1. Customer Metrics What works?

2. Creating a Data DrivenProduct Organization Establish a dashboard Build a funnel Manage retention

3. Establish a dashboard

4. Key Goals Profitability Monthly Recurring Revenue Key Goals Cash Months to recover Cost of Customer Acquisition Growth

5. Profitability Customer Acquisition Cost (CAC) Micro-Economics (per customer profitability) Lifetime Value (LTV) Monthly Recurring Revenue Revenue Services Revenue Expenses Overall Profitability (Accounting) Profitability COGS Revenue per Employee Profitability per Employee Expenses per Employee

6. Key Metrics Customer Acquisition Cost (CAC) Lifetime Value (LTV) < 3 X Months to recover CAC < 12 Months

7. Customer Profitability Average Monthly Revenue Per Customer LTV Average Customer Lifetime % Churn Rate Cost to Serve Customer Profitability Number of Deals closed Funnel Metrics CAC Marketing Program Costs Total Cost of Sales and Marketing Level of Touch Required Personnel Costs

8. Build a funnel

9. Dave McClure’s Funnel

11. David Cancel’s FunnelNote: this is too pretty for him  Website Visitors – 100% Sign up for trial – 10% Log in to account – 8% Active Users – 4% Paying Users - 2% Long term users >1 year – 1%

12. Drill Down on the Funnel Look at the metrics by customer segments (cohorts) Look at the metrics by campaign source Look at the ROI Number of Raw Leads Conversion to paying Customers ROI per Marketing Program Marketing Program Costs Cost per Lead

13. Conversion “2% is the average conversion rate in the United States of America whether you're selling elephants or iPods.” AvinashKaushik - Analytics Evangelist, Google In general, software companies expect 1%-3% of customers using the free version of their software to upgrade. TrialPay’s 2011 REPORT: BEST PRACTICES IN ACQUIRING SOFTWARE CUSTOMERS

14. What is the #1 thing you can do to optimize the funnel? Manage retention

15. Retention Increasing retention (LTV) directly decreases CAC Moving from 1% to 2% retention doubles revenue and halves CAC Renewals Product Issues Product Usage Map Customer Satisfaction Net Promoter Score Churn Rate Cohort Analysis Customer Surveys

16. Customer Satisfaction Best indicator of customer satisfaction is Net Promoter Score Ask 1 question – "How likely is it that you would recommend our company to a friend or colleague?" on a scale from 0-10 3 groups Promoters (9 or 10) Passives (7 or 8) Detractors (0 – 6) NPS = % Promoters - % of Detractors

17. Cohort Analysis Churn stabilizes in month 4 Improvement in first month churn

18. Managing Cohorts Determine the actions that repeat customers perform Create interventions to drive customers to perform the actions Create a flow (funnel) to see how the actions work together to change churn Measure the results Experiment until you get the results you want

19. Cohort Funnel Flow steps Interventions Sign in email Sign In Send user to search page after login Search for wines Review reminder banner ad Review wines Share pop up Share your wine list

20. Cohort Flows

21. What tools can you use to do this? If you are Daddy Warbucks: Coremetrix Omniture If you are a cheapskate like me: Google Analytics Kissmetrics Performable MixPanel

22. Issues With Analytics Tools You need to know what you are doing before you do it You need technical ability to set them up Setting up the funnels is not intuitive and takes a lot of time Only the big guys have specific retention functionality

23. Be Sticky! http://www.besticky.com

24. Resources and Props I stole heavily from: For Entrepreneurs (much more info on metrics) http://www.forentrepreneurs.com/saas-metrics/ David Cancel http://davidcancel.com/ Other shout outs Dave McClure http://500hats.typepad.com/ Brant Cooper http://market-by-numbers.com/ Help us out and take the survey http://www.besticky.com/