KPI, Metriche e Customer Acquisition

KPIs & metrics (slides by Matteo Panfilo)

Presenters

[email protected]

@mattepv

[email protected]

@umbertodefeo

GiT Workshop - January 2014

About us

1

What I’ve done until 2013 I studied economics in Pavia & management in France I wrote a thesis on Angel Investing I attended the AIFI Class for VC professionals in 2011 I worked over two years @ Italian Angels for Growth (11 investments in the period = >4mln)

I worked one year @ Fashionis (e-commerce startup) What I'm doing since the beginning of 2014 I co-founded @Fast4ward I keep on promoting local startup ecosystems @ Activators Pavia

What I’ve done until 2013

I studied International Business and Finance at LUISS I wrote a thesis on the investment opportunities in the green energy sector in South East Asia I lived and worked in Kiev, London, Rome, Kuala Lumpur and Milan I attended the AIFI Class for VC professionals in 2012 I worked @ Italian Angels for Growth

I worked @ Zernike META Ventures What I'm doing since the beginning of 2014 I started working on the international activities @META Group

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate

5.A/B test

6.Source channels, email/DEM

7.CRM

Conclusion

2

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate

5.A/B test


7.CRM

Conclusion

3

1. Different businesses, different metrics

Airbnb

Friendfinder

Blogo

6sicuro.it

Privalia

4

Number of house with HD pics

Viral factor (K)

Pages per user

Generated quotes (lead)

Cost per shoting

Hundreds of different metrics

PV Page Views

UV Unique Visitors

CPM Cost per Thousand

BR Bounce Rate

CTR Click Trough Rate

CPR Cost Per Registration

CPL Cost Per Lead

CPA Cost Per Acquisition (or

Cost per Action)

CPC Cost Per Click

LTV Lifetime Value

CR Conversion Rate

Churn Churn Rate

5

Lean Analytics

6 http://www.startuplessonslearned.com/2013/03/lean-analytics.html

http://www.slideshare.net/Leananalytics

http://www.kaushik.net/avinash/lean-analytics-cycle-metrics-hypothesis-experiment-act/

Lean Analytics (alcuni esempi)

7 http://www.startuplessonslearned.com/2013/03/lean-analytics.html

http://www.slideshare.net/Leananalytics

http://www.kaushik.net/avinash/lean-analytics-cycle-metrics-hypothesis-experiment-act/

Scalability (basic formulas)

LTV

CPC

%CR

CPA = Cost Per Acquisition (or Cost per Action), CPC = Cost per Click, LTV = Lifetime Value

LTV Starbucks: http://blog.kissmetrics.com/wp-content/uploads/2011/08/calculating-ltv.pdf

LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/

Dipende fondamentalmente

da: soddisfazione dei clienti, CRM, biz model, etc

< CPA

8

“LTV is the projected profit that a

customer will generate during his

lifetime”

General CPA = $ Adv cost / # Customers acquired CPA based on CPM campaign: (CPM x Impressions /1000)/ # Customer acquired LTV formulas

•LT Revenues: # Purchases x $ Avg. basket •LT Revenues: $ Avg. basket / % Churn rate •LT Gross Profit: # Purchases x $ Avg. basket x % gross profit margin •LT Gross Profit: $ Avg. basket / % Churn rate x % gross profit margin •LT DCF: ($ Avg. basket margin x Life Expectancy) x (Customer retention rate / 1 + discount rate – Customer retention rate)

http://blog.kissmetrics.com/wp-content/uploads/2011/08/calculating-ltv.pdf





http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/













Scalability (basic formulas)

LTV

CPC

%CR

< CPA

9

Small numbers,

huge impact:

CPC = 0,4€

%CR = 4%

CPA = 10€

CPC = 0,4€

%CR = 2,5%

CPA = 16€

CPA = Cost Per Acquisition (or Cost per Action), CPC = Cost per Click, LTV = Lifetime Value

LTV Starbucks: http://blog.kissmetrics.com/wp-content/uploads/2011/08/calculating-ltv.pdf

LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/



















Scalability, make it happen!

10 Source: David Skok - http://www.forentrepreneurs.com/startup-killer/

Note: CAC = CPA

Source: David Skok - http://www.forentrepreneurs.com/startup-killer/

Scalability, how you can do it?

