lean startup metrics

Download Lean startup metrics

Post on 11-Aug-2014

19.167 views

Category:

Business

0 download

Embed Size (px)

DESCRIPTION

My presentation on Lean Startup Metrics given at Lean Startup Machine on the 4th Feb and Startup Weekend on the 25h Jan.

TRANSCRIPT

  • LEAN STARTUP METRICS @STUECCLES 4th Feb 2012
  • I NEVER FELT LIKE I WAS LEARNINGANYTHING IMPORTANT
  • An actionable metric is one that ties specific andrepeatable actions to observed results. ASH MAURYA http://www.ashmaurya.com/
  • EVENT BASED TRACKING
  • F UNNELS
  • SIMPLE SIGN-UP FUNNEL
  • EXTENDED SIGN-UP FUNNEL
  • A/B TESTING
  • +152%
  • A/B TESTING USER MAP ON HOMEPAGE
  • GOOGLE BING
  • THAT BLUE WAS WORTH $80M AT LEAST PAUL RAY - PRODUCT MANAGER BING
  • AN INTUITIVE LEAPLOCALMAXIMA PROPS @BOKARDO FOR LAST FEW SLIDES
  • @37SIGNALS
  • WHAT TO A/B TESTShort Answer: EverythingLonger Answer: That you haveenough trac to see signicantresults that are not trivaloptimisations (HINT you are notBing/Google)
  • WHAT TO A/B TESTEvery new feature should gointo A/B testing.If has negative or no real eect,pull it.Optimise existing features/copy/design (80% existing 20% new)
  • F RAMEWORK
  • ACTIVATION REFERRAL RETENTION REVENUEACQUISITION Dave McClure http://500hats.typepad.com/
  • DONT TRY TO MEASURE TOO MUCH
  • E XAMPLES
  • SAY HELLO TO OUR 3 FICTIONAL STARTUPS
  • G GIE CO LRDO Social Network for Dog Lovers. Makes money through advertising and aliate sales of lush dog collars.
  • G GIE CO LRDO Key business drivers are: Advertising and aliates need large trac/page views so growth and retention are key
  • ACQUISITION VISITACQUISITION SIGN-UP CREATEACTIVATION PROFILE POSTACTIVATION COMMENT PICTURES SHARE INVITE REFERRAL PICTURES FRIENDS REVENUE BUY COLLAR
  • IL ES AM BAAGProject management tool for Agilestartups.Makes money through monthlysubscriptions. Has a free trial period.
  • IL ES AM BAAGKey business drivers are:Conversion to paid usage andcancelation rates
  • ACQUISITION VISITACQUISITION SIGN-UPACTIVATION CREATES PROJECT UPGRADES REVENUE PAID CANCELS REVENUE ACCOUNT
  • T MY DR ILLR ENMarketplace to rent/buy drills fromyour neighbour (AirBnB for drills)Takes a small percentage of thetransaction between two parties
  • T MY DR ILLR EN Key business drivers are: Two sided business model means acquisition of both lenders and borrowers and transactions per user
  • ACQUISITION VISIT LENDER BORROWERACQUISITION SIGN-UP SIGN-UP SEARCHES SEARCHESACTIVATION BORROWERS LENDERS BORROW REVENUE DRILL
  • ONE KEY METRICThere is generally only one keymetric you need to concentrateon at a time. Such as referral orsign-up conversion orcancellation rate.
  • A CQUISITION
  • TRACKING MARKETINGCHANNELSGoogle AdwordsBannersSocial MediaPartnershipsPRBloggingAnything that links to your site!
  • TRACKING MARKETINGCHANNELSUse unique urls (trackingparameters) on every url youcreate/give-out/pay forUse bit.lyUse HTTP referrers to group PR
  • MEASURING COST OF VISITSCost per click (site visit)Cost of campaign / tracgenerated(Social media) Cost of eort /trac generated
  • MEASURING COST OFACQUISITIONCost of one visit / conversionrate = Cost of an acquisitionAcquisition could be paid foracquisition or free sign-upUnfortunately not that simple
  • DIFFERENT CHANNELS CAN HAVEDIFFERENT CONVERSION RATES
  • MARKETING CHANNELSPer channel track:ScaleCostConversionOptimise and scale channelswith best Cost of Acquisition(CoA) and potential to Scale
  • ACQUISITIONCost of Acquisition < CustomerLifetime ProtThen scale acquisition at asimilar or lower rateA/B test acquisition channels tooptimise
  • ACQUISITION INCLUDING REFERRAL If it costs 3 to acquire a customer through advertising But that customer brought in 2 other customers through referral The COA of that channel is 1
