2. About me
What I’ve done until 2012:
I studied economics at LUISS
I wrote a thesis on the VC
I published a research on the VC that has ended up on the IlSole24Ore
I won InnovAction Lab 2011
I went to Silicon Valley
I worked @ Principia SGR (8 of the last investments ≅ 15mln)
What I'm doing since the beginning of 2013
I work @ Boox Venture Incubator
I’m a member of several professional associations promoting entrepreneurship
I continue research activities
I continue to study (a lot)
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5. 1. Different businesses, different metrics
Airbnb Number of house with HD pics
Fiendfinder Viral factor (K)
Blogo Pages per user
6sicuro.it Generated quotes (lead)
Privalia Cost per shoting
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6. Hundreds of different metrics
PV Page Views
UV Unique Visitors
CPM Cost per Thousand
BR Bounce Rate
CTR Click Trough Rate
CPR Cost Per Registration
CPL Cost Per Lead
CPA Cost Per Acquisition (or
Cost per Action)
CPC Cost Per Click
LTV Lifetime Value
CR Conversion Rate
Churn Churn Rate
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7. Scalability (basic formulas)
CPA < LTV
“LTV is the projected profit that a
customer will generate during his
lifetime”
CPC
Depends on the customer
satisfaction, CRM, biz model,
%CR etc
General CPA = $ Adv cost / # Customers acquired
CPA based on CPM campaign: (CPM x Impressions /1000)/ # Customer acquired
LTV formulas
• LT Revenues: # Purchases x $ Avg. basket
• LT Revenues: $ Avg. basket / % Churn rate
• LT Gross Profit: # Purchases x $ Avg. basket x % gross profit margin
• LT Gross Profit: $ Avg. basket / % Churn rate x % gross profit margin
• LT DCF: ($ Avg. basket margin x Life Expectancy) x (Customer retention rate / 1 + discount
rate – Customer retention rate)
CPA = Cost Per Acquisition (or Cost per Action), CPC = Cost per Click, LTV = Lifetime Value
LTV Starbucks: http://blog.kissmetrics.com/wp-content/uploads/2011/08/calculating-ltv.pdf
LTV Avinash Kaushik: http://www.kaushik.net/avinash/analytics-tip-calculate-ltv-customer-lifetime-value/ 6
9. Scalability, make it happen!
Note: CAC = CPA
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Source: David Skok - http://www.forentrepreneurs.com/startup-killer/
10. Scalability, how you can do it?
Note: CAC = CPA
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Source: David Skok - http://www.forentrepreneurs.com/startup-killer/
11. Conversion
CPC
CPA =
%CR
Define what are you looking to measure!
i.e.: define who you consider a customer; define the difference between
CPL and CPA (if there is)
What’s the meaning of conversion rate?
What’s the meaning of funnel?
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12. The Funnel .. <offline mode>
1. A lot of people see the adv
wall
2. Some people recognize it
walking in front of a
sunglasses shop
3. Some of them decide to go
in and try them
4. One of them want to buy it
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13. The Funnel .. <online mode - ie. ecommerce>
1. I paid to have some users on my
website
100 2. They arrive on the landing page
50% 50 3. They leave their email
4. They put one product in the basket
40% 20
5. They start the checkout process
5
40%
6. They complete all the payment
info
3
38%
7. They pay
1
1% 33%
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14. The Funnel .. <online mode - ie. ecommerce>
Some drivers:
Paid users
• Pictures
100 Landing page • Copy/text button
• Info required
50 Leave the email • Password
• Email confirm
Product on the basket • Add button
20 • Related product
• Info required
5 Checkout process • Shipping days
• Delivery cost
3 Payment info • Payment gateway
• Invoice/legal info
• CC circuit
1 They pay
• PIN request
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15. Why measure the funnel
You need to identify the bottleneck and solve it!
Examples:
- Pictures
- Checkout process
- Payment gateway 14
16. The Funnel .. (flash sales ecommerce)
Unique users Measure your CPL/CPA!
Users that complete
The CPA initially refers only to
the form the traffic resulting from paid
campaigns is the main KPI to
be monitored in an
Registered users
ecommerce / SaaS, but in
Users that
the medium term it should
arrive till be monitored along with the
checkout metrics of the traffic that
1%-0,5%
came from other channels
Paying
users
(email, facebook page,
etc. )
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20. Cohort Analysis referral source analysis
“A cohort is a group of people who share a common
characteristic over a certain period of time”
Customer spending by referral source
Direct Facebook Google Blog
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Source: www.cohortanalysis.com/
21. Cohort Analysis time-period analysis
How much revenue do the users that I’ve acquired on the second months
generate?
How many users that I’ve acquired on the second month will I probably still
have on the ninth month?
