Date post: | 17-Oct-2014 |
Category: |
Business |
View: | 4,306 times |
Download: | 0 times |
My#Background#
! Educa/on#! BS,#Electrical#Engineering,#Northwestern#
! MS,#Industrial#Engineering,#Virginia#Tech#
! MBA,#Stanford#
! 20#years#of#Product#Management#Experience#! 5#years#at#Intuit,#led#Quicken#Product#Management#
! Led#Product#Management#at#Friendster#
! CEO#&#Cofounder#of#YourVersion,#�Pandora#for#your#realM/me#news�#
! Product#consultant:#Box,#YouSendIt,#Epocrates#
! Speaker,#Author#“42#Rules#of#Product#Marke/ng”#
#Will#post#slides#to#hTp://slideshare.net/dan_o##
Quick#Audience#Poll#
! Do#you#work#in:#
! B2B#
! B2C#
! Size/stage#of#company#
! Small/early#stage#
! MidMsize/stage#
! Large/later#stage#
! Marke/ng#Channels#
! SEM#
! Display#Ads#
! Affiliate#
! Social#Media#
! Analy/cs#Tools#
! Google#Analy/cs#
! Omniture#
! KISS#Metrics#
! Others?#
! Other#
! GA#conversion#goals#
! Landing#page#op/miza/on#
! A/B#tes/ng#
! Cohort#analysis#
#
Copyright#©#2013#Olsen#Solu/ons#
7#Marke/ng#Metrics#Framework#
Acquisi/on# Conversion# Mone/za/on# Reten/on#
Copyright#©#2013#Olsen#Solu/ons#
1. New visitors 2. Cost per acquisition
3. Conversion rate 4. Customer acquisition cost 5. Retention rate 6. Average revenue/user 7. Lifetime value (LTV)
Equa/on#of#Your#Business#
! (see#my#other#talks#on#SlideShare)#
! Profit#=#Revenue#–#Cost#
! To#op/mize#marke/ng,#best#to#look#at#this#
on#a#“per#customer”#basis#
! Profit/customer=Revenue/customer#–#Cost/customer#
! We#want#to#maximize#profit/customer#
! We#want#to#acquire#new#customers#in#a#profitable#way#
Copyright#©#2013#Olsen#Solu/ons#5#
The#Customer#Conversion#Funnel#
New#
Visitors#
(prospects)#
Customers#
(revenueM
genera/ng)#
Metric##1:#New#Visitors#
! Job##1#for#Marke/ng#is#to#get#new#
visitors#(prospec/ve#customers)#to#learn#
about#our#product#
! Unique#Visitors#vs.#Visits#
! Unique#=#mul/ple#visits#by#same#person#
only#count#once#(for#that#/me#period)#
Copyright#©#2013#Olsen#Solu/ons#
Unique#Visitors#vs.#Visits#
Copyright#©#2013#Olsen#Solu/ons#
! Graph#of#visits#&#visitors#
! Note:#2#yMaxis#scales#
! 25,044#Visits#
! By#5,878#Unique#Visitors#
! =#4.26#visits#per#visitor#
New#vs.#Returning#Visitors#
Copyright#©#2013#Olsen#Solu/ons#
! You#want#to#separate#New#vs.#Returning#Visitors#
! Click#“Advanced#Segments”#in#Google#Analy/cs#
Sources#of#New#Visitors#
Copyright#©#2013#Olsen#Solu/ons#
Free
P
aid
• Press#
• Organic#Search#
• Word#of#Mouth#&#Viral#
• Social#Media#
• Referral#/#barter#
• Display#ads#
• Search#engine#marke/ng#(SEM)#
• Affiliate#
• Conferences#
New#Visitors#
10#
Metric##2:#Cost#per#Acquisi/on#
Copyright#©#2013#Olsen#Solu/ons#
Cost#Per#Acquisi/on:#Display#Ads#
! Cost#per#Acquisi/on#(CPA*)#is#how#much#you#pay#to#get#a#new#visitor#to#your#site#
! Say#you#buy#100,000#banner#ad#impressions#for#$100#
! That’s#a#CPM#(cost#per#thousand)#of#$1#
! Say#those#100,000#banner#ad#impressions#lead#to#1,000#people#clicking#through#to#your#site:#
clickthrough#rate#(CTR)#of#1%#
! Your#CPA#would#be#$100#/#1,000#visitors#=#$0.10#
! CPA#for#display#ads#=#CPM#/#(CTR#*#1000)##
Copyright#©#2013#Olsen#Solu/ons#
