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Startup Metrics, a love story.
Everything you need to know about
Startup Product Metrics.
#iCatapult Workshop - 2013-08-12...
@andreasklinger
“Startup Founder”
“Product Guy”
@andreasklinger
@andreasklinger
“Startup Founder”
“Product Guy”
What we will cover
- Early Stage Metrics (Pre Product Market Fit).
- Creat...
#emminvest – @andreasklinger
The Biggest Risk of a Startup?
#emminvest – @andreasklinger
The Biggest Risk of a Startup?
Time/Money? No You will learn a lot + huge network gain.
#emminvest – @andreasklinger
Building ALMOST the right thing.
The Biggest Risk of a Startup?
Seeing the successful new com...
“Startups don’t fail because they lack a product;
they fail because they lack customers and a
profitable business model” St...
Market
Your
Solution
Customer
Job/Problem
Willing to pay
To miss your opportunity. By focusing on the wrong thing.
@andrea...
Market
Customer
Job/Problem
Willing to pay
competitor
competitor
competitor
competitor
Your
Solution
Other
Market
Customer...
Startup Founders.
@andreasklinger
Some startups have
ideas for a new product.
Looking for customers
to buy (or at least use) it.
Customers don’t buy.
“early...
traction
time
Product/Market Fit
With early stage
I do not mean “X Years”
I mean before product/market fit.
@andreasklinger
Product/market fit
Being in a good market
with a product that can satisfy
that market.
~ Marc Andreessen
@andreasklinger
Product/market fit
Being in a good market
with a product that can satisfy
that market.
~ Marc Andreessen
= People want your...
traction
time
Product/Market Fit
@andreasklinger
Discovery
traction
time
Validation Efficiency Scale
Product/Market Fit
Steve Blank - Customer Development
@andreasklinger
traction
time
Empathy Stickness Virality Revenue
Product/Market Fit
Ben Yoskovitz, Alistair Croll - Lean Analytics
Scale
@...
traction
time
Product/Market Fit
Find a product
the market wants.
Empathy Stickness Virality Revenue Scale
@andreasklinger
traction
time
Product/Market Fit
Find a product
the market wants.
Optimise the product
for the market.
Empathy Stickness V...
traction
time
Product/Market Fit
Find a product
the market wants.
Optimise the product
for the market.
Most clones
start h...
traction
time
Product/Market Fit
Product & Customer
Development
Scale Marketing
& Operations
Empathy Stickness Virality Re...
traction
time
Product/Market Fit
Startups have phases
but they overlap.
Empathy Stickness Virality Revenue Scale
@andreask...
traction
time
Product/Market Fit
83% of all startups are in here.
Empathy Stickness Virality Revenue Scale
@andreasklinger
traction
time
Product/Market Fit
83% of all startups are in here. Most stuff we learn about
web analytics is meant for thi...
Most of the techniques/pattern
we find when we look to learn about
metrics come out from Online Marketing
@andreasklinger
A/B Testing, Funnels, Referral Optimization, etc etc
They are about optimizing, not innovating
@andreasklinger
What are we testing here?
@andreasklinger
What are we testing here?
Value Proposition, Communication.
Maybe Channels, Target Group.
Not the product implementation.
...
We need product insights.
@andreasklinger
Good news: We don’t need many people
It’s too early for optimizations.
Challenge #1: Get them to stay.
@andreasklinger
“...interesting...”
What does this mean for my product?
Are we even on the right track?
eg. What is a good Time on Site?
Maybe users spend time reading
your support pages just because
they are super confused.
Google Analytics is meant for
Referral Optimization.
Where does traffic come from?
Is this traffic of value?
What does it mean anyway?
@andreasklinger
What does it mean anyway?
“We have 50k registered users!”
Do they still use the service? Are they the right people?
“We ha...
Some graphs always go up.
Vanity. Use it for the Press.
Not for your product.
@andreasklinger
It’s easy to improve conversions
(of the wrong people)
Source: http://www.codinghorror.com/blog/2009/07/how-not-to-adverti...
It’s easy to improve conversions
(of the wrong people)
This is a real example.
Thank the Internet.
Source: http://www.codi...
The same is true for funnels.
It’s easy to optimize by pushing the wrong
people forward.
Disclaimer: this is not a real ex...
The same is true for funnels.
It’s easy to optimize by pushing the wrong
people forward.
Disclaimer: this is not a real ex...
why early stage metrics suck.
small something
Most likely
“Small Data”
Early Stage Product Metrics suck:
- We have the wro...
Early stage product metrics get easily
affected by external traffic.
One of our main goals is to minimize that effect.
@and...
Values: 0, 0, 0, 100
What’s the average?
#1
@andreasklinger
Values: 0, 0, 0, 100
What’s the average? 25
What’s the median?
#1
@andreasklinger
#scb13 – @andreasklinger
Values: 0, 0, 0, 100
What’s the average? 25
What’s the median? 0
Eg. “Average Interactions”
can b...
#scb13 – @andreasklinger
Values: 0, 0, 0, 100
What’s the average? 25
What’s the median? 0
Eg. “Average Interactions”
can b...
