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! !
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
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!
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.!
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!