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Startup Metrics 101 Web 2.0 Expo SF - 04/22/08 Dave McClure, Master of 500 Hats http://500hats.typepad.com/ http://www.500hats.com/ http://slideshare.net/dmc500hats/ Hiten Shah, CrazyEgg / ACS / KISSmetrics http://crazyegg.com http://acsseo.com http://KISSmetrics.com
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Startupmetrics101aarrr

Aug 31, 2014

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Page 1: Startupmetrics101aarrr

Startup Metrics 101Web 2.0 Expo SF - 04/22/08

Dave McClure, Master of 500 Hatshttp://500hats.typepad.com/

http://www.500hats.com/http://slideshare.net/dmc500hats/

Hiten Shah, CrazyEgg / ACS / KISSmetricshttp://crazyegg.comhttp://acsseo.com

http://KISSmetrics.com

Page 2: Startupmetrics101aarrr

AARRR!: 5-Step Startup Metrics Model

Website.com

5. Revenue $$$

Biz DevAds, Lead Gen,Subscriptions,ECommerce

2. Activation

Homepage /Landing Page

ProductFeatures

1. ACQUISITION

SEOSEM

Apps &Widgets

Affiliates

Email

PR BizDev

Campaigns,Contests

Direct,Tel, TV

SocialNetworks

Blogs

Domains

3. Retention

Emails &Alerts

System Events &Time-based

Features

Blogs, RSS,News Feeds

4. REFERRALEmails &widgets

Affiliates,Contests

ViralLoops

Page 3: Startupmetrics101aarrr

Why Be a Web 2.0 Entrepreneur?

• Low Cost• Lots of Users• Online Advertising / E-Commerce• Online Metrics• It’s Cool.• Make MONEY.

Page 4: Startupmetrics101aarrr

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

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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

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Startup Metrics for Pirates:5 Steps to Web 2.0 Booty!

• Acquisition: users come to site from various channels• Activation: users enjoy 1st 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!

Page 7: Startupmetrics101aarrr

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

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Example Conversion Metrics(note: *not* actuals… your mileage may vary)

Category Conversion Status Conv % Est. ValueAcquisition Visit Site

(or landing page, or external widget)100% $.01

Acquisition Doesn't Abandon(views 2+ pages, stays 10+ sec, 2+ clicks)

70% $.05

Activation Happy 1st Visit(views X pages, stays Y sec, Z clicks)

30% $.25

Activation Email/Blog/RSS/Widget/Acct Signup(anything that could lead to repeat visit)

5% $2

Retention Length of Session / # of Clicks(length/intensity of engaged visit, >180s)

10% $1

Retention Email Open/ RSS view -> Click/Repeat Visit(3+ visits in first 30 days)

3% $5

Referral Refer 1+ users who visit site 2% $1Referral Refer 10+ users who activate 0.2% $10Revenue User generates minimum revenue 2% $5Revenue User generates break-even revenue 1% $25

Page 9: Startupmetrics101aarrr

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 Emails

Page 10: Startupmetrics101aarrr

Example Marketing Channelsdisclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business

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Website.com

Marketing Channels:• largest-volume (#)• lowest-cost ($)• best-performing (%)

Acquisition

1. ACQUISITION

SEOSEM

Apps &Widgets

Affiliates

Email

PR BizDev

Campaigns,Contests

Direct,Tel, TV

SocialNetworks

Blogs

Domains

Page 12: Startupmetrics101aarrr

AcquisitionWhere are users coming from?

Acquisition MethodsSEO / SEMBlogsEmailSocial Media &

Social NetworksDomains

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AcquisitionKeyword Vocabulary

Top 10 - 100 words• Your Brand / Products• Customer Needs / Benefits• Competitor’s Brand / Products• Semantic Equivalents• Misspellings

Things to analyze• Sources• Volume• Cost• Conversion

Page 14: Startupmetrics101aarrr

AcquisitionWhere are users coming from?

Key Metrics to TrackQuantity (#)Cost ($)Conversions (%)

Example

Page 15: Startupmetrics101aarrr

AcquisitionTools

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

ResourcesSEO Book Blog

seobook.com/blogThe Social Media Manual: Read Before You Play

searchengineland.com/071120-144401.phpStrategies to ruthlessly acquire users

andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html

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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 dumbguesses & iterate FAST

2. Activation

Homepage /Landing Page

ProductFeatures

1. ACQUISITION

SEOSEM

Apps &Widgets

Affiliates

Email

PR BizDev

Campaigns,Contests

Direct,Tel, TV

SocialNetworks

Blogs

Domains

Activation

Page 17: Startupmetrics101aarrr

ActivationWhat do users 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

Page 18: Startupmetrics101aarrr

ActivationWhat do users do on their first visit?

