Business Models & Startup Business Models & Startup Metrics Metrics for Scottish Pirates for Scottish Pirates ( ( AARRR! AARRR! ) ) v v 1.3 1.3 Dave McClure, Master of 500 Hats Dave McClure, Master of 500 Hats @ Univ. Edinburgh, January 2008 @ Univ. Edinburgh, January 2008 blog: http://500hats.typepad.com/ blog: http://500hats.typepad.com/ website: http://www.500hats.com/ website: http://www.500hats.com/ slides: http://slideshare.net/dmc500hats/ slides: http://slideshare.net/dmc500hats/ * reminder: National Talk Like a Pira is Sept 19 th !
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Startup Metrics For Scottish Pirates (AARRR!) v1.3
revised Startup Metrics for Pirates preso, for talk @ Univ. Edinburgh (January 2008)
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Business Models & Startup Business Models & Startup Metrics Metrics
for Scottish Pirates for Scottish Pirates ((AARRR!AARRR!) ) vv1.31.3
Dave McClure, Master of 500 HatsDave McClure, Master of 500 Hats
@ Univ. Edinburgh, January 2008@ Univ. Edinburgh, January 2008
3.3. BEST: BEST: Make Make Money Money (= Revenue*)(= Revenue*)• * ideally * ideally profitable profitable revenuerevenue
1.1. Note: *eventually* need to turn Users/Usage -> Note: *eventually* need to turn Users/Usage -> MoneyMoney
AARRRAARRRgendagendaStartup Metrics for Pirates (AARRR!)Startup Metrics for Pirates (AARRR!)
Questions for Pirates & FoundersQuestions for Pirates & Founders
What is a Business Model?What is a Business Model?
What is a Marketing Plan?What is a Marketing Plan?
More About MetricsMore About Metrics
Web 2.0: What’s So Special?Web 2.0: What’s So Special?
SummarySummary
MMAARRRAARRRketing keting PlanPlan
Marketing Plan = Target Customer Acquisition Marketing Plan = Target Customer Acquisition ChannelsChannels
3 Important Factors = Volume (3 Important Factors = Volume (##), Cost (), Cost ($$), Conversion ), Conversion ((%%))Measure conversion to target customer actionsMeasure conversion to target customer actionsTest audience segments, campaign themes, Call-To-Action Test audience segments, campaign themes, Call-To-Action ((CTAsCTAs) )
Match Channel Costs to Revenue Potential Match Channel Costs to Revenue Potential Est. Conversion + Revenue PotentialEst. Conversion + Revenue PotentialAvg Txn Value (Avg Txn Value (ATVATV), Ann. Rev. Per User (), Ann. Rev. Per User (ARPUARPU), Cust. ), Cust. Lifetime Value (Lifetime Value (CLVCLV))Design channels that cost Design channels that cost <20-50%<20-50% of target ATV, ARPU, of target ATV, ARPU, or CLVor CLV
Consider Costs & Resource TradeoffsConsider Costs & Resource TradeoffsActual expensesActual expensesMarketing time & resourcesMarketing time & resourcesProduct/Engineering time & resourcesProduct/Engineering time & resourcesTiming of expense vs. revenue, profit vs. cashflowTiming of expense vs. revenue, profit vs. cashflow
Example Marketing ChannelsExample Marketing Channelsdisclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business
AARRRAARRRgendagendaStartup Metrics for Pirates (AARRR!)Startup Metrics for Pirates (AARRR!)
Questions for Pirates & FoundersQuestions for Pirates & Founders
What is a Business Model?What is a Business Model?
What is a Marketing Plan?What is a Marketing Plan?
More About MetricsMore About Metrics
Web 2.0: What’s So Special?Web 2.0: What’s So Special?
SummarySummary
4 Types of Measurement4 Types of Measurement
QualitativeQualitative: Usability Testing / Session Monitoring: Usability Testing / Session MonitoringWatch users, guess problems & solutions from small # of Watch users, guess problems & solutions from small # of usersusers
QuantitativeQuantitative: Traffic Analysis / User Engagement: Traffic Analysis / User EngagementTrack users, usage, conv %'s for empirical sample # of Track users, usage, conv %'s for empirical sample # of usersusers
ComparativeComparative: A/B, Multivariate Testing: A/B, Multivariate TestingCompare what users do in one scenario vs anotherCompare what users do in one scenario vs anotherMeasure which copy/graphics/UI are most effectiveMeasure which copy/graphics/UI are most effective
CompetitiveCompetitive: Monitoring & Tracking Competitors: Monitoring & Tracking CompetitorsTrack competitor activity & compare against yours (if Track competitor activity & compare against yours (if possible)possible)Compare channels, keyword traffic, demographics, user Compare channels, keyword traffic, demographics, user sat, etc.sat, etc.
(see slide notes for links to tools & vendors)(see slide notes for links to tools & vendors)