Values: 0, 5, 10
What’s the average?
#2
@andreasklinger
#scb13 – @andreasklinger
Values: 0, 5, 10
What’s the average? 5
What’s the standard
deviation? 4,08
=> “Average” hides inf...
“This is not statistical
significant.”
I don’t care.
We are anyway playing dart in a
dark room.
Let’s try to get it as good...
#scb13 – @andreasklinger
Correlation / Causality
Source: Lean Analytics
Correlation / Causality
@andreasklingerSource: Lean Analytics
How can we use metrics?
@andreasklinger
How can we use metrics?
To Explore (Examples)
Investigate an
assumption.
Look for causalities.
Validate customer
feedback....
What do i measure?
TL;DR: In case of doubt, people.
Hits
Visits
Visitors
People
Views
Clicks
Page Views
Conversions
Engage...
#scb13 – @andreasklinger
Framework: AARRR
Linked to assumptions of your product (validation/falsify)
What are good KPIs?
#scb13 – @andreasklinger
Framework: AARRR
Rate or Ratio (0.X or %)
What are good KPIs?
#scb13 – @andreasklinger
Framework: AARRR
Comparable (To your history (or a/b). Forget the market)
What are good KPIs?
#scb13 – @andreasklinger
Framework: AARRR
Explainable (If you don’t get it it means nothing)
What are good KPIs?
#scb13 – @andreasklinger
Framework: AARRR
Explainable (If you don’t get it it means nothing)
What are good KPIs?
Linked to...
#scb13 – @andreasklinger
Framework: AARRR
“Industry Standards”
Use industry averages as reality check.
Not as benchmark.
-...
#scb13 – @andreasklinger
Let’s start.
Segment Users into Cohorts
Cohorts = Groups of people that share attributes.
@andreasklinger
Segment Users into Cohorts
Like it
People 23%
@andreasklinger
Segment Users into Cohorts
Like it
People 0-25 3%
People 26-50 4%
People 51-75 65%
@andreasklinger
Segment Users into Cohorts
Average Spending
Jan €5
Feb €4.5
Mar €5
Apr €4.25
May €4.5
... ...
Averages can hide patterns.
...
Segment Users into Cohorts
1 2 3 4 5
Jan €5 €3 €2 €1 €0.5
Feb €6 €4 €2 €1
Mar €7 €6 €5
Apr €8 €7
May €9
... ...
Registrati...
Apply a framework: AARRR
@andreasklinger
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Example: Blossom.io
Kanban Project Mangement Tool
created a card
Activation
moved a card
Retention
invited team members
Re...
Example: Photoapp
created first photo
Activation
opened app twice in perioid
Retention
shared photo to fb
Referral
??? (exi...
Example: Photoapp
ARRR
acquisition activation retention referral revenue
registration first photo twice a month share …
875...
WK acquisition activation retention referral revenue
Photoapp registration first photo
twice a
month
share …
1 400 62,5% 25...
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Because
Retention = f(user_happiness)
Because
Retention = f(user_happiness)
Not only “visited again”.
But “did core activity X again”
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Retention Matrix
Stickness over lifetime.
Source: www.usercycle.com
Acquisition
Visit / Signup / etc
Activation
Use of core feature
Retention
Come + use again
Referral
Invite + Signup
Revenu...
Dig deeper: Crashpadder’s Happiness Index
e.g. Weighted sum over core activities by hosts.
Cohorts by cities and time.
= H...
Marketplaces
/ 2-sided models
Marketplaces
/ 2-sided models
Marketplaces
/ 2-sided models
Amazon Approach:
1) Create loads of inventory
for longtail search
2) Create demand
3) Have s...
How to solve the
Chicken and Egg
Problem TL;DR:
You need very few
but very good and
happy chickens
to get a lot of eggs.
B...
#scb13 – @andreasklinger
Framework: AARRR
Example Mobile App: Pusher2000
Trainer2peer pressure sport app (prelaunch “beta”...
#scb13 – @andreasklinger
Framework: AARRR
Groupwork
- What stage are you in?
Empathy Stickness Virality Revenue Scale
#scb13 – @andreasklinger
Framework: AARRR
Groupwork
- Define your AARRR Metrics!
Acquisition, Activation, Retention, Referr...
#scb13 – @andreasklinger
Framework: AARRR
Groupwork
- What’s your current core metric.
Show & Tell.
@andreasklinger
The dirty side of metrics.
@andreasklinger
Metrics need to hurt
@andreasklinger
A Startup should always only focus on
one core metric to optimize.
Metrics need to hurt
Your dashboard should only show
me...
Have two dashboards (example bufferApp):
A actionable board to work on your product
(eg. % people buffering tweets in week...
If you are not ashamed about the KPIs in
your product dashboard than something is
wrong.
Either you focus on the wrong KPI...
Example: Garmz/LOOKK
Great Numbers:
90% activation (activation = vote)
But they only voted for friends
instead of actually...
Let’s talk cash.
