KPIs & Metrics - Innlab RM 2013
- 1.
- 2. About me 1 What I’vedone until 2012: I studied economics at LUISS I wrote a thesis on the VC I published a research on the VC that has ended up on the IlSole24Ore I won InnovAction Lab 2011 I went to Silicon Valley I worked @ Principia SGR (8 of the last investments ≅ 15mln) What I'm doing since the beginning of 2013 I work @ Boox Venture Incubator I’m a member of several professional associations promoting entrepreneurship I continue research activities I continue to study (a lot)
- 3. Agenda 1. Metrics & KPIs 2. Funnel 3. Cohortanalysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 2
- 4. Agenda 1. Metrics & KPIs 2. Funnel 3. Cohortanalysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 3
- 5. 1. Different businesses,different metrics Airbnb Fiendfinder Blogo 6sicuro.it Privalia 4 Number of house with HD pics Viral factor (K) Pages per user Generated quotes (lead) Cost per shoting
- 6. Hundreds of differentmetrics PV Page Views UV Unique Visitors CPM Cost per Thousand BR Bounce Rate CTR Click Trough Rate CPR Cost Per Registration CPL Cost Per Lead CPA Cost Per Acquisition (or Cost per Action) CPC Cost Per Click LTV Lifetime Value CR Conversion Rate Churn Churn Rate 5
- 7.
- 8. Lean Analytics (alcuniesempi) 7 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/
- 9. Scalability (basic formulas) LTV CPC %CR 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 LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/ Dipende fondamentalmente da: soddisfazione dei clienti, CRM, biz model, etc <CPA 8 “LTV is the projected profit that a customer will generate during his lifetime” 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)
- 10. Scalability (basic formulas) LTV CPC %CR <CPA 9 Smallnumbers, huge impact: CPC = 0,4€ %CR = 4% CPA = 10€ CPC = 0,4€ %CR = 2,5% 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 LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/
- 11. Scalability, make ithappen! 10 Source: David Skok - http://www.forentrepreneurs.com/startup-killer/ Note: CAC = CPA
- 12. Source: David Skok- http://www.forentrepreneurs.com/startup-killer/ Scalability, how you can do it? Note: CAC = CPA 11
- 13. Conversion What’s the meaningof conversion rate? What’s the meaning of funnel? CPC %CR CPA = Define what are you looking to measure! i.e.: define who you consider a customer; define the difference between CPL and CPA (if there is) 12 General CPA = $ Adv cost / # Customers acquired CPA based on CPM campaign: (CPM x Impressions /1000)/ # Customer acquired
- 14. The Funnel ..<offlinemode> 13 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 4. One of them want to buy it
- 15. The Funnel ..<onlinemode - ie. ecommerce> 100 50 20 5 3 1 1. I paid to have some users on my website 2. They arrive on the landing page 3. They leave their email 4. They put one product in the basket 5. They start the checkout process 6. They complete all the payment info 7. They pay 50% 40% 40% 38% 33%1% 14
- 16. The Funnel ..<onlinemode - ie. ecommerce> 100 50 20 5 3 1 Paid users Landing page Leave the email Product on the basket Checkout process Payment info They pay • Pictures • Copy/text button • Info required • Password • Email confirm • Add button • Related product • Info required • Shipping days • Delivery cost • Payment gateway • Invoice/legal info • CC circuit • PIN request Some drivers: 15
- 17. Why measure thefunnel You need to identify the bottleneck and solve it! Examples: - Pictures - Checkout process - Payment gateway 16
- 18. The Funnel ..(flashsales ecommerce) Users that arrive till checkout Registered users Unique users Users that complete the form Paying users 1%-0,5% Measure your CPL/CPA! 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 journeyUsers Customers Source: IABSeminar 2013, Ilaria Zampori Managing Director QUISMA, Individual Conversion Attribution http://www.iabseminar.it/wp-content/uploads/2013/02/9_QUISMA.pdf Awareness Consideration Conversion Loyalty ChoicheInformationDesire 18
- 20. Customer journey Awareness ConsiderationConversion Loyalty Source: IAB Seminar 2013, Marco Caradonna Simple Agency Dynamic Customer Journey http://www.slideshare.net/mcarado/4-iab-seminar-performance-2013-simple-agency ChoicheInformationDesire 19 instruments instruments instruments
