Mike has grown FreshBooks from a one-man startup to a 30-person Web app company. He's going to teach you six essential terms that you need to understand in order to succeed with your app: 'Lifetime Value', 'Average Revenue per User', 'Churn', 'Gross Cost per Acquisition', 'Sales Funnel' and 'Customer Vintages'. He's then going to give an example with a real-life case study. This is one you can't afford to miss.

1. “Flight systems”
@MikeMcDerment – Co-Founder and CEO
Feb 23, 2010 – #fowa

2. Thank You

3. Mike McDerment
Co-founder, CEO

4. True or False:
Technology is the hardest
part of building a web app
business?

5. False

6. Flight Systems
Metrics and systems to help you navigate web
app success.

7. … THE LEADER IN ONLINE
BILLING AND BOOKKEEPING.

8. Customer Types
Solo Team Recurring

9. Now for Web Apps!
Recurring billing managed inside your app
Accept credit cards inside your own app
Real-Time payment notifications ( WEBHOOKS! )
http://developers.freshbooks.com/

10. Users Over 1,000,000 Users Since May 2004
Month

11. Let me apologize in
advance…sorry aboot the
MBA speak

12. Key Metrics for Web Apps
• “How much do we spend to get a customer?”
• Cost Per Acquisition ($) CPA
• “How much do our customers pay us?”
• Average Revenue Per User ARPU
• “At what rate are customers cancelling?”
• Churn (%) Churn
• “How much is a customer worth over time?”
• Lifetime Value Per Customer ($) LTV

13. CPA
ARPU
Churn
LTV

14. Why is not enough.
Less accurate
Less flexible (can’t slice and dice)
Can’t correlate to app usage/events
Too important to outsource
Tied to a vendor
Besides…It’s easy!

15. Three systems to rule them all.
Cookie Tracking
DB Storage
Reporting

16. Variables
to track
Unique
URL’s
Cookie
Cookie Tracking
Code

17. What to Track ( barebones ) and why.
Referring Domain ( who sent them here? )
Ref URL ( what are their interests? )
Landing URL ( campaign, partner, ad unit? )

21. Data Base Storage
Add a
table to
your
Database
Store
alongside
user
profile

25. Search
Sort
Dump
BONUS! Dashboard

26. How does a marketer get the data
from a database?

27. Search it.

28. Sort it.

29. Dump it.

31. Case Study Assumptions
Web Application
Business model is “Freemium”
$10,000 per month marketing budget
6 month campaign

32. Gross New Customers Acquired by Month
100
75
50
25
0
Jan Feb Mar Apr May Jun

33. Gross New by Marketing Spend (Vintages)
100
75
50
25
0
Jan Feb Mar Apr May Jun

34. What we learned
100 customers per vintage
CPA of $100 ($10,000/100)
6 month close <- MASSIVE INSIGHT!!!
50% / 25% / 10% / 5% / 5% / 5%
What else could we know?
ARPU, LTV

35. Parting Thoughts on Flight Systems
Too important to outsource
It’s about data collection, not reporting
It’s easy

36. Flight Systems
Metrics and systems to help you navigate web
app success.

37. Questions? Bring em!
Twitter: @mikemcderment
Email: mike@freshbooks.com
Check out FreshBooks if you are building a web app!
http://developers.freshbooks.com

38. Choose your own adventure.

39. 6 month campaign
Spend Visitors Trials
January $10,000.00 10,000 1,000
February $10,000.00 10,000 1,000
March $10,000.00 10,000 1,000
April $10,000.00 10,000 1,000
May $10,000.00 10,000 1,000
June $10,000.00 10,000 1,000

40. What your marketer gets…
Hands on the wheel
Self service
Easy access to excel
The data they need, when they need it!

42. How many customers did we get?
# new customers Gross
New

43. These systems help answer
Who are our most valuable customers?
Where did we get them?
How do we get more?

45. CPA
Marketing
Spend
ARPU
Visitor
Churn
Lead
LTV
Paying
Customers

46. Simple Conversion Funnel
CPA
ARPU
Churn
LTV