@andreasklinger
Let’s talk cash: Life Time Value (LTV)
Life Time = 1/Churn
Eg. 1 / 0.08 = 12.5 months
Average Revenue Per User (ARPU)
= Re...
Let’s talk cash: Customer Acquisition Costs
CAC = Total Acquisition Costs this month /
New Customers this month
Goal:
CAC ...
MRR
Monthly Recurring
Revenue
Revenue Churn &
Qty Churn
Monitor Revenue
@andreasklinger
Source: www.usercycle.com
But how to make more money?
@andreasklinger
Big wins are often cheap.
source: thomas fuchs - www.metricsftw.com
Viral Distribution
@andreasklinger
Viral Distribution
3 kinds of virality
Product Inherent
A function of use. Eg. Dropbox sharing
Product Artificial
Added to ...
Viral Distribution
Invitation Rate = Invited people / inviters
eg. 1250 users invited 2000 people = 1.6
Acceptance Rate = ...
Viral Distribution
Important #1:
Unless your Growth Engine is Viral,
don’t focus early on Viral Factors.
Focus on retentio...
#scb13 – @andreasklinger
Churn is not what you think it is
@andreasklinger
#scb13 – @andreasklinger
Churn is not what you think it is
“5% Churnrate per month”
One of the highest churn reasons is ex...
#scb13 – @andreasklinger
Churn is not what you think it is
People don’t
wake up and
suddenly want to
unsubscribe your
serv...
#scb13 – @andreasklinger
Churn is not what you think it is
You loose them in the
first 3 weeks.
And then at some point just...
#scb13 – @andreasklinger
Churn is not what you think it is
Source: Lean Analytics
#scb13 – @andreasklinger
Checkout Intercom.io
Segment + message customers = Awesome
User activation.
Some users are happy (power users)
Some come never again (churned users)
What differs them? It’s their ac...
Sub-funnels
“What did the people do
that signed up,
before they signed up,
compare to those who didn’t?”
Source: Usercycle
#scb13 – @andreasklinger
How often did activated users
use twitter in the first month:
7 times
What did they do?
Follow 20 ...
#scb13 – @andreasklinger
Example Twitter:
How did they get more people
to follow 30people within
7visits in the first 30 da...
Data is noisy.
@andreasklinger
source: thomas fuchs - www.metricsftw.com
Data is noisy.
source: thomas fuchs - www.metricsftw.com
Data is noisy.
source: thomas fuchs - www.metricsftw.com
Data is noisy.
source: thomas fuchs - www.metricsftw.com
Data is noisy.
source: thomas fuchs - www.metricsftw.com
Data is noisy.
Dataschmutz
A layer of dirt obfuscating
your useable data.
(~ sample noise we created ourselves)
Usually “wrong intent”.
U...
Dataschmutz
A layer of dirt obfuscating
your useable data.
@andreasklinger
Dataschmutz
A layer of dirt obfuscating
your useable data.
e.g. Traffic Spikes of wrong
customer segment.
(wrong intent)
@a...
How to minimize the impact of Dataschmutz
Base your KPIs on wavebreakers.
WK visitors acquisition activation retention ref...
Dataschmutz
MySugr
is praised as
“beautiful app”
example.…
=> Downloads
=> Problem:
Not all are diabetic
They focus on peo...
Competition Created
“Dataschmutz”
* Users had huge extra incentive.
* Marketing can hurt your numbers.
* While we decided ...
Lean Analytics
@andreasklinger
Lean Analytics
@andreasklinger
Lean Analytics
Lean Analytics
Hypothesis: We believe that introducing a newsfeed
will increase interaction between users.
Track: Engageme...
Lean Analytics
Important #1:
Don’t forget to timebox experiments.
Important #2:
Worry less about statistical significance (...
AARRR misses something
@andreasklinger
Acquisition
Activation
Retention
Referral
Revenue
(c) Dave McClure
CUSTOMER INTENT
FULFILMENT OF CUSTOMER INTENT
Acquisition
Activation
Retention
Referral
Revenue
(c) Dave McClure
CUSTOMER INTENT (JOB)
FULFILMENT OF CUSTOMER INTENT
Cus...
@andreasklinger
That’s you using metrics
“Look ma, the light started blinking”
Metrics are horrible way to understand customer intent
Customer Intent = His “Job to be done”
Watch: http://bit.ly/cc-jtbd...
Metrics are horrible way to understand customer intent
Great Way: Customer Interviews
But: We bias our people,
when we ask...
Source: Lukas Fittl - http://speakerdeck.com/lfittl
#scb13 – @andreasklinger
Framework: AARRR
Groupwork.
- Draw your customer journey
- Pick a point where there is likely a p...
Show & Tell.
@andreasklinger
@andreasklinger
Summary
Summary
- Use Metrics for Product and Customer Development.
- Use Cohorts.
- Use AARRR.
- Figure Customer Intent through n...
Read on
Startup metrics for Pirates by Dave McClure
http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-...
@andreasklinger
Thank you
@andreasklinger
Slides: http://slideshare.net/andreasklinger
All pictures: http://flickr.com/comm...
