Pirate metrics AARRR-Profit and key metrics to track
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Discover de pirate metrics framework and what are the key metrics to track in your startup to get profit.
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Pirate metrics AARRR-Profit and key metrics to track
- 1. Pirate Metrics AARRR, profit and key metrics to track
- 2. Pol Valls Soler ! @polvallssoler! " "linkedin.com/in/polvallssoler! " "slideshare.net/polvallssoler! "! Creator of:! iOS app for discovering people nearby: joinerapp.com! Reddit for spanglish geeks: zumogeek.com! Advising entrepreneurs at La Salle Technova Barcelona!
- 3. Some context: Before & After 2 Dot-Com Crashes Before 2000! • Sun Servers! • Oracle DB! • Exodus Hosting! • 12-24mo dev cycle! • 6-18mo sales cycle! • <100M people online! • $1-2M seed round! • $3-5M Series A! • Sand Hill Road crawl! • Big, Fat, Dinosaur Startup! Source:500startups! After 2008! • AWS, Google, PayPal, FB, TW! • Cloud + Open Source SW! • Lean Startup / Startup Wknd! • 3-90d dev cycle! • SaaS / online sales! • >3B people online! • <$100K incub + <$1M seed! • $1-3M Series A! • Angel List global visibility! • Lean, Little, Cockroach Startup! Daft Punk Startup: ! Simpler, Faster, Cheaper, Smarter
- 4. Some context: Changes in Tech Startups • LESS Capital required to build product, get to market – Dramatically reduced $$$ on servers, software, bandwidth – Crowdfunding, KickStarter, Angel List, Funders Club, etc – Cheap access to online platforms for 100M+ consumers, smallbiz, etc • MORE Customers via ONLINE platforms (100M+ users) – – – – – – Search (Google) Social (Facebook, Twitter) Mobile (Apple, Android) Local (Yelp, Groupon, Living Social) Media (YouTube, Pinterest, Instagram, Tumblr) Comm (Email, IM/Chat, Voice, SMS, etc) • LOTS of little bets: Accelerators, Angels, Angel List, Small Exits – Y Combinator, TechStars, 500 Startups – Funding + Co-working + Mentoring -> Design, Data, Distribution – “Fast, Cheap Fail”, network effects, quantitative + iterative investments Source:500startups!
- 7. ACQUISITION! Users come to the site; you have their attention
- 8. ACTIVATION! User performs some key activity that indicates a good first visit
- 9. RETENTION! User continues to do that key activity indicating they like your product
- 10. REFERRAL! User gets other users to join
- 12. AARRR Funnel: Customer Lifecycle / Conversion Behavior!
- 13. AARRR Funnel: Customer Lifecycle / Conversion Behavior! Campaigns, Contests SEM SEO Social Networks PR Blogs Apps & Widgets Email Domains Biz Dev Affiliates Land age / p Home Page ing ct Produ s re Featu Direct, Tel, TV s & Email s Alert ime-‐ ts & T n es m Eve Syste sed Featur ba , Con Blogs igns, Campa ts Contes & Emails s widget tent Biz Dev n, Ads, Lead Ge s, etc SubscripBon
- 14. BLOG EXAMPLE! Acquisition - users come to the site and stay for at least 2 minutes Activation - user signs up for RSS/newsletter Retention - user reads at least one post a week or opens the newsletter Referral - user promotes your blogs contests and drives traffic Revenue - user buys your ebook !
- 15. SAAS EXAMPLE! (Web-‐based app to convert HTML to PDF or Excel documents) Acquisition - user signs up for the service Activation - user successfully makes a document Retention - user continues to make documents. As long as they're ! successfully making documents they will continue to use the service. Referral – Users send other users to our web, possibly with a coupon code Revenue - yay! money! !
- 16. AND…
- 17. if CLV > CAC, then PROFIT!
- 18. AARRR Funnel: Customer Lifecycle / Conversion Behavior! Campaigns, Contests SEM SEO Social Networks PR Blogs Apps & Widgets Email Domains Biz Dev Affiliates andi ge / L pa Home Page ct Produ s re Featu Direct, Tel, TV s & Email s Alert ng igns, Campa ts Contes -‐ Time nts & s e m Eve Syste sed Featur ba , Con Blogs tent & Emails s widget Biz Dev n, Ads, Lead Ge s, etc SubscripBon
- 19. AARRRP!
- 20. Example Conversion Metrics (note: your mileage may vary…) Category User Status Conv % Est. Value Acquisition Visit Site (or landing page, or external widget) 100% $.01 Acquisition Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks) 70% $.05 Activation Happy 1st Visit (views X pages, stays Y sec, Z clicks) 30% $.25 Activation Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit) 5% $1 Activation Acct Signup (includes profile data) 2% $3 Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor (3+ visits in first 30 days) 2% $5 Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25
- 21. KEY METRICS TO TRACK…!