  • A CTIVATION
  • SURE THEY SIGNED-UP BUT DID THEY LIKE IT?
  • ACTIVATION AT FACEBOOK(i) which data points predictwhether a user will stay?(ii) if they stay, which data pointspredict how active theyll beafter three months?
  • ACTIVATION AT FACEBOOK(i) having more than one session asa new user, and entering basicprole information.(ii) how often a user was reachedout to by others, frequency of thirdparty application use, and howforthcoming a user was on the site.
  • ACTIVATION METRICS OFTEN DRIVE OTHER METRICS IN REFERRAL, RETENTION, REVENUE
  • R ETENTION
  • RETURNING USERSTracking unregistered users thatreturn often (useful for contentsites with advertising)Tracking registered users thatreturn and take some sort ofaction.
  • COHORT METRICS - CREATEDPROJECT
  • COHORT METRICS - CAME BACK
  • R EFERRAL
  • REFFERAL MECHANISMSSocial Media SharingInvite a friend type mechanicsApp ReviewsWord of mouth
  • VIRAL COEFFICIENTThe average number ofcustomers each customer refers
  • VIRAL COEFFICIENT - EXAMPLEEach Doggiecollr customerinvites 5 other customers byemail20 % click on that email link50 % of those users convert intocustomers
  • VIRAL COEFFICIENT - EXAMPLE Viral coecient =Reerals x click through x conversion 5 x 0.2 x 0.5 = 0.5
  • VIRAL COEFFICIENTA viral co-eecient greater than1 means that every customergets more than one othercustomer on averageTherefore your product willgrow virally
  • VIRAL COEFFICIENTMeasure automatically for allyour in built referralmechanisms.Give customers unique inviteURLs and track conversions
  • VIRAL CYCLE TIMEThe average time taken for areferral to turn into a customerWith the viral coeecent andviral cycle time you candetermine your viral growth
  • NET PROMOTER SCORE Number of people who would recommend your product to a friend. A single question survey
  • NET PROMOTER SCORE How likely is it you would recommend AgileSamba to a friend or colleague?0 1 2 3 4 5 6 7 8 9 10 NPS = % Promoters - % Detractors
  • NET PROMOTER SCORE Survey a small percentage of your customers by email weekly Record who you sent to so you dont repeat the same people every week
  • NET PROMOTER SCORE NPS is not a direct measurement that translates to key metrics Can act as a leading indicator of other metrics
  • R EVENUE
  • MAKING MONEY Key for any business is to nd out how much prot they make for every customer and scaling the number of customers
  • LIFETIME CUSTOMER VALUE How much money you make for every customer you acquire For some this is a single transaction For subscription businesses it depends on retention
  • CANCELLATION RATE Is the percentage number of customers who cancel in any given month compared to total (paying) customers [Cancellation rate] = [product utility] + [service quality] + [acceptable price]
  • LIFETIME CUSTOMER VALUE (LTV) LTV = monthly revenue x no months in lifetime No months = 1 / cancellation rate LTV = monthly revenue / cancellation rate
  • LIFETIME CUSTOMER VALUE (LTV) For example: If 20 a month and cancelation rate is 10% a month LTV = 200
  • LIFETIME CUSTOMER VALUE (LTV) Often not that simple. Short term cancellation rates are much higher than long term Use Cohort Analysis to determine
  • LIFETIME CUSTOMER VALUE (LTV) r= short-term cancellation rate (e.g.0.15) p= long-term cancellation rate (e.g.0.03) s= number of months in the short-term age group (e.g.3) (1-r)^s (s+1/p)=expected months
  • T IPS
  • TIPSConcentrate on macro metricsEverything you do should be anattempt to change a metricMeasure if it didTry to use as few tools aspossible
  • TIPSAutomate it and put it in adashboardIf it cant be automated make asimple spreadsheet and an easyway to update it
  • TIPSDont forget to measuremarketingMake metrics a habit
  • T HANKS