Startup Metrics, a love story. All slides of an 6h Lean Analytics workshop.
Startup Metrics, a love story. All slides of an 6h Lean Analytics workshop.
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Startup Metrics, a love story. All slides of an 6h Lean Analytics workshop.

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Everything you need to know about Startup Product Metrics.

This is a slideshare exclusive. The full 8hour workshop deck.

#iCatapult Workshop - 2013-08-12

Links:
http://klinger.io/
http://icatapult.co/

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Transcript of "Startup Metrics, a love story. All slides of an 6h Lean Analytics workshop."

  1. 1. Startup Metrics, a love story. Everything you need to know about Startup Product Metrics. #iCatapult Workshop - 2013-08-12 Slideshare Exclusive: The full Powerdeck. ;) @andreasklinger
  2. 2. @andreasklinger “Startup Founder” “Product Guy” @andreasklinger
  3. 3. @andreasklinger “Startup Founder” “Product Guy” What we will cover - Early Stage Metrics (Pre Product Market Fit). - Create your dashboard & customer journey map. - Wrong assumptions on Metrics - Lean Analytics & Advanced Topics @andreasklinger
  4. 4. #emminvest – @andreasklinger The Biggest Risk of a Startup?
  5. 5. #emminvest – @andreasklinger The Biggest Risk of a Startup? Time/Money? No You will learn a lot + huge network gain.
  6. 6. #emminvest – @andreasklinger Building ALMOST the right thing. The Biggest Risk of a Startup? Seeing the successful new competitor who does what you do, but has one little detail different that you never focused on.
  7. 7. “Startups don’t fail because they lack a product; they fail because they lack customers and a profitable business model” Steve Blank And it might have been where you didn’t look. @andreasklinger
  8. 8. Market Your Solution Customer Job/Problem Willing to pay To miss your opportunity. By focusing on the wrong thing. @andreasklinger
  9. 9. Market Customer Job/Problem Willing to pay competitor competitor competitor competitor Your Solution Other Market Customer Job/Problem Willing to pay Or by looking at the wrong customer. @andreasklinger
  10. 10. Startup Founders. @andreasklinger
  11. 11. Some startups have ideas for a new product. Looking for customers to buy (or at least use) it. Customers don’t buy. “early stage” @andreasklinger
  12. 12. traction time Product/Market Fit With early stage I do not mean “X Years” I mean before product/market fit. @andreasklinger
  13. 13. Product/market fit Being in a good market with a product that can satisfy that market. ~ Marc Andreessen @andreasklinger
  14. 14. Product/market fit Being in a good market with a product that can satisfy that market. ~ Marc Andreessen = People want your stuff. @andreasklinger
  15. 15. traction time Product/Market Fit @andreasklinger
  16. 16. Discovery traction time Validation Efficiency Scale Product/Market Fit Steve Blank - Customer Development @andreasklinger
  17. 17. traction time Empathy Stickness Virality Revenue Product/Market Fit Ben Yoskovitz, Alistair Croll - Lean Analytics Scale @andreasklinger
  18. 18. traction time Product/Market Fit Find a product the market wants. Empathy Stickness Virality Revenue Scale @andreasklinger
  19. 19. traction time Product/Market Fit Find a product the market wants. Optimise the product for the market. Empathy Stickness Virality Revenue Scale @andreasklinger
  20. 20. traction time Product/Market Fit Find a product the market wants. Optimise the product for the market. Most clones start here. People in search for new product start here. Empathy Stickness Virality Revenue Scale @andreasklinger
  21. 21. traction time Product/Market Fit Product & Customer Development Scale Marketing & Operations Empathy Stickness Virality Revenue Scale @andreasklinger
  22. 22. traction time Product/Market Fit Startups have phases but they overlap. Empathy Stickness Virality Revenue Scale @andreasklinger
  23. 23. traction time Product/Market Fit 83% of all startups are in here. Empathy Stickness Virality Revenue Scale @andreasklinger
  24. 24. traction time Product/Market Fit 83% of all startups are in here. Most stuff we learn about web analytics is meant for this part Empathy Stickness Virality Revenue Scale @andreasklinger
  25. 25. Most of the techniques/pattern we find when we look to learn about metrics come out from Online Marketing @andreasklinger
  26. 26. A/B Testing, Funnels, Referral Optimization, etc etc They are about optimizing, not innovating @andreasklinger
  27. 27. What are we testing here? @andreasklinger
  28. 28. What are we testing here? Value Proposition, Communication. Maybe Channels, Target Group. Not the product implementation. @andreasklinger
  29. 29. We need product insights. @andreasklinger
  30. 30. Good news: We don’t need many people It’s too early for optimizations. Challenge #1: Get them to stay. @andreasklinger
  31. 31. “...interesting...”
  32. 32. What does this mean for my product? Are we even on the right track?
  33. 33. eg. What is a good Time on Site? Maybe users spend time reading your support pages just because they are super confused.
  34. 34. Google Analytics is meant for Referral Optimization. Where does traffic come from? Is this traffic of value?
