Startup Metrics 101 Web 2.0 Expo SF - 04/22/08
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1 Startup Metrics 101 Web 2.0 Expo SF - 04/22/08 Dave McClure, Master of 500 Hats Hiten Shah, CrazyEgg / ACS / KISSmetrics
2 AARRR!: 5-Step Startup Metrics Model Social Networks Apps & Widgets Domains SEM Blogs SEO PR 1. ACQUISITION Campaigns, Contests Affiliates Biz Dev Direct, Tel, TV Viral Loops 2. Activation s & Alerts Homepage / Landing Page 4. REFERRAL s & widgets Blogs, RSS, News Feeds 3. Retention Product Features Affiliates, Contests System Events & Time-based Features Ads, Lead Gen, Subscriptions, ECommerce Website.com Biz Dev 5. Revenue $$$
3 Why Be a Web 2.0 Entrepreneur? Low Cost Lots of Users Online Advertising / E-Commerce Online Metrics It s Cool. Make MONEY.
4 Q: What s My Business Model? Can be one of the following: 1. Get Users (= Acquisition, Referral) 2. Drive Usage (= Activation, Retention) 3. Make Money (= Revenue*) * ideally profitable revenue Note: eventually need to turn Users/Usage -> Money
5 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 Metrics (tip: Less = More) Test, Measure, Iterate to Improve Delegate Each Key Metric to someone to OWN
6 Startup Metrics for Pirates: 5 Steps to Web 2.0 Booty! Acquisition: users come to site from various channels Activation: users enjoy 1 st visit: "happy experience Retention: users come back, visit site multiple times Referral: users like product enough to refer others Revenue: users conduct some monetization behavior AARRR!
7 Role: Product / Engineering Q: What to Build? Why? A: Build 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
8 Example Conversion Metrics (note: *not* actuals your mileage may vary) Category Conversion Status Conv % Est. Value Acquisition Acquisition Activation Activation Retention Retention Visit Site (or landing page, or external widget) Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks) Happy 1 st Visit (views X pages, stays Y sec, Z clicks) /Blog/RSS/Widget/Acct Signup (anything that could lead to repeat visit) Length of Session / # of Clicks (length/intensity of engaged visit, >180s) Open/ RSS view -> Click/Repeat Visit (3+ visits in first 30 days) 100% $.01 70% $.05 30% $.25 5% $2 10% $1 3% $5 Referral Refer 1+ users who visit site 2% $1 Referral Refer 10+ users who activate 0.2% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25
9 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 Grab the Low-Hanging Fruit: Blogs SEO/SEM Landing Pages Automated s
10 Example Marketing Channels disclaimer: estimates of vol, cost/user, time & effort are subjective actual costs are dependent on your specific business
11 Acquisition Social Networks Apps & Widgets SEM Domains Blogs SEO PR 1. ACQUISITION Campaigns, Contests Affiliates Biz Dev Direct, Tel, TV Marketing Channels: largest-volume (#) lowest-cost ($) best-performing (%) Website.com
12 Acquisition Where are users coming from? Acquisition Methods! SEO / SEM! Blogs! ! Social Media & Social Networks! Domains
13 Acquisition Keyword Vocabulary Top words Your Brand / Products Customer Needs / Benefits Competitor s Brand / Products Semantic Equivalents Misspellings Things to analyze Sources Volume Cost Conversion
14 Acquisition Where are users coming from? Key Metrics to Track! Quantity (#)! Cost ($)! Conversions (%) Example
15 Acquisition Tools Google Analytics (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/ php Strategies to ruthlessly acquire users andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html
16 Activation Social Networks Apps & Widgets Domains SEM Blogs SEO PR 1. ACQUISITION Campaigns, Contests Affiliates Biz Dev Direct, Tel, TV Activation Criteria: seconds 2-3+ page views 3-5+ clicks 2. Activation Homepage / Landing Page 1 key feature usage Product Features do LOTS of landing page & A/B tests Website.com make lots of dumb guesses & iterate FAST
