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![M AARRR keting Plan Marketing Plan = Target Customer Acquisition Channels 3 Important Factors = Volume (#), Cost ($), Conversion (%) Measure conversion to target customer actions Test audience segments, campaign themes, Call-To-Action ( CTA s) [Gradually] Match Channel Costs => Revenue Potential Increase Vol. & Conversion, Decrease Cost, Optimize for Revenue Potential Avg Txn Value ( ATV ), Ann Rev Per User ( ARPU ), Cust Lifetime Value ( CLV ) Design channels that (eventually) cost <20-50% of target ATV, ARPU, CLV Consider Costs, Scarce Resource Tradeoffs Actual $ expenses Marketing time & resources Product/Engineering time & resources Cashflow timing of expense vs. revenue, profit](https://image.slidesharecdn.com/numbersnotnapkinsjan2009-1232480765312039-2/75/Numbers-not-Napkins-Simple-Startup-Metrics-25-2048.jpg)
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Numbers not Napkins: Simple Startup Metrics
The document outlines a framework for startup metrics, emphasizing a simplified approach to measure business models, conversion rates, and marketing channels. It introduces the 'AARRR' model (Acquisition, Activation, Retention, Referral, Revenue) and promotes iterative testing and optimization of user experience and conversion metrics. The author encourages focusing on a few critical metrics that drive decision-making and highlights the importance of understanding customer behavior and lifecycle.
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Introduction to the importance of metrics in startups, focusing on user experience and actionable metrics. Emphasizes passion for problem-solving and optimizing customer lifecycle.
Discusses the lower startup costs of Web 2.0, emphasizing the significance of collecting real-time usage metrics and understanding different types of measurement for actionable insights.
Introduction to the AARRR metrics framework: Acquisition, Activation, Retention, Referral, and Revenue, which provides a structured approach for startups to analyze customer metrics.
Highlights the role of founders/CEOs in focusing on critical, actionable metrics including defining customer behaviors and prioritizing conversion metrics in their business model.
Visual representation of metrics and examples of specific business model metrics for educational platforms such as TeachStreet, focusing on user engagement and conversion strategies.
Explains the creation of conversion dashboards using metrics for activation, retention, and sales, emphasizing measurement and optimization for better user experience.
Discusses identifying high-performing marketing channels and optimizing costs, volume, and conversion rates for effective user acquisition and retention strategies.
Summary of startup metrics and methods for effective measuring activation, retention, and marketing efforts, focusing on actionable insights and iterative improvements.
In-depth analysis of user activation metrics and strategies to improve retention through engagement techniques. Key metrics to track for successful user return and satisfaction.
Breakdown of acquisition metrics including channels of traffic, the importance of monitoring keyword strategies, and measuring overall effectiveness in user growth.
Exploration of referral strategies to drive user growth post-engagement, with emphasis on tracking revenue generation methods and exploring diverse business models.
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Numbers not Napkins: Simple Startup Metrics
- 1. Numbers not Napkins: Simple Startup Metrics & Business Models SDForum Business Intelligence SIG Palo Alto, January 2009 Dave McClure, Founders Fund http://www.foundersfund.com/ http://500hats.typepad.com/ http://slideshare.net/dmc500hats/
- 2. Agenda The BasicsMeasure Stuff. Keep It Simple. 5 Steps: Startup Metrics for Pirates ( AARRR !) 3 Items: Biz Model, Conversion, Mktg Channels Iterate & Optimize. One Step at a Time. Appendix Activation Retention Acquisition Referral Revenue
- 3. The Startup MetricsReligion Progress ≠ Features Focus on User Experience Measure Conversion; Compare 2+ Options Fast & Frequent Iteration Keep it Simple & Actionable
- 4. Be Bold. Be Humble. Stuff That Matters: Passion for Problem/Solution + Hypothesis of Customer Lifecycle 1-page Business Model : Prioritized List of (Users + Conversions) Critical, Few, Actionable Metrics + Dashboard of Measured User Behavior 1-pg Marketing Plan : (Channels + Campaigns) * (Volume, Cost, Conv %) Velocity of (Product Execution + Cycle Time of Testing ) * Iteration 20% Inspiration + 80% Perspiration Long-term: Audacity + Creative Inspiration Short-term: Humility + Analytic Rigor
- 5. Web 2.0: What’sSo Special? Startup Costs = Lower # Users, Bandwidth = Bigger Online Adv / E-Com = Still Growing Collect Usage Metrics in Real-Time Make Decisions Based on User Behavior
- 6. Just Gimme theGOOD Metrics. Users, Pages, Clicks, Emails, $$$...? Q: Which of these is best? How do you know? 1,000,000 one-time, unregistered unique visitors 500,000 visitors who view 2+ pages / stay 10+ sec 200,000 visitors who clicked on a link or button 20,000 registered users w/ email address 2,000 passionate fans who refer 5+ users / mo. 1,000 monthly subscribers @ $35/mo the good stuff.