  35. 35. What does it mean anyway? @andreasklinger
  36. 36. What does it mean anyway? “We have 50k registered users!” Do they still use the service? Are they the right people? “We have 5000 newsletter signups!” Do they react? Are they potential customers? “We have 500k app downloads!” Do they still use the app? @andreasklinger
  37. 37. Some graphs always go up. Vanity. Use it for the Press. Not for your product. @andreasklinger
  38. 38. It’s easy to improve conversions (of the wrong people) Source: http://www.codinghorror.com/blog/2009/07/how-not-to-advertise-on-the-internet.html @andreasklinger
  39. 39. It’s easy to improve conversions (of the wrong people) This is a real example. Thank the Internet. Source: http://www.codinghorror.com/blog/2009/07/how-not-to-advertise-on-the-internet.html @andreasklinger
  40. 40. The same is true for funnels. It’s easy to optimize by pushing the wrong people forward. Disclaimer: this is not a real example. btw newrelic is awesome ;) @andreasklinger
  41. 41. The same is true for funnels. It’s easy to optimize by pushing the wrong people forward. Disclaimer: this is not a real example. btw newrelic is awesome ;) @andreasklinger
  42. 42. why early stage metrics suck. small something Most likely “Small Data” Early Stage Product Metrics suck: - We have the wrong product - With the wrong communication - Attacting the wrong targetgroup - Who provide us too few datapoints @andreasklinger
  43. 43. Early stage product metrics get easily affected by external traffic. One of our main goals is to minimize that effect. @andreasklinger
  44. 44. Values: 0, 0, 0, 100 What’s the average? #1 @andreasklinger
  45. 45. Values: 0, 0, 0, 100 What’s the average? 25 What’s the median? #1 @andreasklinger
  46. 46. #scb13 – @andreasklinger Values: 0, 0, 0, 100 What’s the average? 25 What’s the median? 0 Eg. “Average Interactions” can be Bollocks #1
  47. 47. #scb13 – @andreasklinger Values: 0, 0, 0, 100 What’s the average? 25 What’s the median? 0 Eg. “Average Interactions” can be Bollocks #1
  48. 48. Values: 0, 5, 10 What’s the average? #2 @andreasklinger
  49. 49. #scb13 – @andreasklinger Values: 0, 5, 10 What’s the average? 5 What’s the standard deviation? 4,08 => “Average” hides information. #2
  50. 50. “This is not statistical significant.” I don’t care. We are anyway playing dart in a dark room. Let’s try to get it as good as possible and use our intuation for the rest. #3 @andreasklinger
  51. 51. #scb13 – @andreasklinger Correlation / Causality Source: Lean Analytics
  52. 52. Correlation / Causality @andreasklingerSource: Lean Analytics
  53. 53. How can we use metrics? @andreasklinger
  54. 54. How can we use metrics? To Explore (Examples) Investigate an assumption. Look for causalities. Validate customer feedback. Validate internal opinions. To Report (Examples) Measure Progress. (Accounting) Measure Feature Impact. See customer happiness/ health. @andreasklinger
  55. 55. What do i measure? TL;DR: In case of doubt, people. Hits Visits Visitors People Views Clicks Page Views Conversions Engagement @andreasklinger
  56. 56. #scb13 – @andreasklinger Framework: AARRR Linked to assumptions of your product (validation/falsify) What are good KPIs?
  57. 57. #scb13 – @andreasklinger Framework: AARRR Rate or Ratio (0.X or %) What are good KPIs?
  58. 58. #scb13 – @andreasklinger Framework: AARRR Comparable (To your history (or a/b). Forget the market) What are good KPIs?
  59. 59. #scb13 – @andreasklinger Framework: AARRR Explainable (If you don’t get it it means nothing) What are good KPIs?
  60. 60. #scb13 – @andreasklinger Framework: AARRR Explainable (If you don’t get it it means nothing) What are good KPIs? Linked to assumptions of your product (validation/falsify) Rate or Ratio (0.X or %) Comparable (To your history (or a/b). Forget the market)
  61. 61. #scb13 – @andreasklinger Framework: AARRR “Industry Standards” Use industry averages as reality check. Not as benchmark. - Usually very hard to get. - Everyone defines stuff different. - You might end up with another business model anyway. - Compare yourself vs your history data.
  62. 62. #scb13 – @andreasklinger Let’s start.