*Note:#CPA#can#also#mean#“Cost#per#Ac/on”#
Cost#Per#Acquisi/on:#PPC#
! Google#AdWords#lets#you#“pay#per#click”#(PPC)#
! So#your#CPA#is#your#“cost#per#click”#(CPC)#
! Due#to#AdWord’s#dynamic#pricing,#need#to#look#at#
your#Average#CPC##
! CPC#can#vary#by#keyword,#ad#copy#&#landing#
Copyright#©#2013#Olsen#Solu/ons#
Metric##3#Conversion#Rate#
Copyright#©#2013#Olsen#Solu/ons#
Prospects# Customers#
100%#
x%#
Landing#Page#Op/miza/on#
Copyright#©#2013#Olsen#Solu/ons#15#
! A/B#Tes/ng#tools#! Google#Website#Op/mizer#
! Op/mizely#
! Visual#Website#Op/mizer#
! Others?#
Osen#Track#Conversion#Rates#for#Different#Ac/ons#
! Most#businesses#don’t#just#have#“new#
visitors”#and#“revenueMgenera/ng#
customers”#
! You#may#have#
! “Free#users”:#registered#but#using#free#/er#
! A#prospect#gives#you#their#email#address#
! Can#track#the#conversion#rate#for#each#
ac/on#
Copyright#©#2013#Olsen#Solu/ons#
Google#Analy/cs#Goal#Funnel#Visualiza/on#
Copyright#©#2013#Olsen#Solu/ons#
Metric##4:#Customer#Acquisi/on#Cost#
! “CAC”#for#short#
! CAC#is#the#average#cost#for#a#revenueM
genera/ng#customer#
! So#it#takes#into#account#both#your#cost#of#
acquiring#a#prospect#and#your#conversion#
rate#for#conver/ng#prospects#to#revenueM
genera/ng#customers#
! CAC#=#CPA#/#Conversion#Rate#
Copyright#©#2013#Olsen#Solu/ons#
Metric##5:#Reten/on#Rate#
! Reten/on#rate#tracks#what#%#of#your#customers#are#s/ll#ac/ve#over#/me#
Copyright#©#2013#Olsen#Solu/ons#
~80% never use app again
Curve eventually flattens out
Cohort#Analysis#
Copyright#©#2013#Olsen#Solu/ons#20#
Cohort#Analysis:#Data#
Copyright#©#2013#Olsen#Solu/ons#
Churn#
! Churn#is#just#an#alterna/ve#way#of#talking#about#customer#reten/on#
! Reten/on#=#customers#staying#ac/ve#
! Churn#=#customers#leaving#
! Churn#rate#=#1#–#Reten/on#Rate#
! So#if#90%#of#your#customers#remain#
ac/ve#monthMtoMmonth,#your#monthly#
churn#rate#is#10%#
Copyright#©#2013#Olsen#Solu/ons#
Metric##6:#Average#Revenue#Per#User#
! “ARPU”#for#short#
! Measured#over#a#specific#/meframe,#e.g.,#
calendar#month#
! Take#total#revenue#for#the#month#and#
divide#it#by#the#number#of#customers#you#
had#that#month#
! Say#you#had#$100k#in#revenues#and#50k#
users,#your#ARPU#would#be#$2/user#
Copyright#©#2013#Olsen#Solu/ons#
Annual#ARPU#for#Tech#Companies#
Copyright#©#2013#Olsen#Solu/ons#
Profit#=#Revenue#M#Cost#
#
##
#
# # ##
#
# # ##
#
##
#
##
#
##
#
#
#Unique#Visitors##x##Ad#Revenue#per#Visitor#
#
##
#
##
#
##
#
##
#
##
#
#
##
#
# # #Impressions/Visitor##x##Effec/ve#CPM#/#1000#
#
# # ##
#
##
#
##
#
##
#
#
##
#
# # ##
#
# # #Visits/Visitor##x##Pageviews/Visit##x##Impressions/PV#
#
##
#
##
#
##
#
#
##
#
# # ##
#
# # ##
#
##
#
#
##
Copyright#©#2013#Olsen#Solu/ons#
ARPU#for#Adver/sing/Publishing#Model#
Your#ARPU#Will#Vary#by#Customer#
Copyright#©#2013#Olsen#Solu/ons#
! Look#at#Quality#vs.#Quan/ty#
! May#have#to#pay#more#to#acquire#higher#ARPU#users#
! Try#to#iden/fy#how#your#high#ARPU#customers#are#different#from#your#low#ARPU#customers:#channel,#industry,#product#usage,#demographics#
25#
Life/me#Value#(LTV)#
! Life/me#value#of#a#customer#represents#
how#much#value#the#average#customer#will#
generate#for#your#company#
