribe rate (or churn rate) • Spam complaint rate Drivers: Subject, time Content Layout All of the above Too many Frequency & content Too many 36
- 38. Email & DEM 37 Source:http://retail-analytics.quora.com/Email-Open-Click-Through-Analytics-from-over-80-Billion-Emails
- 39. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 38
- 40. The true costof bad support Source: https://www.helpscout.net/blog/bad-customer-service/ 39
- 41. Interact with customers… Peoplenow 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 and https://www.helpscout.net/blog/bad-customer-service/ 40
- 42. Interact with customers… Source:Communication Preference, Live Chat Effectiveness, A Survey of Internet Shoppers 2012 41
- 43. 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, 42 Source: Forrester Research Inc., 2008
- 44. Interact with customers… “Customerexperience quality could result in a swing of $184 million for a large Internet retailer.” Source: Forrester Research Inc., 2008 43
- 45. The power ofgreat video… Video: http://www.youtube.com/watch?feature=player_embedded&v=ZUG9qYTJMsI 44
- 46. Agenda 1. Metrics &KPIs 2. Funnel 3. Cohort analysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 45
- 47. Recap & usefultools 1.Metrics, measure and understand your KPIs 2.Funnel, know the steps to improve your conversion 3.Cohort analysis, analyse customer behaviour 4.Churn rate, do not throw the job done 5.A/B test, what do customers prefer? 6.Source channels, email/DEM still a very interesting channel 7.CRM, interact and learn from your customers - Mixpanel Jirafe free Woopra Kissmetrics RJ metric Geckoboard 46
- 48. My 2 cents Nonpensate che fare una startup sia un gioco. Cercate di creare valore, non fate le cose perché vanno di moda e non sviluppate l’ennesima app per condividere le foto. Non pensate a raccogliere soldi ma pensate a creare un prodotto e ad avere una visione per i successivi 10 anni. Studiate e documentatevi tanto prima di prendere ogni decisione, c’è un’enorme quantità di informazioni online, basta saperle cercare. “I believe in the power of a well-operated, sophisticated organization that generates social and economic value. My career goal is to found and lead this type of organization.” Hansoo Lee 47
- 49. Must read/view: • Steveblank 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 ;) 48
- 50. Must read/view: • Blogetsy (http://mcfunley.com/) • Blog Fabrice Grinda • Blog fab.com • Blog google • Blog a16z.com • Foundat.io/n • ecorner.stanford.edu • avc.com • Angel.co 49
- 51. Primo esempio: wikli +70% Spesatot: 200€ Strumenti utilizzati: opimizely Utenti attuali >6.000
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- 56. Quarto esempio (fashionsubscription commerce) Conversion rates: From inception October 30th until December 31th • Unique visitors to registered free members: 27% Benchmark successful players: circa 22% • Free members to paying subscribers: 2,6% in 2 mesi Benchmark successful players: circa 3% in un anno Absolute metrics: Form inception November 5th until December 30th •26k unique visitors •7k registered members •200 subscription sales •7k $ revenues Traffic sources: •Direct: 59% •Facebook 23% •Daily Deal Sites 10% •Others 9%
- 57. Always in test.. “Weput it in a feature that we can build in a week. It's a ghetto build. We AB test it. We flow test it. We put it out to 1%, 10% of our users. We build a data warehouse with the testing platform. So, we're running several hundred tests at any given time for every one of our games. And no single user ever is involved in more than one test. So, we love testing. When we see that it moves our metrics in a considerable way, that's when we take it to be a full feature roll out and then we do the full 2.0. Capitalizzazione 3,6 $bn --- Ricavi 1,22 $bn --- 12% ricavi da facebook Video (da vedere!): http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313
- 58. Always in test.. “Wedon't want to go down those paths until we've test them with our users. And what's amazing and this is a feature that you will all have available to you as you enter this third Internet business is that you're going to run a service and you are going to every week be able to test things with your users and something that I never have available to me in previous companies. It won't be build it for three months and hope and pray. It's test it now. And you can test it with - you don't need to be a big company - you can test it by buying Google AdWords or Facebook Self Service ads. You can put these links out. You could spend 50 bucks a day and know most of what we know. So, it's an awesome way...” Mark Pincus – Founder & CEO @ Zynga Sources: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313