  63. 63. Segment Users into Cohorts Cohorts = Groups of people that share attributes. @andreasklinger
  64. 64. Segment Users into Cohorts Like it People 23% @andreasklinger
  65. 65. Segment Users into Cohorts Like it People 0-25 3% People 26-50 4% People 51-75 65% @andreasklinger
  66. 66. Segment Users into Cohorts Average Spending Jan €5 Feb €4.5 Mar €5 Apr €4.25 May €4.5 ... ... Averages can hide patterns. @andreasklinger
  67. 67. Segment Users into Cohorts 1 2 3 4 5 Jan €5 €3 €2 €1 €0.5 Feb €6 €4 €2 €1 Mar €7 €6 €5 Apr €8 €7 May €9 ... ... Registration Month Month Lifecycle Insight: Users spend less over time in average. We still don’t know if they spend less, or if less people spend at all. @andreasklinger
  68. 68. Apply a framework: AARRR @andreasklinger
  69. 69. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned (c) Dave McClure
  70. 70. Example: Blossom.io Kanban Project Mangement Tool created a card Activation moved a card Retention invited team members Referral have upgraded Revenue (people who) registered an account Acquisition
  71. 71. Example: Photoapp created first photo Activation opened app twice in perioid Retention shared photo to fb Referral ??? (exit?) Revenue (people who) registered an account Acquisition
  72. 72. Example: Photoapp ARRR acquisition activation retention referral revenue registration first photo twice a month share … 8750 65% 23% 9%
  73. 73. WK acquisition activation retention referral revenue Photoapp registration first photo twice a month share … 1 400 62,5% 25% 10% 2 575 65% 23% 9% 3 350 64% 26% 4% … … … … … Example: Photoapp Cohorts based on registration week AARRR
  74. 74. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned (c) Dave McClure Which Metrics to focus on?
  75. 75. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned Short Answer: Focus on Retention (c) Dave McClure
  76. 76. Because Retention = f(user_happiness)
  77. 77. Because Retention = f(user_happiness) Not only “visited again”. But “did core activity X again”
  78. 78. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned (c) Dave McClure Long answer - It depends on two things: Phase of company Type of Product Engine of Growth
  79. 79. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned Source: Lean Analytics Book - highly recommend #1 Phase
  80. 80. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned #2 Engine of Growth Paid Make more money on a customer than you spend, to buy new ones. Eg. Saas Viral A Users brings more than one new user. Eg. typical interactive ad-campaigns @andreasklinger Sticky Keep your userbase to improve your quality. Eg. Communities
  81. 81. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned #2 Type of Company (linked to Engine of Growth) Saas Build a better product Social Network/Community “(subjective) Critical Mass” Marketplace Get the right sellers and many more... @andreasklinger
  82. 82. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned Short Answer: Focus on Retention (c) Dave McClure
  83. 83. Retention Matrix Stickness over lifetime. Source: www.usercycle.com
  84. 84. Acquisition Visit / Signup / etc Activation Use of core feature Retention Come + use again Referral Invite + Signup Revenue $$$ Earned Short Answer: Focus on Retention (c) Dave McClure Eg. Did core-action X times in period.
  85. 85. Dig deeper: Crashpadder’s Happiness Index e.g. Weighted sum over core activities by hosts. Cohorts by cities and time. = Health/Happiness Dashboard
  86. 86. Marketplaces / 2-sided models
  87. 87. Marketplaces / 2-sided models
  88. 88. Marketplaces / 2-sided models Amazon Approach: 1) Create loads of inventory for longtail search 2) Create demand 3) Have shitloads of money. 4) Wait and win. Boticca (aka Startup) Approach: 1) Focus on one niche Targetgroup 2) Create “enough” inventory with very few sellers 3) Create demand 4) Create more demand 5) Add a few more sellers. Repeat. Pray.
  89. 89. How to solve the Chicken and Egg Problem TL;DR: You need very few but very good and happy chickens to get a lot of eggs. Btw: If the chickens don’t come by themselves, buy them. Uber paid 30$/h to the first drivers. Ignore the “minor chickens”, they come anyway.
  90. 90. #scb13 – @andreasklinger Framework: AARRR Example Mobile App: Pusher2000 Trainer2peer pressure sport app (prelaunch “beta”). Rev channel: Trainers pay monthly fee. Two sided => Segment AARRR for both sides (trainer/user) Marketplace => Value = Transactions / Supplier Social Software => DAU/MAU to see if activated users stay active Chicken/Egg => You need a few very happy chickens for loads of eggs. Activated User: More than two training sessions Week/Week retention to see if public launch makes sense Optimize retention: Interviews with Users that left Measure Trainer Happiness Index Pushups / User / Week to see if the core assumption (People will do more pushups) is valid
  91. 91. #scb13 – @andreasklinger Framework: AARRR Groupwork - What stage are you in? Empathy Stickness Virality Revenue Scale
  92. 92. #scb13 – @andreasklinger Framework: AARRR Groupwork - Define your AARRR Metrics! Acquisition, Activation, Retention, Referral, Revenue One KPI each. (e.g. User who xxxx)
  93. 93. #scb13 – @andreasklinger Framework: AARRR Groupwork - What’s your current core metric.
