Startup Metrics for Pirates

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					Startup Metrics for Pirates

AARRR!

Dave McClure, Master of 500 Hats
http://500hats.typepad.com/ http://www.500hats.com/ http://slideshare.net/dmc500hats/

AAARRgenda
• • • • • Measure Stuff. Keep It Simple. 5 Steps. Pirates. AARRR!* Don’t Be Teh FAIL. Conversion Matters. Biz Model WTF? 3 Q’s for Pirates & Founders. One Step at a Time: The Ass/Face Issue.

* with some gusto, please

Web 2.0: What’s So Special?
1. Startup Costs = Lower 2. # Users, Bandwidth = Bigger 3. Online Adv / E-Com = Still Growing*  Collect Usage Metrics in Real-Time  Make Decisions Based on User Behavior

* up until 2 weeks ago, anyway.

Just Gimme the GOOD Metrics.
Users, Pages, Clicks, Emails, $$$...?
Q: Which of these is best? How do you know? • 1,000,000 one-time, unregistered unique visitors
the good stuff.

• 500,000 visitors who view 2+ pages / stay 10+ sec • 200,000 visitors who clicked on a link or button

• 20,000 registered users w/ email address
• 2,000 passionate fans who refer 5+ users / mo. • 1,000 monthly subscribers @ $35/mo

Passion vs. Precision
• “Solve a Problem” = Passion • “Optimize the Solution” = Precision
However… • “Precision” is Illusion; “data” is fuzzy • Collecting & Interpreting data takes time & effort • Keep Metrics Simple & Actionable

AARRR!: 5-Step Startup Metrics Model
Social Networks Apps & Widgets Domains

SEM
Blogs

SEO

PR

Campaigns, Contests Affiliates

Biz Dev
Direct, Tel, TV Viral Loops

Email

ACQUISITION

Emails & Alerts

Homepage / Landing Page Product Features
Affiliates, Contests

Emails & widgets

Blogs, RSS, News Feeds

System Events & Time-based Features

Ads, Lead Gen, Subscriptions, ECommerce

Biz Dev

Website.com

Startup Metrics for Pirates
• • • • • Acquisition: users come to site from various channels Activation: users enjoy 1st visit: "happy” experience Retention: users come back, visit site multiple times Referral: users like product enough to refer others Revenue: users conduct some monetization behavior
AARRR!

Don’t Be Teh FAIL.
     Business Plans are BULLSHIT Revenue Projections are Hockey Stick Delusions Features Don’t Matter… Usability + [Measured] Conversion Matters Offline PR, “Big-Bang” Launches are Stupid & Expensive Investors Don’t Know Your Business Any Better Than You Do

Be Bold. Be Humble.
 20% Inspiration + 80% Perspiration  Long-term: Audacity + Creative Inspiration  Short-term: Humility + Analytic Rigor

Stuff That Matters:
• • • • • Passion for Problem/Solution + Hypothesis of Customer Lifecycle 1-page Business Model: Prioritized List of (Users + Conversions) 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

Q: What’s My Business Model?
Can be one of the following:
1. Get Users (= Acquisition, Referral) 2. Drive Usage (= Activation, Retention) 3. Make Money (= Revenue*)
* ideally profitable revenue

Note: eventually need to turn Users/Usage -> Money

Role: Founder/CEO
Q: Which Metrics? Why? A: Focus on Critical Few Actionable Metrics
(if you don’t use the metric to make a decision, it’s not actionable)

• Hypothesize Customer Lifecycle • Target ~3-5 Conversion Events (tip: Less = More) • Test, Measure, Iterate to Improve

The 1-Page Business Model
(Users + Conversions + Priorities)
Q1: What types of people use your website?
• Visitor = Average User / Buyer • Contributor = Content Contributor / Seller • Distributor = Passionate Fan (unpaid) / Affiliate (paid)

Q2: What actions could they take to help you or them ?
Visitor Contributor Distributor
(aka “Share Pimp”)

Activation
Retention

Watch a slideshow
Visit 1x/mo. for 3+ mo’s

Submit a slideshow
Submit “hi-qual” ppt (=> 1K views/yr) every mo.