- 7. Types of MeasurementQualitative : Usability Testing / Session Monitoring Watch users, guess problems & solutions from small # of users Quantitative : Traffic Analysis / User Engagement Track users, usage, conv %'s for empirical sample # of users Comparative : A/B, Multivariate Testing Compare what users do in one scenario vs another Measure which copy/graphics/UI are most effective Competitive : Monitoring & Tracking Competitors Track competitor activity & compare against yours (if possible) Compare channels, keyword traffic, demographics, user sat, etc.
- 8. Passion vs. Precision “ Solve a Problem” = Passion “ Optimize the Solution” = Precision However… “ Precision” is Illusion; “data” is fuzzy Collecting & Interpreting data takes time & effort Keep Metrics Simple & Actionable
- 9. AARRR!: 5-Step StartupMetrics Model Website.com R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce A CQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains R etention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
- 10. Startup Metrics forPirates A cquisition: users come to site from various channels A ctivation: users enjoy 1 st visit: " happy ” 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 !
- 11. 3 Key MetricsFrameworks: biz model, conversion dashboard, mktg channels Define 1-Page Biz Model : customer segments + desired actions / behaviors Identify critical Conversion Events & Dashboard for each segment & prioritize Test & develop Marketing Channels ; measure Volume (#), Cost ($), Conv (%) Optimize product & marketing using Fast Iteration Cycles & A/B Testing
- 12. Q: What’s MyBusiness Model? Can be one of the following: Get Users (= Acquisition, Referral) Drive Usage (= Activation, Retention) Make Money (= Revenue*) * ideally profitable revenue Note: eventually need to turn Users/Usage -> Money
- 13. Role: Founder/CEO Q:Which Metrics? Why? A: Focus on Critical Few Actionable Metrics (if you don’t use the metric to make a decision, it’s not actionable) Hypothesize Customer Lifecycle Target ~3-5 Conversion Events (tip: Less = More) Test, Measure, Iterate to Improve
- 14. The 1-Page BusinessModel (Users + Conversions + Priorities) Q1: What types of people use your website? Visitor = Average User / Buyer Contributor = Content Contributor / Seller Distributor = Passionate Fan (unpaid) / Affiliate (paid) Q2: What actions could they take to help you or them ?
