biz pirate metrics 2014 - fira de...
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Biz Pirate Metrics 2014 05 DE JUNIO 2014
Anna Ruete & Pol Valls Soler @polvallssoler
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Before 2000 • Sun Servers • Oracle DB • Exodus Hosting • 12-24mo dev cycle • 6-18mo sales cycle • <100M people online • $1-2M seed round • $3-5M Series A • Sand Hill Road crawl • Big, Fat, Dinosaur Startup
After 2008 • AWS, Google, PayPal, FB, TW • Cloud + Open Source SW • Lean Startup / Startup Wknd • 3-90d dev cycle • SaaS / online sales • >3B people online • <$100K incub + <$1M seed • $1-3M Series A • Angel List global visibility • Lean, Little, Cockroach Startup
Some context: Before & After 2 Dot-Com Crashes
Source:500startups
Daft Punk Startup: Simpler, Faster, Cheaper, Smarter
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• LESS Capital required to build product, get to market – Dramatically reduced $$$ on servers, software, bandwidth – Crowdfunding, KickStarter, Angel List, Funders Club, etc – Cheap access to online platforms for 100M+ consumers, smallbiz, etc
• MORE Customers via ONLINE platforms (100M+ users) – Search (Google) – Social (Facebook, Twitter) – Mobile (Apple, Android) – Local (Yelp, Groupon, Living Social) – Media (YouTube, Pinterest, Instagram, Tumblr) – Comm (Email, IM/Chat, Voice, SMS, etc)
• LOTS of little bets: Accelerators, Angels, Angel List, Small Exits – Y Combinator, TechStars, 500 Startups – Funding + Co-working + Mentoring -> Design, Data, Distribution – “Fast, Cheap Fail”, network effects, quantitative + iterative investments
Source:500startups
Some context: Changes in Tech Startups
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Metrics for pirates… AARRR!
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MAARRRketing for startups
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ACQUISITION
Users come to the site; you have their attention
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ACTIVATION
User performs some key activity that indicates a good first visit
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RETENTION
User continues to do that key activity indicating they like your product
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REFERRAL
User gets other users to join
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REVENUE
User pays you
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AARRR Funnel: Customer Lifecycle / Conversion Behavior
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AARRR Funnel: Customer Lifecycle / Conversion Behavior
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BLOG EXAMPLE
Acquisition - users come to the site and stay for at least 2 minutes
Activation - user signs up for RSS/newsletter
Retention - user reads at least one post a week or opens the newsletter
Referral - user promotes your blogs contests and drives traffic
Revenue - user buys your ebook
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SAAS EXAMPLE
Acquisition - user signs up for the service
Activation - user successfully makes a document
Retention - user continues to make documents. As long as they're
successfully making documents they will continue to use the service.
Referral – Users send other users to our web, possibly with a coupon code
Revenue - yay! money!
(Web-based app to convert HTML to PDF or Excel documents)
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AND…
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if CLV > CAC, then PROFIT
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AARRR Funnel: Customer Lifecycle / Conversion Behavior
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AARRRP!
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Example Conversion Metrics (note: your mileage may vary…)
Category User Status Conv % Est. Value Acquisition 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 Signup (anything that could lead to repeat visit)
5% $1
Activation Acct Signup (includes profile data)
2% $3
Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor
(3+ visits in first 30 days) 2% $5
Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25
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Example Conversion Metrics (note: your mileage may vary…)
Category User Status Conv % Est. Value Acquisition 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 Signup (anything that could lead to repeat visit)
5% $1
Activation Acct Signup (includes profile data)
2% $3
Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor
(3+ visits in first 30 days) 2% $5
Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25
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Example Conversion Metrics (note: your mileage may vary…)
Category User Status Conv % Est. Value Acquisition 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 Signup (anything that could lead to repeat visit)
5% $1
Activation Acct Signup (includes profile data)
2% $3
Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor
(3+ visits in first 30 days) 2% $5
Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25
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KEY METRICS TO TRACK
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ACQUISITION Key Metrics To Track:
• Volume(#) • Cost ($) • Conversion (%)
Acquisition tips (for the top 10 - 100 words) • Your brand / Products • Customer needs / Benefits • Competitor’s brand / Products (Steal traffic) • Semantic equivalents • Misspellings
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ACQUISITION
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ACQUISITION Extra tip: How to get your first 100 users
1) What existing solution do you believe your product is better than?