  94. 94. Show & Tell. @andreasklinger
  95. 95. The dirty side of metrics. @andreasklinger
  96. 96. Metrics need to hurt @andreasklinger
  97. 97. A Startup should always only focus on one core metric to optimize. Metrics need to hurt Your dashboard should only show metrics you are ashamed of. @andreasklinger
  98. 98. Have two dashboards (example bufferApp): A actionable board to work on your product (eg. % people buffering tweets in week 2) A vanity board one to show to investors and tell to the press (eg. total amount of tweets buffered) Metrics need to hurt @andreasklinger
  99. 99. If you are not ashamed about the KPIs in your product dashboard than something is wrong. Either you focus on the wrong KPIs. OR you do not drill deep enough. Metrics need to hurt @andreasklinger
  100. 100. Example: Garmz/LOOKK Great Numbers: 90% activation (activation = vote) But they only voted for friends instead of actually using the platform. We drilled (not far) deeper: Activation = Vote for 2 different designers. Boom. Pain. Metrics need to hurt. Metrics need to hurt @andreasklinger
  101. 101. Let’s talk cash. @andreasklinger
  102. 102. Let’s talk cash: Life Time Value (LTV) Life Time = 1/Churn Eg. 1 / 0.08 = 12.5 months Average Revenue Per User (ARPU) = Revenue / Amount of Users Eg. 20.000€ / 1500 = 13.33€ LTV = ARPU * LifeTime = 13.33€ * 12.5 = 166.6666 @andreasklinger
  103. 103. Let’s talk cash: Customer Acquisition Costs CAC = Total Acquisition Costs this month / New Customers this month Goal: CAC < LTV even better: 2-3xCAC < LTV @andreasklinger
  104. 104. MRR Monthly Recurring Revenue Revenue Churn & Qty Churn Monitor Revenue @andreasklinger Source: www.usercycle.com
  105. 105. But how to make more money? @andreasklinger
  106. 106. Big wins are often cheap. source: thomas fuchs - www.metricsftw.com
  107. 107. Viral Distribution @andreasklinger
  108. 108. Viral Distribution 3 kinds of virality Product Inherent A function of use. Eg. Dropbox sharing Product Artificial Added to support behaviour. E.g. Reward systems Word of Mouth Function of customer satisfaction. Source: Lean Analytics
  109. 109. Viral Distribution Invitation Rate = Invited people / inviters eg. 1250 users invited 2000 people = 1.6 Acceptance Rate = Invited Signed-up / Invited total eg. out of the 2000 people 580 signed up = 0.29 Viral Coefficient = Invitation Rate * Acceptance Rate eg. 1.6 * 0.29 = 0.464 (every customer will bring half a customer additionally)
  110. 110. Viral Distribution Important #1: Unless your Growth Engine is Viral, don’t focus early on Viral Factors. Focus on retention/stickyness. Important #2: Viral Cycle Time (time between recv invite and sending invite) is extremely important. eg. K = 2 Cycle Time: 2 days => 20 days = 20.470 users Cycle Time: 1 day => 20 days = 20mio users Source: http://www.forentrepreneurs.com/lessons-learnt-viral-marketing/
  111. 111. #scb13 – @andreasklinger Churn is not what you think it is @andreasklinger
  112. 112. #scb13 – @andreasklinger Churn is not what you think it is “5% Churnrate per month” One of the highest churn reasons is expired credit cards. Sad Fact: People forget about you. @andreasklinger
  113. 113. #scb13 – @andreasklinger Churn is not what you think it is People don’t wake up and suddenly want to unsubscribe your service... “Oh.. it’s May 5th.. Better churn from that random online startup i found 2 months ago.” @andreasklinger
  114. 114. #scb13 – @andreasklinger Churn is not what you think it is You loose them in the first 3 weeks. And then at some point just remind them to unsubscribe. That’s when we measure it (too late). Source: Intercom.io
  115. 115. #scb13 – @andreasklinger Churn is not what you think it is Source: Lean Analytics
  116. 116. #scb13 – @andreasklinger Checkout Intercom.io Segment + message customers = Awesome
  117. 117. User activation. Some users are happy (power users) Some come never again (churned users) What differs them? It’s their activities in their first 30 days. @andreasklinger
  118. 118. Sub-funnels “What did the people do that signed up, before they signed up, compare to those who didn’t?” Source: Usercycle
  119. 119. #scb13 – @andreasklinger How often did activated users use twitter in the first month: 7 times What did they do? Follow 20 people, followed back by 10 Churn: If they don’t keep them 7 times in the first 30 days. They will lose them forever. It doesn’t matter when a user remembers to unsubscribe Example Twitter
  120. 120. #scb13 – @andreasklinger Example Twitter: How did they get more people to follow 30people within 7visits in the first 30 days? Ran assumptions, created features and ran experiments! Watch: http://www.youtube.com/watch?v=L2snRPbhsF0 Example Twitter
  121. 121. Data is noisy. @andreasklinger
  122. 122. source: thomas fuchs - www.metricsftw.com Data is noisy.
  123. 123. source: thomas fuchs - www.metricsftw.com Data is noisy.
  124. 124. source: thomas fuchs - www.metricsftw.com Data is noisy.
  125. 125. source: thomas fuchs - www.metricsftw.com Data is noisy.
  126. 126. source: thomas fuchs - www.metricsftw.com Data is noisy.
