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Startup Metrics for Pirates:   AARRR !!! (Startup Metrics for Product Marketing & Product Management)   Dave McClure Master of 500 Hats blog:  http://500hats.typepad.com/ website:  http://www.500hats.com/ slides:  http://slideshare.net/dmc500hats/ * reminder:  National Talk Like a Pirate Day  is Sept 19 th !
Customer Lifecycle: 5 Steps to Success A cquisition : users come to the site from various channels A ctivation : users enjoy 1 st  visit: "happy" 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!
Customer Lifecycle / Conversion Behavior Website.com 4. REFERRAL Emails & widgets Campaigns, Contests 5. Revenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, etc 2. Activation Homepage / Landing Page Product Features 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
Example Conversion Metrics (note: *not* actuals; your mileage may vary…)  $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
Customer Lifecycle / Conversion Behavior Website.com Marketing Channels: largest-volume (#)  lowest-cost ($) best-performing (%)  1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
Customer Lifecycle / Conversion Behavior Website.com Activation Criteria: 10-30+ seconds 2-3+ page views 3-5+ clicks 1 key feature usage Do LOTS of  landing  page tests & A/B tests - just make lots of dumb  guesses & iterate QUICK 2. Activation Homepage / Landing Page Product Features 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
Customer Lifecycle / Conversion Behavior Website.com Automated emails are simple & easy retention feature lifecycle emails @ +3, +7, +30d  status emails weekly/monthly event-based emails as they occur 2. Activation Homepage / Landing Page Product Features 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
Customer Lifecycle / Conversion Behavior Website.com Only encourage users to  refer * after * they have  “ happy” user experience; avg score >= 8 out of 10 2. Activation Homepage / Landing Page Product Features 4. REFERRAL Emails & widgets Campaigns, Contests 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
Customer Lifecycle / Conversion Behavior Website.com This is the part * you *  have to figure out…  I don’t know  jack  about  your business 5. Revenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, etc 2. Activation Homepage / Landing Page Product Features 4. REFERRAL Emails & widgets Campaigns, Contests 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
Types of Metrics & Measurement Qualitative:  Usability Testing / Session Monitoring Watch what users do, figure out problems & solutions from small # of users Quantitative:  Traffic Analysis / User Engagement Report what users do, track usage & conversion %'s for all or empirical sample # of users Comparative:  A/B, Multivariate Testing Compare what users do in one scenario vs another, see which copy/graphics/UI are most effective Competitive:  Monitoring & Tracking Competitors Track competitor activity & compare against yours; if possible compare channels, keyword traffic, demographic targeting, user satisfaction, etc. (see slide notes for links to tools & vendors)
Quantitative & Comparative Measurement Conversion Criteria: best-performing (%)  channels / campaigns / copy largest-volume (#)  channels / campaigns / copy lowest-cost ($)  channels / campaigns / copy
Quantitative & Comparative Measurement Conversion Criteria: best-performing (%)  channels / campaigns / copy largest-volume (#)  channels / campaigns / copy lowest-cost ($)  channels / campaigns / copy Measurement Components: Audience Segment (young women, regional metro, older singles) Channel Source (social network, SEM, organic, PR, etc) Campaign Theme / Brand Promise (“find a job”, “learn to cook”) Landing Page & CTA Copy & Graphics
Example Conversion Metrics (note: *not* actuals; your mileage may vary…)  $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
Example Conversion Metrics (note: *not* actuals; your mileage may vary…)  $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
Example Conversion Metrics (note: *not* actuals; your mileage may vary…)  $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
Example Conversion Metrics (note: *not* actuals; your mileage may vary…)  $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
Example Conversion Metrics (note: *not* actuals; your mileage may vary…)  $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
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 $$$)
Product Q: how do you choose what to 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
Founder/CEO Q: What metrics do you choose to watch? Hypothesize Customer Lifecycle & Refine Choose 5-10 conversion steps Less, not More is better BUT measure & iterate Focus on conversion improvement Delegate  each Metric to someone to OWN

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Startup Metrics for Pirates

  • 1. Startup Metrics for Pirates: AARRR !!! (Startup Metrics for Product Marketing & Product Management) Dave McClure Master of 500 Hats blog: http://500hats.typepad.com/ website: http://www.500hats.com/ slides: http://slideshare.net/dmc500hats/ * reminder: National Talk Like a Pirate Day is Sept 19 th !
