Startup Metrics for Pirates (SeedCamp 2008)

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Updated presentation on Startup Metrics, delivered at SeedCamp 2008 in London, England. Dave McClure, 500 Hats.


<ul><li><p>Startup Metrics for PiratesAARRR!</p><p>SeedCamp 2008University College London 09/16/08Dave McClure, Master of 500 Hats</p></li><li><p>AARRR!: 5-Step Startup Metrics Model</p><p></p></li><li><p>DisclaimerIm not richIm lazyIm easily distracted (ADD)Ive failed more than succeededIm a crappy (but entertaining) bloggerIm often wrong (but never in doubt)</p></li><li><p>500 Startups(500=13)</p></li><li><p>Web 2.0: Whats So Special?</p><p>Startup Costs = lower# Users, Bandwidth = biggerOnline Adv / E-Com = still growing</p><p>Collect Usage Metrics in Real-TimeMake Decisions based on User Behavior </p></li><li><p>Startup Metrics: An OverviewBusiness Plans are BULLSHITRevenue Projections are Hockey Stick DelusionsFeatures Dont Matter [Measured] Conversion MattersOffline PR, Big-Bang Launches are Stupid &amp; ExpensiveFAIL.WIN!Reality = Conversion Events =&gt; Measured User Behavior Conversion + Usability =&gt; Design + Development (not vice versa)Success = Evolution not Revolution (modify, measure, iterate)</p></li><li><p>Startup Metrics: An OverviewWhat Really Matters:Passion for Problem/Solution + Hypothesis of Customer Lifecycle1-pg Business Model: Prioritized Matrix of (User Types + Conversion Events)Critical, Few, Actionable Metrics + Dashboard of (Measured User Behavior)1-pg Marketing Plan: (Channels + Campaigns) * (Volume, Cost, Conv %)Velocity of (Product Execution + Cycle Time of Testing) * Iteration</p><p>20% Inspiration + 80% PerspirationLong-term: Audacity + Creative InspirationShort-term: Humility + Analytic Rigor</p></li><li><p>Startup Metrics: Passion vs Precision</p><p>Solve a Problem = PassionOptimize the Solution = PrecisionOn the Other HandPrecision is IllusionData is fuzzyCollecting data takes time &amp; effortKeep Metrics Simple &amp; Actionable</p></li><li><p>Whats The Best Metric ? Users, Pages, Clicks, Emails, $$$Q: Which Would You Prefer?1,000,000 one-time, unregistered unique visitors500,000 visitors who view 2+ pages / stay 10+ sec200,000 visitors who clicked on a link or button20,000 registered users w/ email address1,000 monthly subscribers @ $10/mo200 passionate fans who refer 5+ users / month</p></li><li><p>Startup Metrics for PiratesAcquisition: users come to site from various channelsActivation: users enjoy 1st visit: "happy experienceRetention: users come back, visit site multiple timesReferral: users like product enough to refer othersRevenue: users conduct some monetization behavior</p></li><li><p>AARRR!: 5-Step Startup Metrics Model</p><p></p></li><li><p>Q: Whats My Business Model?Can be one of the following:Get Users (= Acquisition, Referral)Drive Usage (= Activation, Retention)Make Money (= Revenue*)* ideally profitable revenue</p><p>Note: eventually need to turn Users/Usage -&gt; Money</p></li><li><p>Role: Founder/CEOQ: Which Metrics? Why?A: Focus on Critical Few Actionable Metrics(if you dont use the metric to make a decision, its not actionable)</p><p>Hypothesize Customer LifecycleTarget ~3-5 Conversion Events (tip: Less = More)Test, Measure, Iterate to Improve</p></li><li><p>The 1-Page Business Model(Users + Conversions + Priorities) Q1: What types of people use your website? Visitor = Average User / BuyerContributor = Content Contributor / SellerDistributor = Passionate Fan (unpaid) / Affiliate (paid)</p></li><li><p>The 1-Page Business Model(Users + Conversions + Priorities) Q2: What actions could they take to help you or them ?</p></li><li><p>Role: Product / EngineeringQ: What to Build? Why?A: Build Features that Increase Conversion</p><p>Wireframes = Conversion StepsMeasure, A/B Test, Iterate FAST (daily/weekly)Optimize for Conversion Improvement80% on existing feature optimization20% on new feature development</p></li><li><p>Example Conversion Metrics(note: *not* actuals your mileage may vary)</p><p>StageConversion StatusConv. %Est. Value(*not* cost)AcquisitionVisitors -&gt; Site/Widget/Landing Page(2+ pages, 10+ sec, 1+ clicks = dont abandon)60%$.05ActivationHappy 1st Visit; Usage/Signup(clicks/time/pages, email/profile reg, feature usage)15%$.25RetentionUsers Come Back; Multiple Visits(1-3x visits/mo; email/feed open rate / CTR)5%$1ReferralUsers Refer Others(cust sat &gt;=8; viral K factor &gt; 1; )1%$5RevenueUsers Pay / Generate $$$(first txn, break-even, target profitability)2%$10</p></li><li><p>Role: Marketing / SalesQ: What channels? Which users? Why?A: High Volume (#), Low Cost ($), High Conv (%)</p><p>Design &amp; Test Multiple Marketing Channels + CampaignsSelect &amp; Focus on Best-Performing Channels &amp; ThemesOptimize for conversion to target CTAs, not just site/landing pageMatch/Drive channel cost to/below revenue potential</p><p>Low-Hanging Fruit: BlogsSEO/SEMLanding PagesAutomated Emails</p></li><li><p>Example Marketing Channelsdisclaimer: estimates of vol, cost/user, time &amp; effort are subjective actual costs are dependent on your specific business</p></li><li><p>Startup Priorities Diffrent Strokes for Diffrent Folks:Make a Good Product: