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(c) 2009 David Binetti
The Sacred, The Profane, and the Pivot
A Brief Case Study of Applied CDM, AARRR Metrics, and Lean Principles
Monday, March 7, 2011
(c) 2009 David Binetti
DefinitionsSacred
Steve Blank’s Customer Development Model (CDM). I follow it religiously.
ProfaneDave McClure swears every third word. Oh, and his Acquisition, Activation, Retention, Referral, Revenue (AARRR) model is awesome.
PivotEric Ries’s concept of strategic shifts predicated on learnings. (Sorry, no pithy witticism for this.)
Monday, March 7, 2011
(c) 2009 David Binetti
CDM (Brief Version)
A) Establish Hypotheses
Test -> (Iterate or Exit)
B) Sell
Test -> (Iterate or Exit)
Monday, March 7, 2011
(c) 2009 David Binetti
CDM (Discovery - Phase A)Category Hypothesis
Product State what you are selling.
Problem State the customer problem you are solving.
Channel State how you are going to sell your product.
Demand State how you are going to generate demand for your product.
Market Type State the market type (existing, re-segmented, new) you’re in.
Competitive State the competition you face.
Monday, March 7, 2011
(c) 2009 David Binetti
CDM (Validation - Phase B)
I could explain in detail, but basically boils down to: prove you can sell by actually selling before you scale.
Monday, March 7, 2011
(c) 2009 David Binetti
Metric Description
Acquisition Users visit
Activation Users sign up
Retention Users come back
Referral Users like and refer
Revenue User pay something for something
AARRR Model
(AKA, Metrics for Pirates)
Monday, March 7, 2011
(c) 2009 David Binetti
AARRR Model (cont.)The Model measures:
Conversion rates for each step
Expected value at each step (not included here.)
A ‘one-slide pitch deck’.
Have these numbers, and you need nothing else.
Monday, March 7, 2011
(c) 2009 David Binetti
Slight Differences
The CDM has you look at and test the whole business model.
The AARRR assumes the model rolls up in the metrics.
Monday, March 7, 2011
(c) 2009 David Binetti
How They Complement
The CDM teaches you to test assumptions, but isn’t as specific on how to measure results.
The AARRR gives metrics to know what’s good, but not how to identify what’s broken.
Monday, March 7, 2011
(c) 2009 David Binetti
Case: Votizen
Social Network for Registered Voters
Civic Participation Made Simple and Meaningful
Voter-Focused (as opposed to politician-focused) approach to $5B Political Market.
Independent, non-partisan, simple and fun!
Monday, March 7, 2011
(c) 2009 David Binetti
CDM (Brief)Category Hypothesis
Product Social Network for Registered Voters (“LinkedIn for Politics”)
Problem Traditional campaign techniques #fail in a web 2.0 world.
Channel The internet is the primary source of voter information.
Demand Social networks are both the product and the demand-generator.
Market Type Resegmented; displace current market for direct-mail & robocalls.
Competitive Hyper-fragmented.
Monday, March 7, 2011
(c) 2009 David Binetti
Metric Description
Acquisition Creates account on system. (Precursor-requirement)
Activation Certifies voting record (Authenticates - gives voter the power)
Referrals Forwards to friends (Acquisition model)
Retention Uses system to affect change (Validates lifetime value)
Revenue Private! (Sorry, not appropriate for a public document.)
AARRR (Brief)
Monday, March 7, 2011
AppliedStarted with MVP - Minimum Viable Product.
Just enough to get feedback (cost: $1206)
Metric MVP
Acquisition 5%
Activation 17%
Referrals -
Retention -
Revenue -
Monday, March 7, 2011
(c) 2009 David Binetti
Improve
Tried a bunch of A/B testing on home page.
Found an optimal message.
Learning: When given the option to explore, people explored. When given a direction, they took the direction.
If you want something done, make it part of registration flow.
Monday, March 7, 2011
Applied
Significant, immediate jump in initial metrics. (Spend ~$10K)
Metric MVP V.1
Acquisition 5% 17%
Activation 17% 90%
Referrals - 4%
Retention - 5%
Revenue - -
Monday, March 7, 2011
(c) 2009 David Binetti
Improve Retention and Referrals
Same Process, Different Results
A/B, Feedback, Analytics, etc.
Incremental improvement on retention and referrals.
Was improving, but marginal value of efforts were asymptotic.
Time for a pivot!
Monday, March 7, 2011
(c) 2009 David Binetti
The PivotEric Ries concept: shift direction while grounded in learning
Implementation of “back to start of CDM”
I took learning and created new MVP.
So, $10K sunk cost -- buh-bye! (ugh)
Needed to fire current developers, hire new skills. (double-ugh)
Monday, March 7, 2011
(c) 2009 David Binetti
The Pivot (cont.)
But, not a waste!
Time, money and effort brought learning.
Look beyond the features to the problem.
“I always wanted to get more involved. This makes it so much easier. Thanks!”
Monday, March 7, 2011
AppliedNew product launched as MVP - @2gov on Twitter
Contact all public officials at a single address.
Results? Much better R&R, and better conversion.
Metric MVP V.1 New ProductAcquisition 5% 17% 42%
Activation 17% 90% 83%
Referrals - 4% 54%
Retention - 5% 21%
Revenue - - -
Monday, March 7, 2011
AppliedNext step: test revenue assumptions
Provide a channel for voters to support causes and candidates in which they believe.
Another pivot! - No data yet
Metric MVP V.1 New Product
Next IterationAcquisition 5% 17% 42% ?
Activation 17% 90% 83% ?
Referrals - 4% 54% ?
Retention - 5% 21% ?
Revenue - - - ?
Monday, March 7, 2011
(c) 2009 David Binetti
TakeawaysSet up your CDM hypotheses so that you know what you are trying to accomplish and how to tell if you are finished or need to start over.
The AARRR approach serves as a great ‘startup dashboard.’ Numbers don’t lie (as long as you don’t lie to yourself.)
Should you need to iterate, then pivot -- don’t flail. Measure success by lessons learned, not by the results themselves (oh, and restate CDM.)
Monday, March 7, 2011
(c) 2009 David Binetti
Learn from the Source
CDM: http://www.steveblank.com
AARRR: http://www.slideshare.net/Startonomics/startup-metrics-for-pirates-presentation
Pivot: http://www.startuplessonslearned.com/2009/06/pivot-dont-jump-to-new-vision.html
Monday, March 7, 2011
(c) 2009 David Binetti
Feedback Wanted!
Would love feedback!
Want to get better, so criticism is preferred.
“If you don’t have anything bad to say, then don’t say anything.”
Monday, March 7, 2011