Share/Embed a slideshow
Share/Embed => drive 100 visits/mo for 3+ mo’s

Revenue

Ad Click; Qualified Lead Generated

$/mo Premium Sub; Pay $$+ for traffic or leads

Drive 10+ Premium users; 1K+ Viewers

TeachStreet: Eye Chart Madness 500Hats EXPLODES! in Board Mtg

TeachStreet:
Customer Types + Conversion Priorities

TeachStreet: 1-Pag Business Model Focus, Focus, Focus!
Teachers Activation •Claim Profile •Add Class Students •Contact Teacher •View 3 Pages SEO •Bounce Rate

Retention

•Visit 1x/mo for 3 mo’s •Visit 1x/mo for 3 mo’s

Referral

•Request Review %

•Suggest Teacher %

Role: Product / Engineering
Q: What Features to Build? Why? A: Easy-to-Find, Fun, Useful, Unique Features that Increase Conversion • Wireframes = Conversion Steps • Measure, A/B Test, Iterate FAST (daily/weekly) • Optimize for Conversion Improvement – 80% on existing feature optimization – 20% on new feature development

Example Conversion Metrics
(note: *not* actuals… your mileage may vary) Stage Conversion Status Conv. %
60%

Est. Value (*not* cost)
$.05

Acquisition
Activation Retention Referral Revenue

Visitors -> Site/Widget/Landing Page (2+ pages, 10+ sec, 1+ clicks = don’t abandon) “Happy” 1st Visit; Usage/Signup (clicks/time/pages, email/profile reg, feature usage) Users Come Back; Multiple Visits (1-3x visits/mo; email/feed open rate / CTR) Users Refer Others (cust sat >=8; viral K factor > 1; ) Users Pay / Generate $$$ (first txn, break-even, target profitability)

15%

$.25

5%

$1

1%

$5

2%

$10

TeachStreet: Teacher “Claim Rate” (Seattle, Portland)

TeachStreet: 45-day Claim Rates
(Seattle, Portland)

Design, Optimize for Conversion

Role: Marketing / Sales
Q: What channels? Which users? Why? A: High Volume (#), Low Cost ($), High Conv (%)
• • • • • Design & Test Multiple Marketing Channels + Campaigns Select & Focus on Best-Performing Channels & Themes Optimize for conversion to target CTAs, not just site/landing page Match/Drive channel cost to/below revenue potential Low-Hanging Fruit: – Blogs – SEO/SEM – Landing Pages – Automated Emails

Example Marketing Channels
disclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business
Channel Viral / Referral Email Volume depends on CTA; size of accessible social networks / # users depends on CTA, size of your house lists, email signups Depends on # blogs in your segment, competitive scenario Cost/user low/zero Time to implement Low for FB social networks; med/hi for normal sites Low Mktg Effort low Prod Effort low/med

low/med

low/med

low/med (med = create templates) low/zero (med = CMS, prof design) med/hi

Blogs / Bloggers

low/med

Low (if just you blogging); med (if you're setting up big CMS / evangelizing to other bloggers) Medium (depends on your search geeks) Low/med (depends on your marketing) low/med (depends on contest, site, campaign) Low/med low medium (develop story, build contacts) med/hi (capture metrics, generate reports) med/hi (need to build affiliate program, capture metrics, generated reports) medium med-high

low/med

SEO

depends on your keywords

Low/zero

low/zero

SEM

depends on your keywords

Depends

Low/med

low/med (landing pages = med) low/zero (med = prof contest site) med/hi (depends on complexity) Low (redirects/co-brand?) low/zero med/hi (reports, co-branding) med/hi (depends on rqd tracking & reporting) low/zero low/zero if no system; Med/hi if integrated SFA Med/hi (production cost)

Contest

small unless big prize $ (don’t, keep it under $5K) Depends on CTA; size of accessible sites, level of adoption + bloggers depends on keywords, domain costs depends on your business & audience & news depends on partner, size of customer base, conversion depends on economics depends on geography depends on target demographics

low/med

Med

Widget domains PR Biz Dev / Partner Affiliate / Lead Gen Direct / radio Telemarketin g TV

low/med depends depends med-high

med low med Med/hi

Med/hi Med/hi med-high

med/hi Med/hi High

Potentially large (if you spend)

High

Med-high

High

One Step at a Time.
1. Make a Good Product: Activation & Retention 2. Market the Product: Acquisition & Referral 3. Make Money: Revenue & Profitability

“You probably can’t save your Ass and your Face at the same time… choose carefully.” – me

STARTonomics Sessions
• • • • AARRR! Product 101: Killer Apps Startup Scalability Fun => Functional • • • • • • • Internet Marketing 101 SEO Kung Fu Social Media, Social Objects Arch Viral: Loops & Apps Getting PAID. Customer Service = Hot Sexy Funding Secret$

• Designr ❤ Developr • Sit, Stay, Click! = Activation & Retention

Links & Resources
Additional 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) • “Don’t Make Me Think”, Steve Krug (book) • “A Theory of Fun”, Raph Koster (book, website) • “Designing for the Social Web”, Joshua Porter (book, website)


				
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posted:10/4/2008
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