2) Where can you find a critical mass of people who use the existing solution?
3) Go there. Talk to them. Show them your product.
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ACQUISITION Extra tip: Reverse Engineered App Store’s ranking
algorithm (approximation)
AppStore Ranking = H + D + R + E + S H = # of installs weighted for the past few hours D = # of installs weighted for the past few days R = Reviews (star rating + number of reviews) E = Engagement (# of times app opened etc.) S = Sales ($)
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ACTIVATION Key metrics to track:
• Pages per visit (2-3+ page views) • Time on site (10-30+ seconds) • Conversions (1 key feature usage) • Clicks (3-5+ clicks) • Bounce rate (low)
Activation Tips: • Less is more • Focus on UX / Usability • Provide incentives & call to actions • Perform A/B tests and iterate fast
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ACTIVATION
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RETENTION Key metrics to track:
• Source (email, RSS, affiliates…) • Volume (Low spam rating) • Conversions (20% open rate / CTR) • Visitor Loyalty (1–3+ visits per month) • Session Length • Long customer life cycle / Low decay • Identify fanatics and cheerleaders
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RETENTION
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RETENTION 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
• Status / “best of” weekly/monthly emails
• “Something happened” emails
• Lifecycle emails @ +3, +7, +30 days
• RSS / News feeds
• Widgets / Embeds
• Gamification
• Fanatics = Virality + affiliate channels (like bloggers)
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REFERRAL Key metrics to track:
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.
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REFERRAL
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REFERRAL Referral Tips:
• Personal send to friend (Email / IM) • Social Media • Widgets / Embeds • Affiliates
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REVENUE Key metrics to track:
• Conversion to revenue (%)
• Volume ($$$)
Revenue Tips:
• Don’t just rely on AdSense, iAd…
• Offer something free (at least when starting out)
• Subscription / Recurring transactions
• Qualify your customers / Traffic for lead generation.
• Sell somethig (physical or virtual)
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REVENUE
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PROFIT
…
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CAC (Customer Acquisition Cost)
Take only a portion of those salaries and expenses in the early days to give a better indication of how
CAC will look when you are at scale.
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CLV or LTV (Customer Lifetime Value)
if the Customer Churn rate is a monthly % or yearly %, then the Customer Lifetime will be for the same time period.
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CLV or LTV (Customer Lifetime Value)
In most SaaS businesses, the gross margin % is high (above 80%), and it’s quite common to use the simpler version of
the formula that is not Gross Margin adjusted.
To truly get an accurate picture of LTV, you should take into consideration Gross Margin:
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a = initial ARPA per month ( x GM %, if you prefer) m = monthly growth in ARPA per account c = Customer Churn Rate (in months)
CLV or LTV in a More Complex Scenario (Where you expect ARPA to change over the lifespan
of the customer due to expansion revenue)
(This formula makes an assumption that revenue increases at a roughly fixed rate every month for the entire lifetime of the customer)
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if 1 < LTV/CAC < 3 if LTV/CAC < 1
LTV : CAC Ratio Awesomeness
> 3 if
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if 1 < LTV/CAC < 3 if LTV/CAC < 1
LTV : CAC Ratio Awesomeness
> 3 if
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if 1 < LTV/CAC < 3 if LTV/CAC < 1
LTV : CAC Ratio Awesomeness
> 3 if
(It’s ok. As a startup, don’t worry initially about LTV>3*CAC)
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if 1 < LTV/CAC < 3 if LTV/CAC < 1
LTV : CAC Ratio Awesomeness
> 3 if
(It’s ok. As a startup, don’t worry initially about LTV>3*CAC)
your business model is broken!
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Tools for metrics analysis
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Tools for testing
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Gracias – Q&A
Anna Ruete Entrepreneurship Program Manager at La Salle Technova [email protected]
Pol Valls Soler Key Account Manager at La Salle Technova [email protected] @polvallssoler linkedin.com/in/polvallssoler slideshare.net/polvallssoler
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