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Discover de pirate metrics framework and what are the key metrics to track in your startup to get profit.
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Pirate Metrics AARRR, profit and key metrics to track
@polvallssoler!
" "linkedin.com/in/polvallssoler!
" "slideshare.net/polvallssoler!"!
Pol Valls Soler !
Creator of:!
iOS app for discovering people nearby: joinerapp.com!
Reddit for spanglish geeks: zumogeek.com!
Advising entrepreneurs at La Salle Technova Barcelona!
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
• 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
Metrics for pirates…AARRR!
MAARRRketing for startups
ACQUISITION !
Users come to the site; you have their attention
ACTIVATION !
User performs some key activity that indicates a good first visit
RETENTION!
User continues to do that key activity indicating they like your product
REFERRAL!
User gets other users to join
REVENUE!
User pays you
AARRR Funnel: Customer Lifecycle / Conversion Behavior!
Emails &
Alerts
Blogs, Conten
t
System Events
& Time-‐
based Featur
es
Biz Dev
Ads, Lead Gen,
SubscripBons, etc
Emails &
widgets
Campaigns,
Contests
Homepage / Landin
g
Page
Product
Features
SEO SEM
Apps & Widgets
Affiliates
PR
Biz Dev Campaigns, Contests
Direct, Tel, TV
Social Networks Blogs
Domains
AARRR Funnel: Customer Lifecycle / Conversion Behavior!
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 !
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)
AND…
if CLV > CAC, then PROFIT !
AARRR Funnel: Customer Lifecycle / Conversion Behavior!
Emails &
Alerts
Blogs, Conten
t System
Events & Tim
e-‐
based Featur
es
Biz Dev
Ads, Lead Gen,
SubscripBons, etc
Emails &
widgets
Campaigns,
Contests
Homepage / Landin
g
Page
Product
Features
SEO SEM
Apps & Widgets
Affiliates
PR
Biz Dev Campaigns, Contests
Direct, Tel, TV
Social Networks Blogs
Domains
AARRRP!
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
KEY METRICS TO TRACK…!
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 !
ACQUISITION !
ACQUISITION !Extra tip: How to get your first 100 users!
1) What exisBng soluBon do you believe your product is beTer than?
2) Where can you find a criBcal mass of people who use the exisBng soluBon?
3) Go there. Talk to them. Show them your product.
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 ($)!
!!
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!
ACTIVATION !
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!
RETENTION!
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)!
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.!
REFERRAL!
REFERRAL!Referral Tips:!
• Personal send to friend (Email / IM)!• Social Media!• Widgets / Embeds!• Affiliates!
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)!
REVENUE!
PROFIT !
…
CAC (Customer Acquisition Cost) !
Take only a porBon of those salaries and expenses in the early days to give a beTer indicaBon of how
CAC will look when you are at scale.
CLV or LTV (Customer Lifetime Value) !
if the Customer Churn rate is a monthly % or yearly %, then the Customer LifeBme will be for the same Bme period.
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 consideraBon Gross Margin:
a = iniBal 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 assumpBon that revenue increases at a roughly fixed rate every month for the enBre lifeBme of the customer)
if 1 < LTV/CAC < 3 if LTV/CAC < 1 your business model is broken!
LTV : CAC Ratio Awesomeness !
> 3 if
(It’s ok. As a startup, don’t worry iniBally about LTV>3*CAC)
Tools for metrics analysis
…
Tools for testing
…
How do we improve the funnel?...
Take a look at my Growth Hacking
slides at " "slideshare.net/polvallssoler!
@polvallssoler!
" "linkedin.com/in/polvallssoler!
" "slideshare.net/polvallssoler!"!
Pol Valls Soler !
Creator of:!
iOS app for discovering people nearby: joinerapp.com!
Reddit for spanglish geeks: zumogeek.com!
Advising entrepreneurs at La Salle Technova Barcelona!