- 15. TeachStreet Metrics v1:Eye Chart Madness
- 16. TeachStreet Metrics v2: Customer Types + Conversion Priorities
- 17. TeachStreet 1-Page BusinessModel: Teachers & Students Teachers Students Activation Claim Profile Add Class Contact Teacher View 3 Pages Retention Visit 1x/mo for 3 mo’s Visit 1x/mo for 3 mo’s Referral Request Review Suggest Teacher
- 18. Role: Product /Engineering Q: What Features to Build? Why? A: Easy-to-Find , Fun , Useful , Unique Features that Increase Conversion Wireframes = Conversion Steps Measure, A/B Test, Iterate FAST (daily/weekly) Optimize for Conversion Improvement 80% on existing feature optimization 20% on new feature development
- 19. Example Conversion Dashboard(note: *not* actuals… your mileage may vary) Stage Conversion Status Conv. % Est. Value (*not* cost) Acquisition Visitors -> Site/Widget/Landing Page (2+ pages, 10+ sec, 1+ clicks = don’t abandon) 60% $.05 Activation “ Happy” 1 st Visit; Usage/Signup (clicks/time/pages, email/profile reg, feature usage) 15% $.25 Retention Users Come Back; Multiple Visits (1-3x visits/mo; email/feed open rate / CTR) 5% $1 Referral Users Refer Others (cust sat >=8; viral K factor > 1; ) 1% $5 Revenue Users Pay / Generate $$$ (first txn, break-even, target profitability) 2% $10
- 20. TeachStreet: Teacher “ClaimRate” ( Seattle , Portland )
- 21. TeachStreet: 45-day ClaimRates ( Seattle , Portland )
- 22. Design, Optimize for Conversion
- 23. Role: Marketing /Sales Q: What channels? Which users? Why? A: High Volume (#), Low Cost ($), High Conv (%) Design & Test Multiple Marketing Channels + Campaigns Select & Focus on Best-Performing Channels & Themes Optimize for conversion to target CTAs, not just site/landing page Match/Drive channel cost to/below revenue potential Low-Hanging Fruit: Blogs SEO/SEM Landing Pages Automated Emails
- 24. Example Marketing Channelsdisclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business
- 25. M AARRR ketingPlan Marketing Plan = Target Customer Acquisition Channels 3 Important Factors = Volume (#), Cost ($), Conversion (%) Measure conversion to target customer actions Test audience segments, campaign themes, Call-To-Action ( CTA s) [Gradually] Match Channel Costs => Revenue Potential Increase Vol. & Conversion, Decrease Cost, Optimize for Revenue Potential Avg Txn Value ( ATV ), Ann Rev Per User ( ARPU ), Cust Lifetime Value ( CLV ) Design channels that (eventually) cost <20-50% of target ATV, ARPU, CLV Consider Costs, Scarce Resource Tradeoffs Actual $ expenses Marketing time & resources Product/Engineering time & resources Cashflow timing of expense vs. revenue, profit
- 26. One Step ata Time. Make a Good Product : Activation & Retention Market the Product : Acquisition & Referral Make Money : Revenue & Profitability “ You probably can’t save your Ass and your Face at the same time… choose carefully .” – DMC
- 27. Summary Measure Stuff. Keep It Simple. 5 Steps: Startup Metrics for Pirates ( AARRR !) 3 Items: Biz Model, Conversion, Mktg Channels Iterate & Optimize. One Step at a Time.
- 28. Links & ResourcesAdditional References: “ Influence: The Psychology of Persuasion ”, Robert Cialdini (book) “ Putting the Fun in Functional ”, Amy Jo Kim (etech 2006 preso) “ Futuristic Play ”, Andrew Chen (blog) “ Don’t Make Me Think ”, Steve Krug (book) “ A Theory of Fun ”, Raph Koster (book, website) “ Designing for the Social Web ”, Joshua Porter (book, website) “ Customer Development Methodology ” Steve Blank (presentation)
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- 31. Website.com Activation Criteria:10-30+ seconds 2-3+ page views 3-5+ clicks 1 key feature usage do LOTS of landing page & A/B tests – make lots of dumb guesses & iterate FAST Activation SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
- 32. Activation What dousers do on their first visit? Example Activation Goals Click on something! Account sign up / Emails Referrals / Tell a friend Widgets / Embeds Low Bounce Rate Activation Tips Less is more Focus on user experience / usability Provide incentives & call to actions Test and iterate continuously
- 33. Activation What dousers do on their first visit? Key Metrics to Track Pages per visit Time on site Conversions
- 34. Activation Tools CrazyEgg (Visual Click Mapping) http://crazyegg.com Google Website Optimizer (A/B & Multivariate Testing) http://google.com/websiteoptimizer Marketo.com (B2B Lead Generation Management) http://marketo.com Resources Experimentation and Testing: A Primer kaushik.net/avinash/2006/05/experimentation-and-testing-a-primer.html Landing Page Design Toolbox: 100 Tips & Tools http://tinyurl.com/326co6 Landing Page Tutorials & Case Studies http://www.copyblogger.com/landing-pages/ 101 Easy Easy to use Google Website Optimizer http://conversion-rate-experts.com/articles/101-google-website-optimizer-tips/
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- 36. Website.com Automated emails:lifecycle emails @ +3, +7, +30d status / “best of” weekly/monthly “ something happened” emails BUT: make it easy to unsubscribe Tip on emails: > 80% or more on SUBJECT LINE < 20% or less on BODY TEXT Retention SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
- 37. Cohort Analysis: Distribof Visits over Time Rate of Decay Effective Customer Lifecycle Retention Methods Automated Emails * Track open rate / CTR / Quantity RSS / News Feeds * Track % viewed / CTR / Quantity Widgets / Embeds * Track impressions / CTR / Quantity Retention How do users come back? How often?