Key Metrics to TrackPages per visitTime on siteConversions

Before After

Page 19: Startupmetrics101aarrr

ActivationTools

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

ResourcesExperimentation and Testing: A Primer

kaushik.net/avinash/2005/05/experimentation-and-testing-a-primer.htmlLanding 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/

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Website.com

2. Activation

Homepage /Landing Page

ProductFeatures

1. ACQUISITION

SEOSEM

Apps &Widgets

Affiliates

Email

PR BizDev

Campaigns,Contests

Direct,Tel, TV

SocialNetworks

Blogs

Domains

3. Retention

Emails &Alerts

System Events &Time-based

Features

Blogs, RSS,News Feeds

Automated emails are simple & easyretention (but don’t overdo it)

• lifecycle emails @ +3, +7, +30d

• status emails weekly/monthly

• event-based emails as they occur

BUT:

• make it easy to unsubscribe

Tip on emails:

• > 80% or more on SUBJECT LINE

• < 20% or less on BODY TEXT

Retention

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RetentionHow do users come back?

Retention Methods Automated Emails

* Track open rate / CTR / Quantity

RSS / News Feeds* Track % viewed / CTR / Quantity

Widgets / Embeds* Track impressions / CTR / Quantity

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RetentionHow 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• 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?)

Page 23: Startupmetrics101aarrr

RetentionHow do users come back?

Key Metrics to Track Source Quantity Conversions Visitor Loyalty Session Length

Example

Page 24: Startupmetrics101aarrr

RetentionTools

Campaign Monitor / 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

Resources30 free HTML email templates

campaignmonitor.com/resources/templates.aspxBest Practices in Writing Email Subject Lines

mailchimp.com/resources/best-practices-in-writing-email-subject-lines.phtmlLearning Viral: Viral Emails of Tagged.com

okdork.com/2008/04/10/learning-viral-studying-taggedcom/

Page 25: Startupmetrics101aarrr

Website.com

2. Activation

Homepage /Landing Page

ProductFeatures

1. ACQUISITION

SEOSEM

Apps &Widgets

Affiliates

Email

PR BizDev

Campaigns,Contests

Direct,Tel, TV

SocialNetworks

Blogs

Domains

3. Retention

Emails &Alerts

System Events &Time-based

Features

Blogs, RSS,News Feeds

4. REFERRALEmails &widgets

Affiliates,Contests

ViralLoops

Focus on driving referrals*after* users have a“happy” experience; avg score >= 8 out of 10

Referral

Page 26: Startupmetrics101aarrr

ReferralHow do users refer others?

Referral MethodsSend to Friend:

Email / IMSocial MediaWidgets / EmbedsAffiliates

Page 27: Startupmetrics101aarrr

ReferralViral Growth Factor

Viral Growth Factor = X * Y * ZX = % of users who invite other peopleY = average # of people that they invitedZ = % of users who accepted an invitation

A viral growth factor > 1 means an exponential organic user acquisition.

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ReferralTools

Gigya (social media distribution & tracking tool)gigya.com

ShareThis / AddThis (sharing buttons)sharethis.com / addthis.com

GetMyContacts (PHP contacts importing & invitation software)getmycontacts.com

ResourcesSeven 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.htmlMetrics: Where Users Come From

slideshare.net/guest2968b8/rockyou-snap-summit-32508

Page 29: Startupmetrics101aarrr

Website.com

5. Revenue $$$

Biz DevAds, Lead Gen,Subscriptions,ECommerce

2. Activation

Homepage /Landing Page

ProductFeatures

1. ACQUISITION

SEOSEM

Apps &Widgets

Affiliates

Email

PR BizDev

Campaigns,Contests

Direct,Tel, TV

SocialNetworks

Blogs

Domains

3. Retention

Emails &Alerts

System Events &Time-based

Features

Blogs, RSS,News Feeds

4. REFERRALEmails &widgets

Affiliates,Contests

ViralLoops

Revenue

This is the part *you*still have to figure out…(we don’t know jackabout your business)

Page 30: Startupmetrics101aarrr

RevenueHow 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)

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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)