Metrics that Matter

Poornima VijayashankerEIR @ 500 StartupsOctober 21, 2014

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• What are metrics and analytics

• Methods of collecting metrics

• Types of metrics

• One metric that matters

Agenda

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What are metrics?

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A business metric is any type of measurement used to gauge some quantifiable component of a company’s performance such as ROI, churn rate, etc.

“”

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Analytics is the discovery and communication of meaningful patterns in data.

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Why do we need analytics & metrics?

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Uncertainty.

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A startup is an experiment.

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Experiments needs a hypothesis & results!

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Vanity metrics.

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Almost anything you read on TechCrunch.

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We send out 10M emails daily!

We received 1M likes overnight!

”“

“ ”

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What are good metrics?

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1. Comparative2. Understandable3. Ratio

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What will I do differently based on this information?

- Lean Analytics

”“

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Total sign ups - Vanity Metricvs.

Total active user - Actionable Metric

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Qualitative vs. Quantitative

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Sometimes you have to pick up the phone!

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KPIs: Key Performance Indicator

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Leading vs. Lagging

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Cohort

A/B

Multivariate

Similar groups over time.

Lots of data.

Testing all variables at once.

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January February March April May

Total Customers 1,000 2,000 3,000 4,000 5,000

Avg Revenue Per Customer $5.00 $4.50 $4.33 $4.25 $4.50

Table 2-1 from Lean Analytics.

Average revenue for 5 months as we add features, and refine product.

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What is this data telling us?

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Cohort Analysis

Month of UseMonth of UseMonth of UseMonth of UseMonth of Use

January February March April May

New Users 1000 1000 1000 1000 1000

Total Users 1000 2000 3000 4000 5000

Month 1 $5.00 $3.00 $2.00 $1.00 $0.50

Month 2 $6.00 $4.00 $2.00 $1.00

Month 3 $7.00 $6.00 $5.00

Month 4 $8.00 $7.00

Month 5 $9.00

Table 2-2 from Lean Analytics.

Cohort Analysis of revenue data. Horizontal axis are cohorts (e.g. January cohort).

Spending less initially.

Spending increases.

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AARRR

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Marketing Metrics

Product Metrics

Customer Metrics

PricingMetrics

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Marketing Metrics

Product Metrics

Customer Metrics

PricingMetrics

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website

Need to figure out appropriate metric for each.

e-mail campaignsoffline

social media

Market Channels

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Possible Reach in Channel

Actual Reach

Sign Up for Trial

Active

Paying

Long Term Paying

Funnel per Channel

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Marketing Metrics

Product Metrics

Customer Metrics

PricingMetrics

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Sign up for product

Try out product

Actively use product

Convert to Paid

Refer more users

Funnel for Product

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Funnel depends on type of product.

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Services that are used constantly but with a specific purpose.

Daily

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Frequently used products with a number of use cases.

Daily

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Less frequently used product with a specific use case.

Yearly? Possibly monthly.

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Frequency of use (engagement), use case, and appeal impact adoption.

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What features trigger conversions?

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How can you create an experience that will

set off those triggers?

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Install it!

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• Understand place of features in your product.• Look at the frequency of their usage.• Does one feature lead to the usage of another• Can you constrain UX to improve adoption?• Can issues reported or requests be monetized?

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Marketing Metrics

Product Metrics

Customer Metrics

PricingMetrics

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•# of customers•Recency•Retention Rate (churn rate)•LTV (lifetime value)•Customer Acquisition Costs•Customer Profitability •Net Promoter Score

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•Prospects•First-time Buyers•Early Repeat Buyers•Core Customers•Core Defectors

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Oh it ain’t no lie, your churn rates make the users go BYE BYE BYE!

“”- Sean P.

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One metric that matters.

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• Most important question you have.• Draw a line.• Focuses entire company.• Encourages a culture of experimentation & small failures.

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• How many new customers do you need?• How many new customers per week (per acquisition channel) do you think define a level of success?

• Level of success being that which gets you to the next stage.

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Take a snapshot today!

Marketing & product.

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$0 $1K

$5K $10K

$10K $100K

Marketing activities change.

Customer costs change.

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Exercise!

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• Come up with 1 metric.

• Ask yourself, “How will our current activities meet or achieve that metric?”

• Cut out the activities that don’t or put them on the back burner.

• Email me your metric and activities (poornima@500.co) or come to my office hours on Friday @ 12-1pm.

Exercise #1

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• What are metrics and analytics

• Methods of collecting metrics

• Types of metrics

• One metric that matters

Review

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Appendix.

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• E-Commerce Site• Get to shopping cart.

• Reduce abandonment!

• SaaS• Monthly subscription

• Conversion v. cancellation rate

• Marketplace• transaction fee

• connecting buyers & sellers

• Mobile App• discovery

• in-app purchases

• upgrading to paid app

• Media• engagement with content

Metrics based on business model

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