Startup Marketing Metrics for Pirates Aarrr

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Startup Marketing Metrics for Pirates Aarrr Internet Startup Dotcom Business

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* reminder: National Talk Like a Pirate Day is Sept 19th!

Startup Metrics for Pirates:

AARRR!

Dave McClure, Master of 500 Hats @ SXSW, March 2008blog: http://500hats.typepad.com/ website: http://www.500hats.com/ slides: http://slideshare.net/dmc500hats/

Panel o PIRATES!Dave McClure, 500 Hats (moderator) Ted Rheingold, Dogster Todd Vernon, Lijit Hiten Shah, CrazyEgg Lance Tokuda, RockYou

AARRRgendaPirate Warmups: EVERYONE! Startup Metrics: Pirate Dave Acquisition: Pirate Ted Activation: Pirate Todd Retention: Pirate Hiten Referral: Pirate Lance Revenue: (sorry, this ones all you, landlubber)

Pirate WarmupsShip Ahoy! Yo-ho-ho, Yo-ho-ho! AARRR!

More tips: TalkLikeAPirate.com

Ship Ahoy!

Yo Ho Ho! Yo Ho Ho!

AARRR!

Why You Should Be A Web 2.0 RR AR A Entrepreneur ! te air P

BOOTY!

Startup Metrics for Pirates: 5 Steps to Web 2.0 Booty!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!

Customer Lifecycle & Conversion BehaviorSocial Network s Apps & Widgets

SEMBlogs

SEO

PR

Campaigns, Contests Affiliate s

Biz DevDirect, Tel, TV Campaigns, Contests

Email

Domain s

1. ACQUISITION

Homepage / Landing Page Product Feature s

A ERR F . RE 4

L

ti Ac 2. tio va n

Emails & widgets

ve Re 5. nu

Ads, Lead Gen, Subscriptions, etc

Biz Dev

Website.com

$$ e$

Q: Business Model?Business Model can be one of the following: Get Users (= Acquisition, Referral) Drive Usage (= Activation, Retention) Make Money (= Revenue*)* ideally profitable revenue

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

Founder/CEOQ: Which Metrics? Why? A: Focus on Critical Few Actionable Metrics(if you dont use metric to make a decision, its not actionable)

Hypothesize Customer Lifecycle & Refine Choose ~5 Conversion steps (tip: Less = More) Delegate Each Key Metric to someone to OWN

Product / EngineeringQ: What to Build? Why? A: Build Features that Increase ConversionWireframes = Conversion Steps Measure, A/B Test, Iterate FAST (daily/weekly) Optimize for Conversion Improvement 80% on existing feature optimization 20% on new feature development

Marketing / SalesQ: What channels? Which users? Why? A: High Volume (#), Low Cost ($), High Conversion (%)Design & Test Multiple Marketing Channels + Campaigns Select & Focus on Best-Performing Channels & Themes Optimize for *deeper* conversion, not just site/landing page Low-Hanging Fruit:

1) Blogs, 2) SEO/SEM, 3) Landing Pages, 4) Automated Emails

Customer Lifecycle / Conversion BehaviorSocial Network s Apps & Widgets

SEMBlogs

SEO

PR

Campaigns, Contests Affiliate s

Biz DevDirect, Tel, TV

Email

Domain s

Marketing Channels: largest-volume (#) lowest-cost ($) best-performing (%)

Website.com

Customer Lifecycle / Conversion Behavior Campaigns, SEOSocial Network s Apps & Widgets

SEM

PR

Contests Affiliate s

Blogs Email

Biz Dev

Domain s

1. ACQUISITION

Direct, Tel, TV

Activation Criteria: 10-30+ seconds 2-3+ page views 3-5+ clicks

on ati tiv Ac 2.

Homepage / Landing Page Product Feature s

1 key feature usage do LOTS of landing page tests & A/B tests make lots of dumb guesses & iterate FAST

Website.com

Customer Lifecycle / Conversion BehaviorSocial Network s Apps & Widgets Automated emails are simple, easy retention feature (but dont overdo it) lifecycle emails @ +3, +7, +30d status emails weekly/monthly event-based emails as they occur but: make it easy to unsubscribe Homepage / Landing Page2. iv Act

SEM Blogs

SEO

PR

Campaigns, Contests Affiliate s

Biz Dev

Domains

Email 1. ACQUISITION

Direct, Tel, TV

ati on

Product Features

Website.com

Customer Lifecycle / Conversion Behavior Campaigns, SEOSocial Network s Apps & Widgets

SEM

PR

Contests Affiliate s

Blogs Email

Biz Dev

Domain s

1. ACQUISITION

Direct, Tel, TV Campaigns, Contests

Homepage / Landing Page Product Feature s

R FER . RE 4

AL

ti Ac 2. tio va n

Emails & widgets

Website.com

Encourage users to refer *after* they have happy user experience; avg score >= 8 out of 10

Customer Lifecycle / Conversion Behavior Campaigns, SEOSocial Network s Apps & Widgets

SEM

PR

Contests Affiliate s

Blogs Email

Biz Dev

Domain s

1. ACQUISITION

Direct, Tel, TV Campaigns, Contests

Homepage / Landing Page Product Feature s

R FER . RE 4

AL

This is the part *you* have to figure out I dont know jack about your business

on ati tiv Ac 2.