Activation &amp; RetentionMarket the Product: Acquisition &amp; ReferralMake Money: Revenue &amp; Profitability</p></li><li><p>Startup MetricsActivation</p></li><li><p>Website.comActivation Criteria: 10-30+ seconds 2-3+ page views 3-5+ clicks 1 key feature usagedo LOTS of landing page &amp; A/B tests make lots of dumb guesses &amp; iterate FASTActivation</p></li><li><p>ActivationWhat do users do on their first visit?Example Activation GoalsClick on something!Account sign up / EmailsReferrals / Tell a friendWidgets / EmbedsLow Bounce Rate</p><p>Activation TipsLess is moreFocus on user experience / usabilityProvide incentives &amp; call to actionsTest and iterate continuously</p></li><li><p>ActivationWhat do users do on their first visit?Key Metrics to TrackPages per visitTime on siteConversions</p></li><li><p>ActivationToolsCrazy Egg (Visual Click Mapping)crazyegg.comGoogle Website Optimizer (A/B &amp; Multivariate Testing) (B2B Lead Generation Management)</p><p>ResourcesExperimentation and Testing: A Page Tutorials and Case Easy Easy to use Google Website</p></li><li><p>Startup MetricsRetention</p></li><li><p>Website.comAutomated emails: lifecycle emails @ +3, +7, +30d status / best of weekly/monthly something happened emails BUT: make it easy to unsubscribeTip on emails: &gt; 80% or more on SUBJECT LINE &lt; 20% or less on BODY TEXTRetention</p></li><li><p>Cohort Analysis:Distrib of Visits over TimeRate of DecayEffective Customer Lifecycle</p><p>Retention MethodsAutomated Emails* Track open rate / CTR / QuantityRSS / News Feeds* Track % viewed / CTR / QuantityWidgets / Embeds* Track impressions / CTR / QuantityRetentionHow do users come back? How often?</p></li><li><p>Example Retention Goals1 - 3+ visits per month20% open rate / 2% CTRHigh deliverability / Low spam ratingLong customer life cycle / Low decayIdentify fanatics and cheerleaders</p><p>Retention TipsEmail is simple and it worksBUT make unsubscribe easy80% subject line / 20% body textACTUALLY 99% subject line / 1% body textFanatics = virality + affiliate channel (bloggers?)Retention How do users come back? How often?</p></li><li><p>RetentionHow do users come back? How often?Key Metrics to TrackSourceQuantityConversionsVisitor LoyaltySession Length</p></li><li><p>RetentionToolsCampaign Monitor / MailChimp (email newsletter software) / mailchimp.comTriggerMail (site-centric email management)triggermail.netLitmus (email and website design testing - clients / browsers)</p><p>Resources30 free HTML email Practices in Writing Email Subject Viral: Viral Emails of</p></li><li><p>Startup MetricsAcquisition</p></li><li><p>Website.comMarketing Channels: largest-volume (#) lowest-cost ($) best-performing (%) Acquisition</p></li><li><p>AcquisitionWhere are users coming from?Acquisition MethodsSEO / SEMBlogsEmailSocial Media &amp; Social NetworksDomains</p></li><li><p>AcquisitionKeyword VocabularyTop 10 - 100 wordsYour Brand / ProductsCustomer Needs / BenefitsCompetitors Brand / ProductsSemantic EquivalentsMisspellings</p><p>Things to analyzeSourcesVolumeCostConversion</p></li><li><p>AcquisitionWhere are users coming from?Key Metrics to TrackQuantity (#)Cost ($)Conversions (%)Example</p></li><li><p>AcquisitionToolsGoogle Analytics (web analytics) Keyword Tool (keyword research tool) Book Tools (SEO related tools)</p><p>ResourcesSEO Book Social Media Manual: Read Before You to ruthlessly acquire</p></li><li><p>Startup MetricsReferral</p></li><li><p>Website.comFocus on driving referrals*after* users have ahappy experience; avg score &gt;= 8 out of 10Referral</p></li><li><p>ReferralHow do users refer others?Referral MethodsSend to Friend: Email / IMSocial MediaWidgets / EmbedsAffiliates</p></li><li><p>ReferralViral Growth FactorViral Growth Factor = X * Y * ZX = % of users who invite other peopleY = average # of people that they invitedZ = % of users who accepted an invitationA viral growth factor &gt; 1 means an exponential organic user acquisition.</p></li><li><p>ReferralToolsGigya (social media distribution &amp; tracking tool)gigya.comShareThis / AddThis (sharing buttons) / addthis.comGetMyContacts (PHP contacts importing &amp; invitation software)</p><p>ResourcesSeven Ways to GO your viral loop? Understanding the engine of Where Users Come</p></li><li><p>Startup MetricsRevenue</p></li><li><p>Website.comRevenueThis is the part *you* still have to figure out (we dont know jack about your business)</p></li><li><p>RevenueHow do you make money?Revenue TipsDont Rely on AdSense (only)Start Free =&gt; 2% FreemiumSubscription / Recurring transactionsQualify your customers -&gt; Lead generation (arbitrage)Sell something! (physical or virtual)</p></li><li><p>Links &amp; ResourcesAdditional References: Influence: The Psychology of Persuasion, Robert Cialdini (book) Putting the Fun in Functional, Amy Jo Kim (etech 2006 preso) Futuristic Play, Andrew Chen (blog) Dont Make Me Think, Steve Krug (book) A Theory of Fun, Raph Koster (book, website) Designing for the Social Web, Joshua Porter (book, website)</p><p>******I know, too many bullets ********If you dont remember anything else, perhaps this graphic &amp; the next 2-3 might be useful.***********************************</p></li></ul>