1. Startup Metrics 101
Web 2.0 Expo SF - 04/22/08
Dave McClure, Master of 500 Hats
http://500hats.typepad.com/
http://www.500hats.com/
http://slideshare.net/dmc500hats/
Hiten Shah, CrazyEgg / ACS / KISSmetrics
http://crazyegg.com
http://acsseo.com
http://KISSmetrics.com
2. AARRR!: 5-Step Startup Metrics Model
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct,
Widgets Email Tel, TV
Domains
1. ACQUISITION Viral
Loops
A L
2. A E F ERR
4. R
Emails & Homepage / Emails &
Alerts ctiv widgets
atio Landing Page
Blogs, RSS, Product Affiliates,
io n Features Contests
te n t
n
News Feeds
e
3. R
Ads, Lead Gen, Biz Dev
5. R
System Events & Subscriptions,
Time-based ECommerce
Features e ve
nu
Website.com e$
$$
3. Why Be a Web 2.0 Entrepreneur?
• Low Cost
• Lots of Users
• Online Advertising / E-Commerce
• Online Metrics
• It’s Cool.
• Make MONEY.
4. Q: What’s My Business Model?
Can be one of the following:
1. Get Users (= Acquisition, Referral)
2. Drive Usage (= Activation, Retention)
3. Make Money (= Revenue*)
* ideally profitable revenue
Note: eventually need to turn Users/Usage -> Money
5. Role: Founder/CEO
Q: Which Metrics? Why?
A: Focus on Critical Few Actionable Metrics
(if you don’t use the metric to make a decision, it’s not actionable)
• Hypothesize Customer Lifecycle
• Target ~3-5 Conversion Metrics (tip: Less = More)
• Test, Measure, Iterate to Improve
• Delegate Each Key Metric to someone to OWN
6. 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!
7. Role: Product / Engineering
Q: What to Build? Why?
A: Build Features that Increase Conversion
• Wireframes = Conversion Steps
• Measure, A/B Test, Iterate FAST (daily/weekly)
• Optimize for Conversion Improvement
– 80% on existing feature optimization
– 20% on new feature development
8. Example Conversion Metrics
(note: *not* actuals… your mileage may vary)
Category Conversion Status Conv % Est. Value
Acquisition Visit Site 100% $.01
(or landing page, or external widget)
Acquisition Doesn't Abandon 70% $.05
(views 2+ pages, stays 10+ sec, 2+ clicks)
Activation Happy 1st Visit 30% $.25
(views X pages, stays Y sec, Z clicks)
Activation Email/Blog/RSS/Widget/Acct Signup 5% $2
(anything that could lead to repeat visit)
Retention Length of Session / # of Clicks 10% $1
(length/intensity of engaged visit, >180s)
Retention Email Open/ RSS view -> Click/Repeat Visit 3% $5
(3+ visits in first 30 days)
Referral Refer 1+ users who visit site 2% $1
Referral Refer 10+ users who activate 0.2% $10
Revenue User generates minimum revenue 2% $5
Revenue User generates break-even revenue 1% $25
9. Role: Marketing / Sales
Q: What channels? Which users? Why?
A: High Volume (#), Low Cost ($), High Conv (%)
• Design & Test Multiple Marketing Channels + Campaigns
• Select & Focus on Best-Performing Channels & Themes
• Optimize for conversion to target CTAs, not just site/landing page
• Match/Drive channel cost to/below revenue potential
• Grab the Low-Hanging Fruit:
– Blogs
– SEO/SEM
– Landing Pages
– Automated Emails
11. Acquisition
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct,
Widgets Email Tel, TV
Domains
1. ACQUISITION
Marketing Channels:
• largest-volume (#)
• lowest-cost ($)
• best-performing (%)
Website.com
12. Acquisition
Where are users coming from?
Acquisition Methods
SEO / SEM
Blogs
Email
Social Media &
Social Networks
Domains
13. Acquisition
Keyword Vocabulary
Top 10 - 100 words
• Your Brand / Products
• Customer Needs / Benefits
• Competitor’s Brand / Products
• Semantic Equivalents
• Misspellings
Things to analyze
• Sources
• Volume
• Cost
• Conversion
14. Acquisition
Where are users coming from?
Key Metrics to Track Example
Quantity (#)
Cost ($)
Conversions (%)
15. Acquisition
Tools
Google Analytics (web analytics)
google.com/analytics
Google Keyword Tool (keyword research tool)
adwords.google.com/select/KeywordToolExternal
SEO Book Tools (SEO related tools)
tools.seobook.com
Resources
SEO Book Blog
seobook.com/blog
The Social Media Manual: Read Before You Play
searchengineland.com/071120-144401.php
Strategies to ruthlessly acquire users
andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html
16. Activation
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates Activation Criteria:
Apps & Direct,
Widgets Email Tel, TV • 10-30+ seconds
1. ACQUISITION
Domains • 2-3+ page views
• 3-5+ clicks
• 1 key feature usage
2. A
Homepage /
ctiv
Landing Page
atio
Product
Features
n
do LOTS of landing page
& A/B tests –
make lots of dumb
guesses & iterate FAST
Website.com
17. Activation
What do users do on their first visit?