Note: CAC = CPA 11

Conversion

What’s the meaning of conversion rate?

What’s the meaning of funnel?

CPC

%CR CPA =

Define what are you looking to measure! i.e.: define who you consider a customer; define the difference between

CPL and CPA (if there is)

12

General CPA = $ Adv cost / # Customers acquired CPA based on CPM campaign: (CPM x Impressions /1000)/ # Customer acquired

The Funnel .. <offline mode>

13

1. A lot of people see the adv

wall

2. Some people recognize it

walking in front of a

sunglasses shop

3. Some of them decide to go

in and try them

1. One of them want to buy it

The Funnel .. <online mode - ie. ecommerce>

100

50

20

5

3

1

1. I paid to have some users on my

website

2. They arrive on the landing page

3. They leave their email

1. They put one product in the basket

2. They start the checkout process

3. They complete all the payment

info

4. They pay

50%

40%

40%

38%

33% 1%

14

The Funnel .. <online mode - ie. ecommerce>

100

50

20

5

3

1

Paid users

Landing page

Leave the email

Product on the basket

Checkout process

Payment info

They pay

• Pictures

• Copy/text button

• Info required

• Password

• Email confirm

• Add button

• Related product

• Info required

• Shipping days

• Delivery cost

• Payment gateway

• Invoice/legal info

• CC circuit

• PIN request

Some drivers:

15

Why measure the funnel

You need to identify the bottleneck and solve it!

Examples:

- Pictures

- Checkout process

- Payment gateway 16

The Funnel .. (flash sales ecommerce)

Users that arrive till

checkout

Registered users

Unique users

Users that complete the form

Paying

users

1%-0,5%

Measure your CPL/CPA!

The CPA initially refers only to

the traffic resulting from paid

campaigns is the main KPI to

be monitored in an

ecommerce / SaaS, but in

the medium term it should

be monitored along with the

metrics of the traffic that

came from other channels

(email, facebook page, etc.

)

17

Customer journey

Use

rs

Cu

stom

ers

Source: IAB Seminar 2013, Ilaria Zampori Managing Director QUISMA, Individual Conversion Attribution

http://www.iabseminar.it/wp-content/uploads/2013/02/9_QUISMA.pdf

Awareness

Consideration Conversion

Loyalty

Choiche Information

Desire

18

Customer journey

Awareness

Consideration Conversion

Loyalty

Source: IAB Seminar 2013, Marco Caradonna Simple Agency Dynamic Customer Journey

http://www.slideshare.net/mcarado/4-iab-seminar-performance-2013-simple-agency

Choiche Information

Desire

19

instruments instruments instruments

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis, measure customer behaviour

4.Churn rate

5.A/B test


7.CRM

Conclusion

20

Cohort Analysis referral source analysis

“A cohort is a group of people who share a common

characteristic over a certain period of time”

Google Facebook Blog

Customer spending by referral source

Direct

Source: www.cohortanalysis.com/

21

Cohort Analysis time-period analysis

Time period

1 2 3 4 5 6 7 8 9 10 11 12

Time-period cohorts

1 513 410 328 263 210 168 134 108 86 69 55 44

2 923 739 591 473 378 303 242 194 155 124 99

3 1.258 1.007 805 644 515 412 330 264 211 169

4 1.537 1.230 984 787 630 504 403 322 258

5 1.777 1.421 1.137 910 728 582 466 373

6 1.987 1.590 1.272 1.017 814 651 521

7 2.178 1.742 1.394 1.115 892 714

8 2.355 1.884 1.507 1.206 965

9 2.524 2.020 1.616 1.292

10 2.689 2.151 1.721

11 2.852 2.282

12 3.017

paying users 513 1.334 2.325 3.398 4.495 5.583 6.644 7.671 8.661 9.618 10.547 11.454

How much revenue do the users that I’ve acquired on the second months

generate?

How many users that I’ve acquired on the second month will I probably still

have on the ninth month?

Source: andrewchenblog.com

22

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate, do not throw the job done

5.A/B test


7.CRM

Conclusion

23

Churn Rate

Your churn rate is the amount of customers or subscribers who cut ties

with your service or company during given time period.