  127. 127. Dataschmutz A layer of dirt obfuscating your useable data. (~ sample noise we created ourselves) Usually “wrong intent”. Usually our fault. @andreasklinger
  128. 128. Dataschmutz A layer of dirt obfuscating your useable data. @andreasklinger
  129. 129. Dataschmutz A layer of dirt obfuscating your useable data. e.g. Traffic Spikes of wrong customer segment. (wrong intent) @andreasklinger More “wrong” people come. Lower conversion rate on the landing page.
  130. 130. How to minimize the impact of Dataschmutz Base your KPIs on wavebreakers. WK visitors acquisition activation retention referral revenue Birchbox visit registration first photo twice a month share … 1 6000 66% / 4000 62,5% 25% 10% 2 25000 35% / 8750 65% 23% 9% 3 5000 70% / 3500 64% 26% 4%
  131. 131. Dataschmutz MySugr is praised as “beautiful app” example.… => Downloads => Problem: Not all are diabetic They focus on people who activated. @andreasklinger
  132. 132. Competition Created “Dataschmutz” * Users had huge extra incentive. * Marketing can hurt your numbers. * While we decided on how to relaunch we had dirty numbers. Dataschmutz Competitions (before P/M Fit) are nothing but Teflon Marketing People come. People leave. They leave dirt in your database. Competitions create artificial incentive “Would you use my app and might win 1.000.000 USD?” @andreasklinger
  133. 133. Lean Analytics @andreasklinger
  134. 134. Lean Analytics @andreasklinger
  135. 135. Lean Analytics
  136. 136. Lean Analytics Hypothesis: We believe that introducing a newsfeed will increase interaction between users. Track: Engagement between users (comments/likes) Falsifiable Hypothesis: People who visited the newsfeed will give a 30% more comments and likes, than people who didn’t.
  137. 137. Lean Analytics Important #1: Don’t forget to timebox experiments. Important #2: Worry less about statistical significance (while early stage). Just use experiments to doublecheck your entrepreneurial intuition.
  138. 138. AARRR misses something @andreasklinger
  139. 139. Acquisition Activation Retention Referral Revenue (c) Dave McClure CUSTOMER INTENT FULFILMENT OF CUSTOMER INTENT
  140. 140. Acquisition Activation Retention Referral Revenue (c) Dave McClure CUSTOMER INTENT (JOB) FULFILMENT OF CUSTOMER INTENT Customer Interviews Customer Interviews & Metrics
  141. 141. @andreasklinger That’s you using metrics “Look ma, the light started blinking”
  142. 142. Metrics are horrible way to understand customer intent Customer Intent = His “Job to be done” Watch: http://bit.ly/cc-jtbd Products are bought because they solve a “job to be done”. Learn about Jobs to be done Framework @andreasklinger
  143. 143. Metrics are horrible way to understand customer intent Great Way: Customer Interviews But: We bias our people, when we ask them. Even if we try not to. Reason: we believe our own bullshit. Watch: www.hackertalks.io
  144. 144. Source: Lukas Fittl - http://speakerdeck.com/lfittl
  145. 145. #scb13 – @andreasklinger Framework: AARRR Groupwork. - Draw your customer journey - Pick a point where there is likely a problem - Formulate assumption - Formulate Success Criteria
  146. 146. Show & Tell. @andreasklinger
  147. 147. @andreasklinger Summary
  148. 148. Summary - Use Metrics for Product and Customer Development. - Use Cohorts. - Use AARRR. - Figure Customer Intent through non-biasing interviews. - Understand your type of product and it’s core drivers - Find KPIs that mean something to your specific product. - Avoid Telfonmarketing (eg Campaigns pre-product). - Filter Dataschmutz - Metrics need to hurt - Focus on the first 30 days of customer activation. - Connect Product Hypotheses to Metrics. - Don’t hide behind numbers. TL;DR: Use metrics to validate/doublecheck. Use those insights when designing for/speaking to your customers.
  149. 149. Read on Startup metrics for Pirates by Dave McClure http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version Actionable Metrics by Ash Mauyra http://www.ashmaurya.com/2010/07/3-rules-to-actionable-metrics/ Data Science Secrets by DJ Patil - LeWeb London 2012 http://www.youtube.com/watch?v=L2snRPbhsF0 Twitter sign up process http://www.lukew.com/ff/entry.asp?1128 Lean startup metrics - @stueccles http://www.slideshare.net/stueccles/lean-startup-metrics Cohorts in Google Analytics - @serenestudios http://danhilltech.tumblr.com/post/12509218078/startups-hacking-a-cohort-analysis-with-google Rob Fitzpatrick’s Collection of best Custdev Videos - @robfitz http://www.hackertalks.io Lean Analytics Book http://leananalyticsbook.com/introducing-lean-analytics/ Actionable Metrics - @lfittl http://www.slideshare.net/lfittl/actionable-metrics-lean-startup-meetup-berlin App Engagement Matrix - Flurry http://blog.flurry.com/bid/90743/App-Engagement-The-Matrix-Reloaded My Blog http://www.klinger.io
  150. 150. @andreasklinger Thank you @andreasklinger Slides: http://slideshare.net/andreasklinger All pictures: http://flickr.com/commons Liked it? Tweet it.
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