- 21. Agenda 1. Metrics & KPIs 2. Funnel 3. Cohortanalysis, 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” GoogleFacebook Blog Customer spending by referral source Direct Source: www.cohortanalysis.com/ 21
- 23. Cohort Analysis time-periodanalysis Time period 1 2 3 4 5 6 7 8 9 10 11 12 Time-period cohorts 1 513 410 328 263 210 168 134 108 86 69 55 44 2 923 739 591 473 378 303 242 194 155 124 99 3 1.258 1.007 805 644 515 412 330 264 211 169 4 1.537 1.230 984 787 630 504 403 322 258 5 1.777 1.421 1.137 910 728 582 466 373 6 1.987 1.590 1.272 1.017 814 651 521 7 2.178 1.742 1.394 1.115 892 714 8 2.355 1.884 1.507 1.206 965 9 2.524 2.020 1.616 1.292 10 2.689 2.151 1.721 11 2.852 2.282 12 3.017 paying users 513 1.334 2.325 3.398 4.495 5.583 6.644 7.671 8.661 9.618 10.547 11.454 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? Source: andrewchenblog.com 22
- 24. Agenda 1. Metrics & KPIs 2. Funnel 3. Cohortanalysis 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 Traditional Ecommerce # Subscribers lost # Starting subscribers = % Churn rate # Customers who has not made a purchase in 90 days* # Starting active customers = % Churn rate Source: www.churn-rate.com 24 * it depend on business model and offer
- 26. Optimize.. 1. Metrics & KPIs 2. Funnel 3. Cohortanalysis 4. Churn rate 25 Analyse Change LearnConsolidate Iterate Learning process
- 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. Cohortanalysis 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
- 30.
- 31.
- 32.
- 33. Layout.. Is not alwaysa good idea to write more… 32Fonte: http://37signals.com/svn/posts/1525-writing-decisions-headline-tests-on-the-highrise-signup-page
- 34. A/B test areeasy but.. Source: http://techcrunch.com/2013/01/12/current-conversion-rate-and-desired- confidence-interval-will-help-you-avoid-analysis-paralysis-stop-running-stupid-tests/ 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. 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. Cohortanalysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 35
- 37. Email & DEM 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: Ø Subject, time Ø Content Ø Layout Ø All of the above Ø Too many Ø Frequency & content Ø Too many Email could become your first traffic source, improve the LTV of your customers, decrease your customer acquisition cost ! 36
- 38. Email & DEM Source:http://retail-analytics.quora.com/Email-Open-Click-Through-Analytics-from-over-80-Billion-Emails 37
- 39. Agenda 1. Metrics & KPIs 2. Funnel 3. Cohortanalysis 4. Churn rate 5. A/B test 6. Source channels, email/DEM 7. CRM Conclusion 38
- 40. The true costof bad support 39Source: https://www.helpscout.net/blog/bad-customer-service/
- 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. Source: Communication Preference,Live Chat Effectiveness, A Survey of Internet Shoppers 2012 Interact with customers… 41
- 43. Source: “Email CustomerService in North American Small and Medium Businesses” by BenchmarkPortal, 2005, Source: Forrester Research Inc., 2008 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. Interact with customers… 42
- 44. “Customer experience qualitycould result in a swing of $184 million for a large Internet retailer. Source: Forrester Research Inc., 2008 Interact with customers… 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. Cohortanalysis 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. 47 “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
- 49. • Steve blanktools (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 Must read/view:
- 50. • Blog etsy(http://mcfunley.com/) • Blog Fabrice Grinda • Blog fab.com • Blog google • Blog a16z.com • Foundat.io/n • ecorner.stanford.edu • avc.com • Angel.co Must read/view: 49
- 51. Primo esempio: wikli +70% Spesatot: 200€ Strumenti utilizzati: opimizely Utenti attuali >6.000
- 52.
- 53.
- 54.
- 55.
- 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.. Video(da vedere!): http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313 “We put 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
- 58. Always in test.. Sources:http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313 “We don'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