Metrics for web companies

Metrics for Web Companies

By Dave FowlerCEO & Founder @ Chartio

OverviewCommon Web metrics

Social

SaaS

Cohort Analysis

Chartio

Web Business ModelsAdvertising

Social (Facebook, Pinterest)

Content (NY Times, Youtube)

Search

Software as a Service: SaaS (Salesforce, Zendesk, Chartio)

Market Places

E-Comerce

Viral CoefficientSocial

How many users each new user brings.

0"

5"

10"

15"

20"

25"

30"

35"

40"

45"

50"

1" 2" 3" 4" 5" 6" 7" 8" 9"0"

50"

100"

150"

200"

250"

300"

1" 2" 3" 4" 5" 6" 7" 8" 9"

k = .8 k = 1.2

k = viral coefficientk = (# invites sent/user) * (# invites accepted/# invites sent)

Viral Cycle Time

0"

5000"

10000"

15000"

20000"

25000"

1" 2" 3" 4" 5" 6" 7" 8" 9" 10" 11"

10"days"

20"days"

40"days"

80"days"

100"days"

0"

20"

40"

60"

80"

100"

120"

140"

160"

1" 2" 3" 4"

10"days"

20"days"

40"days"

80"days"

100"days"

Social

The time it takes a user to invite other users.

RR: Recurring RevenueSaaS

RR = Revenue/Δt

ARR (Annual) = $50k/yr

MRR (Monthly) = $50k/yr / 12 months

Churn RateSaaS

How often you lose customers.

If you have 100 customers, and you lose 10 of them in a year

you have a 10% annual churn rate.

aka. attrition

ASP: Average Selling PriceSaaS

The average price that you sell your product for.

ASP = ARR / # of Customers

Why its important:Determines your sales and distribution strategy. Can you afford a sales team? Can you afford adwords?

ACS: Average Cost of ServiceSaaS

Your average cost to support and maintain a customer.

ACS = Total Expenses / # of Customers

Trend:This should ideally trend downward as your number of customers goes up.

CLTV: Customer Lifetime ValueSaaS

Average total expected revenue from a customer.

Why its important:This also determines your go to market strategy. Can you afford a sales team or adwords?

simple CLTV = ASP / churn rate

CAC: Customer Acquisition CostSaaS

The average cost to gain a new customer.

costs: adwords, sales, marketing, PR

Why its important:Acquiring a customer along with the ASP must cost less than the life time value the customer will bring in.

Profit?SaaS

Profit = (LTV - CAC - ASP) * # Customers

So you need

LTV > CAC + ASP

Split TestingOften referred to as A/B testing.

examples: compare designs, pricing, layouts, etc.

Cohort AnalysisSplit testing by a date group

example cohorts: join date, age,