LEAN & AARR
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This document discusses Lean startup methodology and key performance metrics for startups. It emphasizes the importance of testing assumptions through building minimum viable products, measuring key metrics, and learning from customer feedback to iterate quickly through a process of continuous experimentation and pivoting if needed. The document also introduces the AARRR framework for tracking acquisition, activation, retention, referral, and revenue metrics.
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LEAN & AARR
- 1. @oxygenaccel www.oxygenaccelerator.com PAIN, LEAN & AARRR Simon Jenner CEO, Oxygen Accelerator @simonjenner
- 4. Not Lean I think the problem is X The solution looks like this: A website with social logon Location based HTML 5 mobile ready front end Cloud based, multi continent hosting for resilience Ability for users to like each others profiles Monetization via adverts We can launch in 6-9 months
- 5. YOU JUST CREATED A PRODUCT THAT NO ONE CAN USE OR WANTS
- 6. Feel the pain @oxygenaccel www.oxygenaccelerator.com Pain Threshold Pain is felt No pain is felt Cure for cancer Ferrari
- 7. In the beginning @oxygenaccel www.oxygenaccelerator.com Lean manufacturing - Toyota 2011
- 8. How to drive a startup @oxygenaccel www.oxygenaccelerator.com Vision Strategy Product Optimization Pivot True North
- 9. STRATEGY IS BASED ON ASSUMPTIONS @oxygenaccel www.oxygenaccelerator.com Customers can be acquired for $1 Customers will use a mobile app Each customer will invite 0.5 other customers Customers wants to do X We can build in in 3-months Advertisers will pay $3 per customer There are 100,000 early adopters We will attract customers via social media Customers will come back to the app daily
- 10. LEAP of FAITHs @oxygenaccel www.oxygenaccelerator.com Some assumptions are Leaps of Faith iPod - People want to listen to music on the move - People will pay for music
- 12. BUILD, MEASURE, LEARN @oxygenaccel www.oxygenaccelerator.com BUILDLEARN MEASURE IDEAS PRODUCTDATA
- 13. BUILD @oxygenaccel www.oxygenaccelerator.com Build a key assumptions solving Minimum Viable Product (MVP)
- 14. MEASURE @oxygenaccel www.oxygenaccelerator.com Must be real data What to measure – everything AARRR – Pirate metrics
- 15. LEARN @oxygenaccel www.oxygenaccelerator.com Test data with customers Must impact business results
- 17. PIVOT or PERSEVERE @oxygenaccel www.oxygenaccelerator.com Get enough data then make Data based decisions Customer based decisions
- 18. PIVOTS @oxygenaccel www.oxygenaccelerator.com - Zoom in pivot –more niche - Zoom out pivot – less niche - Customer segment pivot - Customer need pivot - Technology pivot - Business model pivot - Channel pivot
- 19. PIVOT @oxygenaccel www.oxygenaccelerator.com sortedlocal.com Assumptions - People wanted unskilled tasks doing (customers) - People wanted unskilled per hour work (sorters) - Attracting sorters was going to be difficult - Customers will want to use mobile An unskilled tasks market place
- 20. PIVOT @oxygenaccel www.oxygenaccelerator.com sortedlocal.com MVP - Customer task led mobile app - Customer creates profile & then task “I need a cleaner on Friday at 4pm to clean my flat” - Sorters respond via messaging system saying they will do it & their price per hour - Customer selects a Sorter & pays An unskilled tasks market place
- 21. PIVOT @oxygenaccel www.oxygenaccelerator.com sortedlocal.com Data 1st Month - 1st task posted was an advert not a task - 600 Sorters signed up - 20 Customers signed up - 60% bounce rate on website - Zero tasks completed - Customers saying to many responses to task, takes to long to message each sorter, trust issues with sorters An unskilled tasks market place
- 22. PIVOT @oxygenaccel www.oxygenaccelerator.com sortedlocal.com Pivot – Live for 2 weeks - Sorter led task market place - Each sorter has a profile - Customer searches by task & location (i.e. cleaning) - Customer selects Sorter from a list of profiles An unskilled tasks market place
- 23. PIVOT @oxygenaccel www.oxygenaccelerator.com sortedlocal.com Data – 2 weeks old - 2000 customers signed up - 31 tasks posted - 5% bounce rate on website - Zero tasks completed (via site) - Transactions are being taken off-line - 150+ clicks on Book now button on Sorter profile An unskilled tasks market place
- 24. GROWTH ENGINES @oxygenaccel www.oxygenaccelerator.com - Sticky Engine - Viral Engine - Paid Engine
- 26. @oxygenaccel www.oxygenaccelerator.com AARRR – Pirate Metrics Simon Jenner CEO, Oxygen Accelerator @simonjenner
- 27. AARRR @oxygenaccel www.oxygenaccelerator.com - Acquisition - users come to the site from various channels - Activation – users enjoy 1st experience - Retention - users come back re-visit site - Referral - users like it enough to refer others - Revenue – users pay
- 29. ACQUISITION @oxygenaccel www.oxygenaccelerator.com - What? - SEO, Social Media, Blogs, Email - Affiliates, Direct, pay per click adverts - Measure? - Unique visits, visitor sources, user demographic, cost per acquisition CPA
- 30. ACTIVATION @oxygenaccel www.oxygenaccelerator.com - What? - Landing page optimization - UI/UX iterations - Value proposition - Measure? - Conversions (signup, download) - Bounce rate - Dwell time CPA
- 31. RETENTION @oxygenaccel www.oxygenaccelerator.com - What? - Email reminders, notifications, newsletters - Notifications, popups - Re-target advertising - Measure? - Monthly active users (MAU) - Web re-visits - Email open % - Click though % from reminder/notification LTV
- 32. REFERRAL @oxygenaccel www.oxygenaccelerator.com - What? - Social sharing, discounts, invitations, competitions - Measure? - Viral Loop or virality ratio - Invite to signups (1:0.2) CPA
- 33. REVENUE @oxygenaccel www.oxygenaccelerator.com - What? - In app purchases, subscription, one off payment - Measure? - Revenue per user LTV
- 34. FUNNEL @oxygenaccel www.oxygenaccelerator.com £££££ Visitors Clicks on more information button Clicks on start free trial Completes registration info Verifies e-mail address Logs on Logs on twice 50,000 5,000 10:1 Funnel 2:1 100:1
- 35. KEY @oxygenaccel www.oxygenaccelerator.com - Cost Per Activation (CPA) - How much do you spend to activate each user - Calculated by acquisition spend divided by the number of signups - i.e. spend £100 to get 10 users = £10 CPA - Life Time Value (LTV) - Revenue from customer over the length of time they stay with you - Calculate by monthly revenue timed by average months retained - i.e. £10 per month * 4 –months = £40 LTV LTVCPA