Example Activation Goals
• Click on something!
• Account sign up / Emails
• Referrals / Tell a friend
• Widgets / Embeds
• Low Bounce Rate
Activation Tips
• Less is more
• Focus on user experience / usability
• Provide incentives & call to actions
• Test and iterate continuously
18. Activation
What do users do on their first visit?
Key Metrics to Track
Pages per visit
Time on site
Conversions
Before After
19. Activation
Tools
Crazy Egg (Visual Click Mapping)
crazyegg.com
Google Website Optimizer (A/B & Multivariate Testing)
google.com/websiteoptimizer
Marketo.com (B2B Lead Generation Management)
marketo.com
Resources
Experimentation and Testing: A Primer
kaushik.net/avinash/2005/05/experimentation-and-testing-a-primer.html
Landing Page Tutorials and Case Studies
copyblogger.com/landing-pages/
101 Easy Easy to use Google Website Optimizer
conversion-rate-experts.com/articles/101-google-website-optimizer-tips/
20. Retention
SEO Campaigns,
Automated emails are simple & easy SEM PR Contests Biz
Social
retention (but don’t overdo it) Networks Dev
Blogs Affiliates
• lifecycle emails @ +3, +7, +30d Apps & Direct,
Widgets Email Tel, TV
• status emails weekly/monthly 1. ACQUISITION
Domains
• event-based emails as they occur
BUT:
• make it easy to unsubscribe
2. A
Emails & Homepage /
Alerts
ctiv
Landing Page
atio
Blogs, RSS, Product
io n Features
te n t
n
News Feeds
e
3. R
Tip on emails:
• > 80% or more on SUBJECT LINE
System Events &
• < 20% or less on BODY TEXT Time-based
Features
Website.com
22. Retention
How do users come back?
Example Retention Goals
• 1 - 3+ visits per month
• 20% open rate / 2% CTR
• High deliverability / Low spam rating
• Long customer life cycle / Low decay
• Identify fanatics and cheerleaders
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
• Fanatics = virality + affiliate channel (bloggers?)
23. Retention
How do users come back?
Key Metrics to Track Example
Source
Quantity
Conversions
Visitor Loyalty
Session Length
25. Referral
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct,
Widgets Email Tel, TV Viral
Domains
1. ACQUISITION Loops
A L
E F ERR
4. R
2. A Emails &
widgets
Emails & Homepage /
Alerts
ctiv
Landing Page
Affiliates,
atio
Blogs, RSS, Product Contests
ti on Features
n
News Feeds
R e te n
3.
Focus on driving referrals
System Events & *after* users have a
Time-based
Features “happy” experience;
avg score >= 8 out of 10
Website.com
26. Referral
How do users refer others?
Referral Methods
Send to Friend:
Email / IM
Social Media
Widgets / Embeds
Affiliates
27. Referral
Viral Growth Factor
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.
28. Referral
Tools
Gigya (social media distribution & tracking tool)
gigya.com
ShareThis / AddThis (sharing buttons)
sharethis.com / addthis.com
GetMyContacts (PHP contacts importing & invitation software)
getmycontacts.com
Resources
Seven Ways to GO VIRAL
lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/
What’s your viral loop? Understanding the engine of adoption
andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your-vira.html
Metrics: Where Users Come From
slideshare.net/guest2968b8/rockyou-snap-summit-32508
29. Revenue
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct,
Widgets Email Tel, TV
Domains
1. ACQUISITION Viral
Loops
A L
2. A E F ERR
4. R
Emails & Homepage / Emails &
Alerts ctiv widgets
atio Landing Page
Blogs, RSS, Product Affiliates,
io n Features Contests
te n t
n
News Feeds
e
3. R
Ads, Lead Gen, Biz Dev
5. R
System Events & Subscriptions,
Time-based ECommerce
Features e ve
This is the part *you*
nu
Website.com e$
still have to figure out…
(we don’t know jack
$$
about your business)
30. Revenue
How do you make money?
Revenue Tips
• Don’t rely on AdSense
• Start Free -> Go Freemium
• Subscription / Recurring transactions
• Qualify your customers -> Lead generation (arbitrage)
• Sell something! (physical or virtual)
31. 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)
• “Don’t Make Me Think”, Steve Krug (book)
• “A Theory of Fun”, Raph Koster (book, website)