17 Activation What do users do on their first visit? Example Activation Goals Click on something! Account sign up / s 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
18 Activation What do users do on their first visit? Key Metrics to Track! Pages per visit! Time on site! Conversions Before After
19 Activation Tools Crazy Egg (Visual Click Mapping) crazyegg.com Google Website Optimizer (A/B & Multivariate Testing) google.com/websiteoptimizer Marketo.com (B2B Lead Generation Management) marketo.com Resources Experimentation and Testing: A Primer kaushik.net/avinash/2005/05/experimentation-and-testing-a-primer.html Landing Page Tutorials and Case Studies copyblogger.com/landing-pages/ 101 Easy Easy to use Google Website Optimizer conversion-rate-experts.com/articles/101-google-website-optimizer-tips/
20 Retention Automated s are simple & easy retention (but don t overdo it) lifecycle +3, +7, +30d status s weekly/monthly event-based s as they occur Social Networks Apps & Widgets Domains SEM Blogs SEO PR 1. ACQUISITION Campaigns, Contests Affiliates Biz Dev Direct, Tel, TV BUT: make it easy to unsubscribe s & Alerts 2. Activation Homepage / Landing Page Tip on s: > 80% or more on SUBJECT LINE < 20% or less on BODY TEXT Blogs, RSS, News Feeds 3. Retention System Events & Time-based Features Product Features Website.com
21 Retention How do users come back? Retention Methods! Automated s * Track open rate / CTR / Quantity! RSS / News Feeds * Track % viewed / CTR / Quantity! Widgets / Embeds * Track impressions / CTR / Quantity
22 Retention How do users come back? Example Retention Goals 1-3+ 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 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?)
23 Retention How do users come back? Key Metrics to Track! Source! Quantity! Conversions! Visitor Loyalty! Session Length Example
24 Retention Tools Campaign Monitor / MailChimp ( newsletter software) campaignmonitor.com / mailchimp.com TriggerMail (site-centric management) triggermail.net Litmus ( and website design testing - clients / browsers) litmusapp.com Resources 30 free HTML templates campaignmonitor.com/resources/templates.aspx Best Practices in Writing Subject Lines mailchimp.com/resources/best-practices-in-writing- -subject-lines.phtml Learning Viral: Viral s of Tagged.com okdork.com/2008/04/10/learning-viral-studying-taggedcom/
25 Referral Social Networks Apps & Widgets Domains SEM Blogs SEO PR 1. ACQUISITION Campaigns, Contests Affiliates Biz Dev Direct, Tel, TV Viral Loops 2. Activation Blogs, RSS, News Feeds s & Alerts 3. Retention System Events & Time-based Features Homepage / Landing Page Product Features Website.com 4. REFERRAL Affiliates, Contests s & widgets Focus on driving referrals *after* users have a happy experience; avg score >= 8 out of 10
26 Referral Methods! Send to Friend: / IM! Social Media! Widgets / Embeds! Affiliates Referral How do users refer others?
27 Referral Viral Growth Factor 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.
28 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
29 Revenue Social Networks Apps & Widgets Domains SEM Blogs SEO PR 1. ACQUISITION Campaigns, Contests Affiliates Biz Dev Direct, Tel, TV Viral Loops 2. Activation s & Alerts Homepage / Landing Page 4. REFERRAL s & widgets Blogs, RSS, News Feeds 3. Retention Product Features Affiliates, Contests System Events & Time-based Features This is the part *you* still have to figure out (we don t know jack about your business) Ads, Lead Gen, Subscriptions, ECommerce Website.com 5. Revenue $$$ Biz Dev
30 Revenue How do you make money? Revenue Tips Don t rely on AdSense Start Free -> Go Freemium Subscription / Recurring transactions Qualify your customers -> Lead generation (arbitrage) Sell something! (physical or virtual)
31 AARRR! Any Questions, Ye Scurvy Dogs? Additional 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)
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