These customers have “churned”

Recurring revenues model Traditional Ecommerce

# Subscribers lost

# Starting subscribers = % Churn rate

# Customers who has not made a

purchase in 90 days*

# Starting active customers

= % Churn rate

Source: www.churn-rate.com

24

* it depend on

business model

and offer

Optimize..

1.Metrics & KPIs

2.Funnel

3.Cohort analysis

4.Churn rate

25

Analyse

Change

Learn Consolidate

Iterate Learning

process

Why you need to optimize..

• You have 0-8 seconds to make a compelling headline and

landing page. After 8 seconds, the majority of visitors leave.

• Approximately 96% of visitors that come to your website are

not ready to buy.

• The more landing pages you have, the more leads you are

likely to get.

• Product videos can increase purchases of the product by

144%.

• A 1 second delay in your site speed can result in a 7%

reduction in conversions.

• A/B testing is becoming the preferred method that has

brought a lot of the companies the most success.

Source: http://blog.kissmetrics.com/what-converting-websites-do/ 26

http://blog.kissmetrics.com/what-converting-websites-do/







Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate

5.A/B test, what do customers prefer?


7.CRM

Conclusion

27

A/B test…

• Elaborate 2 different versions (text, colors, font, layout, etc)

• Propose versions to the target sample (with the same content)

• Measure conversion rate

• Profile users based on conversion rates (male/female, addicted, etc)

• (Visualize where the users click on the pages)

The same process could be applicable to web pages, email/DEM,

games dynamics, etc!

28

Headline..

Original

+30%

+15%

29 Fonte: http://37signals.com/svn/posts/1525-writing-decisions-headline-tests-on-the-highrise-signup-page

http://37signals.com/svn/posts/1525-writing-decisions-headline-tests-on-the-highrise-signup-page



















Layout..





















Layout..





















Layout..

Is not always a good

idea to write more…





















A/B test are easy but..

Source: http://techcrunch.com/2013/01/12/current-conversion-rate-and-desired-

confidence-interval-will-help-you-avoid-analysis-paralysis-stop-running-stupid-tests/

Consider a site that has 10,000 visitors per month and has a 5 percent conversion

rate. The table below shows how long it will take to run a “conclusive” test (95

percent confidence) based on how much the change impacts conversion rate.

33

Other tips..

• Badging

up to +50%

• Message consistency

up to +100%

• International website

up to +100%

• Email sign-up

up to +1.000%

Fonte: http://www.slideshare.net/Emerce/emerce-performance-bryan-eisenberg 34

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate

5.A/B test


7.CRM

Conclusion

35

Email & DEM

1. Choose & Optimize email form

2. Choose & Optimize password request

3. Choose the confirmation process

4. Choose emails’ arguments and style

5. Choose & Optimize email subjects

6. Metrics, metrics, metrics:

• Open rate/Unique OR

• Click rate

• Click-through-rate

• Delivery time

• List growth

• Unsubscribe rate (or churn rate)

• Spam complaint rate

Drivers:

Subject, time

Content

Layout

All of the above

Too many

Frequency & content

Too many

Email could become your first traffic source, improve the LTV of your

customers, decrease your customer acquisition cost !

36

Email & DEM

Source: http://retail-analytics.quora.com/Email-Open-Click-Through-Analytics-from-over-80-Billion-Emails

37

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate

5.A/B test


7.CRM

Conclusion

38

The true cost of bad support

39 Source: https://www.helpscout.net/blog/bad-customer-service/

Interact with customers…

People now expect the same—if not better— level of

service from online storefronts and service channels as

they do from a visit to a retail store or a phone

conversation with an agent.”

Source: “ E mail Customer Service in North American Small and Medium Businesses” by

BenchmarkPortal, 2005 and https://www.helpscout.net/blog/bad-customer-service/ 40

Source: Communication Preference, Live Chat Effectiveness, A Survey of Internet Shoppers 2012


41

Source: “Email Customer Service in North American Small and Medium Businesses” by BenchmarkPortal, 2005,

Source: Forrester Research Inc., 2008

83% of small and medium-sized

businesses responded with

inaccurate or incomplete answers.

41% of consumers expect an e-mail

response within six hours.