- 22. ACQUISITION! Key Metrics To Track:! • Volume(#) ! • Cost ($)! • Conversion (%)! ! Acquisition tips (for the top 10 - 100 words)! • Your brand / Products! • Customer needs / Benefits! • Competitor’s brand / Products (Steal traffic)! • Semantic equivalents! • Misspellings !
- 23. ACQUISITION!
- 24. ACQUISITION! Extra tip: How to get your first 100 users! 1) What exisBng soluBon do you believe your product is beTer than? 2) Where can you find a criBcal mass of people who use the exisBng soluBon? 3) Go there. Talk to them. Show them your product.
- 25. ACQUISITION! Extra tip: Reverse Engineered App Store’s ranking algorithm (approximation)! AppStore Ranking = H + D + R + E + S ! !H = # of installs weighted for the past few hours! !D = # of installs weighted for the past few days! !R = Reviews (star rating + number of reviews)! !E = Engagement (# of times app opened etc.) ! !S = Sales ($)! ! !
- 26. ACTIVATION! Key metrics to track:! • Pages per visit (2-3+ page views)! • Time on site (10-30+ seconds)! • Conversions (1 key feature usage)! • Clicks (3-5+ clicks)! • Bounce rate (low)! Activation Tips:! • Less is more! • Focus on UX / Usability! • Provide incentives & call to actions! • Perform A/B tests and iterate fast!
- 27. ACTIVATION!
- 28. RETENTION! Key metrics to track:! • Source (email, RSS, affiliates…)! • Volume (Low spam rating)! • Conversions (20% open rate / CTR)! • Visitor Loyalty (1–3+ visits per month)! • Session Length! • Long customer life cycle / Low decay! • Identify fanatics and cheerleaders!
- 29. RETENTION!
- 30. RETENTION! Retention Tips:! • Email is simple and it works! • But make Unsubscribe easy! • 80% subject line / 20% body text! • Actually… 99% subject line / 1% body text! • Status / “best of” weekly/monthly emails! • “Something happened” emails! • Lifecycle emails @ +3, +7, +30 days ! • RSS / News feeds! • Widgets / Embeds! • Gamification! • Fanatics = Virality + affiliate channels (like bloggers)!
- 31. REFERRAL! Key metrics to track:! Viral Growth Factor = X * Y * Z! ! !X = % of users who invite other people! !Y = average # of people that they invited! !Z = % of users who accepted an invitation! A viral growth factor > 1 means an exponential organic user acquisition.!
- 32. REFERRAL!
- 33. REFERRAL! Referral Tips:! • Personal send to friend (Email / IM)! • Social Media! • Widgets / Embeds! • Affiliates!
- 34. REVENUE! Key metrics to track:! • Conversion to revenue (%)! • Volume ($$$)! Revenue Tips:! • Don’t just rely on AdSense, iAd…! • Offer something free (at least when starting out)! • Subscription / Recurring transactions! • Qualify your customers / Traffic for lead generation.! • Sell somethig (physical or virtual)!
- 35. REVENUE!
- 36. PROFIT! …
- 38. CAC (Customer Acquisition Cost)! Take only a porBon of those salaries and expenses in the early days to give a beTer indicaBon of how CAC will look when you are at scale.
- 39. CLV or LTV (Customer Lifetime Value)! if the Customer Churn rate is a monthly % or yearly %, then the Customer LifeBme will be for the same Bme period.
- 40. CLV or LTV (Customer Lifetime Value)! To truly get an accurate picture of LTV, you should take into consideraBon Gross Margin: In most SaaS businesses, the gross margin % is high (above 80%), and it’s quite common to use the simpler version of the formula that is not Gross Margin adjusted.
- 41. CLV or LTV in a More Complex Scenario (Where you expect ARPA to change over the lifespan of the customer due to expansion revenue) a = iniBal ARPA per month ( x GM %, if you prefer) m = monthly growth in ARPA per account c = Customer Churn Rate (in months) (This formula makes an assumpBon that revenue increases at a roughly fixed rate every month for the enBre lifeBme of the customer)
- 42. LTV : CAC Ratio Awesomeness! if > 3 (It’s ok. As a startup, don’t worry iniBally about LTV>3*CAC) if 1 < LTV/CAC < 3 if LTV/CAC < 1 your business model is broken!
- 43. Tools for metrics analysis …
- 45. How do we improve the funnel?... Take a look at my Growth Hacking slides at " " slideshare.net/polvallssoler!
- 46. Pol Valls Soler ! @polvallssoler! " "linkedin.com/in/polvallssoler! " "slideshare.net/polvallssoler! "! Creator of:! iOS app for discovering people nearby: joinerapp.com! Reddit for spanglish geeks: zumogeek.com! Advising entrepreneurs at La Salle Technova Barcelona!