Emails & widgets

ve Re 5. nu

Ads, Lead Gen, Subscriptions, etc

Biz Dev

Website.com

$$ e$

Example Conversion Metrics(note: *not* actuals your mileage may vary.)

CategoryAcquisition Acquisition Activation Activation Retention Retention Referral Referral Revenue Revenue

Conversion StatusVisit Site (or landing page, or external widget) Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks) Happy 1st Visit (views X pages, stays Y sec, Z clicks) Email/Blog/RSS/Widget/Acct Signup (anything that could lead to repeat visit) Length of Session / # of Clicks (length/intensity of engaged visit, >180s) Email Open/ RSS view -> Click/Repeat Visit (3+ visits in first 30 days) Refer 1+ users who visit site Refer 10+ users who activate User generates minimum revenue User generates break-even revenue

Conv %100% 70% 30% 5% 10% 3% 2% 0.2% 2% 1%

Est. Value$.01 $.05 $.25 $2 $1 $5 $1 $10 $5 $25

MAARRRketing PlanMarketing Plan = F(Customer Acquisition Channels, Campaign Themes)3 Important Factors = Volume (#), Cost ($), Conversion (%) Measure conversion to target customer actions Test audience segments, campaigns, Call-To-Action (CTAs)

Match Channel Costs to Revenue Potential

Est. Conversion + Revenue Potential Avg Txn Value (ATV), Ann. Rev. Per User (ARPU), Cust. Lifetime Value (CLV) Design channels that cost 2m 0.1% -> 4%

39

Change #1: Used MBL Widget to discover Blog URL User hits site and blog URL is automatically entered into input field using JS call to MBL Widget (running on our homepage)

40

Change #2: Use Blog URL to inspect blog1. Extract commonly used account name(s) from Widgets 2. Read Blogroll Use for default social network

Lijit Networks, Inc.

Change #3: Find other User Generated Content1. Using discovered Acct name(s), find other content 2. AJAX Screen entertains prospect during discovery

42

ValidationSignup Time Conversion 15m -> ~2m 0.1% -> ~4% (40x)

Users CommentsEasy to install Took me only a few minutes Youre freaking me out, how did you get my blog URL.

43

http://ouriel.typepad.com/myblog/2007/08/execution-is--1.html

AARRRgendaRetention: Pirate Hiten, Ship CrazyEgg

Retention

Before

Before

After

After

Results

Before

After

AARRRgendaReferral: Pirate Lance, Ship RockYou

QuickTime and a decompressor are needed to see this picture.

AARRR!R for Referral

The RockYou MissionTo engage the world through social applications

RockYou Growth: Fastest Ever.50

Registered Users (MM)

40 30 20 10 0 1 3 5 7 9 11 13 Months (1) 15 17 19 21 23(2)

Facebook platform launch

Source: eBay Investor Presentation, RockYou eBay starts Q2 98, PayPal starts Q100, Yahoo! starts Q195, AOL starts Q192, Facebook starts Q404, and RockYou Starts Q405 Facebook data represents active users, which was disclosed on 12/05 and 12/06. Undisclosed active user data is extrapolated by applying an average active user penetration to global Unique Visitors (per comScore Media Metrix)

Referral traffic is key for viral growthPrimary sources of referral traffic Install flow Engagement flow

Install flow example for Bumper Sticker

Engagement flow example for Friends for Sale

Metrics for viral loopUserCall to action to invite friends x = invited friends

Yes y% = accept rate

Accept?

No

x * y > 1 gives you viral growth!

Typical viral numbersInstall flowx = 5 (friends invited on average) y = 22% (acceptance rate for invites) Viral factor = 5 * 0.22 = 1.1 VIRAL!!!

Engagement flowx = 20 (friends invited on average) y = 6% (acceptance rate for invites) Viral factor = 20 * 0.6 = 1.2 VIRAL!!!

Use multiple flows and channelsInstall flow x=5 y = 10% Viral factor = 5 * 0.1 = 0.5

0.5 + 0.3 + 0.3 = 1.1 Engagement flow, invite channel VIRAL!!! x = 3 (invites)y = 10% (acceptance rate for invites) Viral factor = 3 * 0.1 = 0.3 Engagement flow, notification channel x = 6 (notifications) y = 5% (acceptance rate for notifications) Viral factor = 6 * 0.05 = 0.3

Important tipsInstall flow should generate most of your referrals everyone installing will use that flow so make it good user test different calls to actions if all else fails, offer $10,000 for invites =) Engagement flows supplement virality not everyone will engage, generally weaker than install flow consider having the primary flow invite new friends user test different calls to actions if all else fails, offer $20,000! Decay invite rate decreases as you saturate acceptance rate decreases as you saturate engagement tends to decay continuous improvement required!

AARRR!Any Questions, Ye Scurvy Dogs?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) Dont Make Me Think, Steve Krug (book) A Theory of Fun, Raph Koster (book, website)