  • 2. Customer Lifecycle: 5 Steps to Success A cquisition : users come to the site from various channels A ctivation : users enjoy 1 st visit: "happy" 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!
  • 3. Customer Lifecycle / Conversion Behavior Website.com 4. REFERRAL Emails & widgets Campaigns, Contests 5. Revenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, etc 2. Activation Homepage / Landing Page Product Features 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
  • 4. Example Conversion Metrics (note: *not* actuals; your mileage may vary…) $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
  • 5. Customer Lifecycle / Conversion Behavior Website.com Marketing Channels: largest-volume (#) lowest-cost ($) best-performing (%) 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
  • 6. Customer Lifecycle / Conversion Behavior Website.com Activation Criteria: 10-30+ seconds 2-3+ page views 3-5+ clicks 1 key feature usage Do LOTS of landing page tests & A/B tests - just make lots of dumb guesses & iterate QUICK 2. Activation Homepage / Landing Page Product Features 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
  • 7. Customer Lifecycle / Conversion Behavior Website.com Automated emails are simple & easy retention feature lifecycle emails @ +3, +7, +30d status emails weekly/monthly event-based emails as they occur 2. Activation Homepage / Landing Page Product Features 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
  • 8. Customer Lifecycle / Conversion Behavior Website.com Only encourage users to refer * after * they have “ happy” user experience; avg score >= 8 out of 10 2. Activation Homepage / Landing Page Product Features 4. REFERRAL Emails & widgets Campaigns, Contests 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
  • 9. Customer Lifecycle / Conversion Behavior Website.com This is the part * you * have to figure out… I don’t know jack about your business 5. Revenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, etc 2. Activation Homepage / Landing Page Product Features 4. REFERRAL Emails & widgets Campaigns, Contests 1. ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains 3. RETENTION Emails & Alerts Blogs, Content System Events & Time-based Features
  • 10. Types of Metrics & Measurement Qualitative: Usability Testing / Session Monitoring Watch what users do, figure out problems & solutions from small # of users Quantitative: Traffic Analysis / User Engagement Report what users do, track usage & conversion %'s for all or empirical sample # of users Comparative: A/B, Multivariate Testing Compare what users do in one scenario vs another, see which copy/graphics/UI are most effective Competitive: Monitoring & Tracking Competitors Track competitor activity & compare against yours; if possible compare channels, keyword traffic, demographic targeting, user satisfaction, etc. (see slide notes for links to tools & vendors)
  • 11. Quantitative & Comparative Measurement Conversion Criteria: best-performing (%) channels / campaigns / copy largest-volume (#) channels / campaigns / copy lowest-cost ($) channels / campaigns / copy
  • 12. Quantitative & Comparative Measurement Conversion Criteria: best-performing (%) channels / campaigns / copy largest-volume (#) channels / campaigns / copy lowest-cost ($) channels / campaigns / copy Measurement Components: Audience Segment (young women, regional metro, older singles) Channel Source (social network, SEM, organic, PR, etc) Campaign Theme / Brand Promise (“find a job”, “learn to cook”) Landing Page & CTA Copy & Graphics
  • 13. Example Conversion Metrics (note: *not* actuals; your mileage may vary…) $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
  • 14. Example Conversion Metrics (note: *not* actuals; your mileage may vary…) $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
  • 15. Example Conversion Metrics (note: *not* actuals; your mileage may vary…) $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
  • 16. Example Conversion Metrics (note: *not* actuals; your mileage may vary…) $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
  • 17. Example Conversion Metrics (note: *not* actuals; your mileage may vary…) $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
  • 18. 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 $$$)
  • 19. Product Q: how do you choose what to 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
  • 20. Founder/CEO Q: What metrics do you choose to watch? Hypothesize Customer Lifecycle & Refine Choose 5-10 conversion steps Less, not More is better BUT measure & iterate Focus on conversion improvement Delegate each Metric to someone to OWN