Only 36% of retailers responded that quickly.


42

“Customer experience quality could

result in a swing of $184 million for a

large Internet retailer.”

Source: Forrester Research Inc., 2008


43

The power of great video…

Video: http://www.youtube.com/watch?feature=player_embedded&v=ZUG9qYTJMsI

44

http://www.youtube.com/watch?feature=player_embedded&v=ZUG9qYTJMsI

Agenda

1.Metrics & KPIs

2. Funnel

3.Cohort analysis

4.Churn rate

5.A/B test


7.CRM

Conclusion

45

Recap & useful tools

1.Metrics, measure and understand your KPIs

2.Funnel, know the steps to improve your conversion

3.Cohort analysis, analyse customer behaviour

4.Churn rate, do not throw the job done

5.A/B test, what do customers prefer?

6.Source channels, email/DEM still a very interesting

channel

7.CRM, interact and learn from your customers

- Mixpanel

- Jirafe free

- Woopra

- Kissmetrics

- RJ metric

- Geckoboard

46

My 2 cents

Non pensate che fare una startup sia un gioco.

Cercate di creare valore, non fate le cose perché vanno di moda

e non sviluppate l’ennesima app per condividere le foto.

Non pensate a raccogliere soldi ma pensate a creare un prodotto

e ad avere una visione per i successivi 10 anni.

Studiate e documentatevi tanto prima di prendere ogni decisione,

c’è un’enorme quantità di informazioni online, basta saperle cercare.

47

“I believe in the power of a well-operated, sophisticated organization

that generates social and economic value. My career goal is to found

and lead this type of organization.” Hansoo Lee

• Steve blank tools (www.steveblank.com/tools)

• Avinash Kaushik (www.kaushik.net)

• Quora (follow Matthew Caroll)

• Slideshare (xerox, 500startups, etsy)

• Techcrunch

• Angel.co

• Italian Startup Scene

• Indigeni Digitali

• Startupnumbers.com ;)

48

Must read/view:

• Blog etsy (http://mcfunley.com/)

• Blog Fabrice Grinda

• Blog fab.com

• Blog google

• Blog a16z.com

• Foundat.io/n

• ecorner.stanford.edu

• avc.com

• Angel.co

Must read/view:

49

Primo esempio: wikli

+70%

Spesa tot: 200€ Strumenti utilizzati: opimizely

Utenti attuali >6.000

Secondo esempio..

Secondo esempio…iterazione

Secondo esempio…iterazione

Terzo esempio…non solo web

Quarto esempio (fashion subscription commerce)

Conversion rates: From inception October 30th until December 31th

• Unique visitors to registered free members: 27% Benchmark successful players: circa 22%

• Free members to paying subscribers: 2,6% in 2 mesi Benchmark successful players: circa 3% in un anno

Absolute metrics:

Form inception November 5th until December 30th

•26k unique visitors

•7k registered members

•200 subscription sales

•7k $ revenues

Traffic sources: •Direct: 59%

•Facebook 23%

•Daily Deal Sites 10%

•Others 9%

Always in test..

Video (da vedere!): http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313

“We put it in a feature that we can

build in a week. It's a ghetto build. We

AB test it. We flow test it. We put it out

to 1%, 10% of our users. We build a

data warehouse with the testing

platform. So, we're running several

hundred tests at any given time for

every one of our games. And no single

user ever is involved in more than one

test. So, we love testing. When we see

that it moves our metrics in a

considerable way, that's when we take

it to be a full feature roll out and then

we do the full 2.0.

Capitalizzazione 3,6 $bn --- Ricavi 1,22 $bn --- 12% ricavi da facebook

Always in test..

Sources: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313

“We don't want to go down those paths until we've test them

with our users. And what's amazing and this is a feature that you will all have available to you as you enter this third Internet

business is that you're going to run a service and you are going

to every week be able to test things with your users and

something that I never have available to me in previous companies. It won't be build it for three months and hope and

pray. It's test it now. And you can test it with - you don't need to

be a big company - you can test it by buying Google AdWords

or Facebook Self Service ads. You can put these links out. You could spend 50 bucks a day and know most of what we know.

So, it's an awesome way...”

Mark Pincus – Founder & CEO @ Zynga