! LTV#=#ARPU#x#Avg#Customer#Life/me#x#Gross#Margin#
! Average#Customer#Life/me#
! How#long#your#average#customer#is#ac/ve#and#generates#
revenue#
! Equals#1#/#churn#rate.#5%#monthly#churn#M>#avg#life#20#months#
! Gross#Margin:#the#%#of#revenues#les#over#aser#
subtrac/ng#the#cost#of#providing#the#product/service#
Copyright#©#2013#Olsen#Solu/ons#
Note:#for#simplicity,#this#LTV#equa/on#ignores#the#“cost#of#capital”#
LTV#Example#
! ARPU#=#$10#/#customer#per#month#
! Monthly#reten/on#rate#is#80%#M>#churn#rate#
is#20%#M>#avg#customer#life#=#5#months#
! Gross#margin#=#40%#
! LTV#=#ARPU#x#Avg#Customer#Life/me#x#Gross#Margin#
! LTV#=#$10/mo#x#5#months#x#40%#
! LTV#=#$50#x#40%#=#$20#
! So#the#average#customer#is#worth#$20#to#us#
#Copyright#©#2013#Olsen#Solu/ons#
You#Want#LTV#>#CAC#
! Say#LTV#is#$20#
! But#it#cost#us#$30#(CAC)#to#get#the#user:#LTV#–#CAC#=#20#–#30#=#M10###no#good!#
! If#it#only#costs#$10#CAC:#LTV#–#CAC#=#20#–#10#=#+10###good#
! Knowing#your#LTV#can#help#you#jus/fy#
marke/ng#budget#
! Average#profit/customer#=#LTV#–#CAC#
! So#we#want#LTV#>#CAC#
! Many#companies#use#the#ra/o#LTV/CAC#Copyright#©#2013#Olsen#Solu/ons#
What#You’d#Like#to#See#Over#Time#
Copyright#©#2013#Olsen#Solu/ons#
! LTV#increasing#as#you#improve#your#value#proposi/on,#pricing,#&#customer#reten/on#
! CAC#decreasing#as#you#op/mize#your#marke/ng:#segments,#channels,#messaging#
Ra/o#of#LTV#to#CAC:#Real#data#from#HubSpot#
Copyright#©#2013#Olsen#Solu/ons#30#
7#Marke/ng#Metrics#Framework#
Acquisi/on# Conversion# Mone/za/on# Reten/on#
Copyright#©#2013#Olsen#Solu/ons#
1. New visitors 2. Cost per acquisition
3. Conversion rate 4. Customer acquisition cost 5. Retention rate 6. Average revenue/user 7. Lifetime value (LTV)
Copyright#©#2013#Olsen#Solu/ons#
How#to#Track#Your#Metrics#
! Track#each#metric#as#daily#/me#series#
! Ra/o#metrics#make#it#easy#to#compare#applesMtoMapples#over#/me#(Conversion#rate,#CPA)#
#
Date#
New#
Visitors#
New#
Customers#
Conv#
Rate#
Ad#
Spend# CPA# CAC#…#
10/8/12# 10,000# 200# 2.0%# $200# $0.02# $1.00#
10/9/12# 10,000# 300# 3.0%# $600# $0.03# $2.00#
…#
Copyright#©#2013#Olsen#Solu/ons#
Iden/fying#the#“Cri/cal#Few”#Metrics#
! What#are#the#metrics#for#your#business?#
! Where#is#current#value#for#each#metric?##
! How#many#resources#to#“move”#each#metric?#! Employee#/me,#money#
! Which#metrics#have#highest#ROI#opportuni/es?#
Return#
Investment#
Return#
Investment#Return#
Investment#
Metric#A#Good#ROI#
Metric#B#Bad#ROI#
Metric#C#Great#ROI#
Copyright#©#2013#Olsen#Solu/ons#
Op/miza/on#through#Itera/on:#Con/nuous#Improvement#
Measure#
the#metric#
Analyze#
the#metric#
Iden/fy#top#
opportuni/es#
to#improve#
Design#&#develop##
the#enhancement#
Implement#the#
enhancement#
Learning#
Gaining#knowledge:#
• #Messaging#
• #Channel#
• #Customer#
• #Acquisi/on#costs#
34#
Copyright#©#2013#Olsen#Solu/ons#
Op/mizing#Signup#Page#Conversion#Rate#
Daily Signup Page Yield vs. TimeNew Registered Users divided by Unique Visitors to Signup Page
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/10
Dai
ly S
ignu
p P
age
Yie
ld
Changedmessaging
Added questionsto signup page
Started requiringregistration
35#