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Mike has grown FreshBooks from a one-man startup to a 30-person Web app company. He's going to teach you six essential terms that you need to understand in order to succeed with your app: 'Lifetime Value', 'Average Revenue per User', 'Churn', 'Gross Cost per Acquisition', 'Sales Funnel' and 'Customer Vintages'. He's then going to give an example with a real-life case study. This is one you can't afford to miss.
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“Flight systems”
@MikeMcDerment – Co-Founder and CEO
Feb 23, 2010 – #fowa
Thank You
Mike McDerment
Co-founder, CEO
True or False:
Technology is the hardest
part of building a web app
business?
False
Flight SystemsMetrics and systems to help you navigate web
app success.
… THE LEADER IN ONLINE
BILLING AND BOOKKEEPING.
Customer Types
Team RecurringSolo
Now for Web Apps!
Recurring billing managed inside your app
Accept credit cards inside your own app
Real-Time payment notifications ( WEBHOOKS! )
http://developers.freshbooks.com/
Over 1,000,000 Users Since May 2004
Month
Use
rs
Let me apologize in
advance…sorry aboot the
MBA speak
• “How much do we spend to get a customer?”
• Cost Per Acquisition ($) CPA
• “How much do our customers pay us?”
• Average Revenue Per User ARPU
• “At what rate are customers cancelling?”
• Churn (%) Churn
• “How much is a customer worth over time?”
• Lifetime Value Per Customer ($) LTV
Key Metrics for Web Apps
CPA
ARPU
Churn
LTV
Why is not enough.
Less accurate
Less flexible (can’t slice and dice)
Can’t correlate to app usage/events
Too important to outsource
Tied to a vendor
Besides…It’s easy!
Three systems to rule them all.
Reporting
DB Storage
Cookie Tracking
Cookie Tracking
Variables to track
Unique URL’s
Cookie Code
Referring Domain ( who sent them here? )
Ref URL ( what are their interests? )
Landing URL ( campaign, partner, ad unit? )
What to Track ( barebones ) and why.
Data Base Storage
Add a table to
your Database
Store alongside
user profile
Search
Sort
Dump
BONUS! Dashboard
How does a marketer get the data
from a database?
Search it.
Sort it.
Dump it.
Web Application
Business model is “Freemium”
$10,000 per month marketing budget
6 month campaign
Case Study Assumptions
0
25
50
75
100
Jan Feb Mar Apr May Jun
Gross New Customers Acquired by Month
0
25
50
75
100
Jan Feb Mar Apr May Jun
Gross New by Marketing Spend (Vintages)
What we learned
100 customers per vintage
CPA of $100 ($10,000/100)
6 month close <- MASSIVE INSIGHT!!!
50% / 25% / 10% / 5% / 5% / 5%
What else could we know?
ARPU, LTV
Too important to outsource
It’s about data collection, not reporting
It’s easy
Parting Thoughts on Flight Systems
Flight SystemsMetrics and systems to help you navigate web
app success.
Questions? Bring em!
Twitter: @mikemcderment
Email: [email protected]
Check out FreshBooks if you are building a web app!
http://developers.freshbooks.com
Choose your own adventure.
6 month campaign
Spend Visitors Trials
January $10,000.00 10,000 1,000
February $10,000.00 10,000 1,000
March $10,000.00 10,000 1,000
April $10,000.00 10,000 1,000
May $10,000.00 10,000 1,000
June $10,000.00 10,000 1,000
What your marketer gets…
Hands on the wheel
Self service
Easy access to excel
The data they need, when they need it!
How many customers did we get?
# new customersGross New
Who are our most valuable customers?
Where did we get them?
How do we get more?
These systems help answer
Marketing
Spend
Visitor
Lead
CPA
ARPU
Churn
LTV
Paying
Customers
Simple Conversion Funnel
CPA
ARPU
Churn
LTV