- 38. Example Retention Goals1 - 3+ visits per month 20% open rate / 2% CTR High deliverability / Low spam rating Long customer life cycle / Low decay Identify fanatics and cheerleaders Retention Tips Email is simple and it works BUT make unsubscribe easy 80% subject line / 20% body text ACTUALLY 99% subject line / 1% body text Fanatics = virality + affiliate channel (bloggers?) Retention How do users come back? How often?
- 39. Retention How dousers come back? How often? Key Metrics to Track Source Quantity Conversions Visitor Loyalty Session Length
- 40. Retention Tools CampaignMonitor / MailChimp (email newsletter software) campaignmonitor.com / mailchimp.com TriggerMail (site-centric email management) triggermail.net Litmus (email and website design testing - clients / browsers) litmusapp.com Resources 30 free HTML email templates campaignmonitor.com/resources/templates.aspx Best Practices in Writing Email Subject Lines mailchimp.com/resources/best-practices-in-writing-email-subject-lines.phtml Learning Viral: Viral Emails of Tagged.com okdork.com/2008/04/10/learning-viral-studying-taggedcom/
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- 42. Website.com Marketing Channels:largest-volume (#) lowest-cost ($) best-performing (%) Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
- 43. Acquisition Where areusers coming from? Acquisition Methods SEO / SEM Blogs Email Social Media & Social Networks Domains
- 44. Acquisition Keyword VocabularyTop 10 - 100 words Your Brand / Products Customer Needs / Benefits Competitor’s Brand / Products Semantic Equivalents Misspellings Things to analyze Sources Volume Cost Conversion
- 45. Acquisition Where areusers coming from? Key Metrics to Track Quantity (#) Cost ($) Conversions (%) Example
- 46. Acquisition Tools GoogleAnalytics (web analytics) google.com/analytics Google Keyword Tool (keyword research tool) adwords.google.com/select/KeywordToolExternal SEO Book Tools (SEO related tools) tools.seobook.com Resources SEO Book Blog seobook.com/blog The Social Media Manual: Read Before You Play searchengineland.com/071120-144401.php Strategies to ruthlessly acquire users andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html
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- 48. Website.com Focus ondriving referrals * after * users have a “ happy ” experience; avg score >= 8 out of 10 Referral Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
- 49. Referral How dousers refer others? Referral Methods Send to Friend: Email / IM Social Media Widgets / Embeds Affiliates
- 50. Referral Viral GrowthFactor Viral Growth Factor = X * Y * Z X = % of users who invite other people Y = average # of people that they invited Z = % of users who accepted an invitation A viral growth factor > 1 means an exponential organic user acquisition.
- 51. Referral Tools Gigya(social media distribution & tracking tool) gigya.com ShareThis / AddThis (sharing buttons) sharethis.com / addthis.com GetMyContacts (PHP contacts importing & invitation software) getmycontacts.com Resources Seven Ways to GO VIRAL lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/ What’s your viral loop? Understanding the engine of adoption andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your-vira.html Metrics: Where Users Come From slideshare.net/guest2968b8/rockyou-snap-summit-32508
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- 53. Website.com Revenue Thisis the part *you* still have to figure out… (we don’t know jack about your business) R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
- 54. Revenue How doyou make money? Revenue Tips Don’t Rely on AdSense (only) Start Free => 2% “ Freemium ” Subscription / Recurring transactions Qualify your customers -> Lead generation (arbitrage) Sell something! (physical or virtual)
- 55. Revenue Resources &Tools Revenue Metrics (Andrew Chen) http://tinyurl.com/47r63a How to Create a Profitable “Freemium” Startup (Andrew Chen) http://tinyurl.com/8z9ygk 2008 Affiliate Marketing Review (Scott Jangro) http://tinyurl.com/86wak4