Time period
1 2 3 4 5 6 7 8 9 10 11 12
1 513 410 328 263 210 168 134 108 86 69 55 44
2 923 739 591 473 378 303 242 194 155 124 99
3 1.258 1.007 805 644 515 412 330 264 211 169
4 1.537 1.230 984 787 630 504 403 322 258
5 1.777 1.421 1.137 910 728 582 466 373
6 1.987 1.590 1.272 1.017 814 651 521
Time-period cohorts
7 2.178 1.742 1.394 1.115 892 714
8 2.355 1.884 1.507 1.206 965
9 2.524 2.020 1.616 1.292
10 2.689 2.151 1.721
11 2.852 2.282
12 3.017
paying users 513 1.334 2.325 3.398 4.495 5.583 6.644 7.671 8.661 9.618 10.547 11.454
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Source: andrewchenblog.com
23. Churn Rate
Your churn rate is the amount of customers or subscribers who cut ties
with your service or company during given time period.
These customers have “churned”
Recurring revenues model Traditional Ecommerce
# Customers who has
not made a
# Subscribers lost purchase in 90 days*
= % Churn rate = % Churn rate
# Starting subscribers # Starting active
customers
* it depend on
business model
and offer
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Source: www.churn-rate.com
25. Why you need to optimize..
• You have 0-8 seconds to make a compelling headline and
landing page. After 8 seconds, the majority of visitors leave.
• Approximately 96% of visitors that come to your website are
not ready to buy.
• The more landing pages you have, the more leads you are
likely to get.
• Product videos can increase purchases of the product by
144%.
• A 1 second delay in your site speed can result in a 7%
reduction in conversions.
• A/B testing is becoming the preferred method that has
brought a lot of the companies the most success.
Source: http://blog.kissmetrics.com/what-converting-websites-do/
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27. A/B test…
• Elaborate 2 different versions (text, colors, font, layout, etc)
• Propose versions to the target sample (with the same content)
• Measure conversion rate
• Profile users based on conversion rates (male/female, addicted, etc)
• (Visualize where the users click on the pages)
The same process could be applicable to web pages, email/DEM,
games dynamics, etc!
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28. Headline..
Original
+30%
+15%
Fonte: http://37signals.com/svn/posts/1525-writing-decisions-headline-tests-on-the-highrise-signup-page
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32. A/B test are easy but..
Consider a site that has 10,000 visitors per month and has a 5 percent conversion
rate. The table below shows how long it will take to run a “conclusive” test (95
percent confidence) based on how much the change impacts conversion rate.
Source: http://techcrunch.com/2013/01/12/current-conversion-rate-and-desired-
confidence-interval-will-help-you-avoid-analysis-paralysis-stop-running-stupid-tests/ 31
33. Other tips..
• Badging
up to +50%
• Message consistency
up to +100%
• International website
up to +100%
• Email sign-up
up to +1.000%
Fonte: http://www.slideshare.net/Emerce/emerce-performance-bryan-eisenberg
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35. Email & DEM
Email could become your first traffic source, improve the LTV of your
customers, decrease your customer acquisition cost !
1. Choose & Optimize email form
2. Choose & Optimize password request
3. Choose the confirmation process
4. Choose emails’ arguments and style
5. Choose & Optimize email subjects
6. Metrics, metrics, metrics: Drivers:
• Open rate/Unique OR Ø Subject, time
• Click rate Ø Content
• Click-through-rate Ø Layout
• Delivery time Ø All of the above
• List growth Ø Too many
• Unsubscribe rate (or churn rate) Ø Frequency & content
• Spam complaint rate Ø Too many
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36. Email & DEM
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Source: http://retail-analytics.quora.com/Email-Open-Click-Through-Analytics-from-over-80-Billion-Emails
38. Interact with customers…
People now expect the same—if not
better— level of service from online
storefronts and service channels as they
do from a visit to a retail store or a phone
conversation with an agent.
Source: “ E mail Customer Service in North American Small and Medium
Businesses” by BenchmarkPortal, 2005
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39. Interact with customers…
Source: Communication Preference, Live Chat Effectiveness, A Survey of Internet Shoppers 2012
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40. Interact with customers…
83% of small and medium-sized
businesses responded with
inaccurate or incomplete answers.
41% of consumers expect an e-mail
response within six hours.
Only 36% of retailers responded that quickly.
Source: “Email Customer Service in North American Small and Medium Businesses” by BenchmarkPortal, 2005,
Source: Forrester Research Inc., 2008 39
41. Interact with customers…
“Customer experience quality could
result in a swing of $184 million for a
large Internet retailer.
Source: Forrester Research Inc., 2008
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42. The power of great video…
Video: http://www.youtube.com/watch?feature=player_embedded&v=ZUG9qYTJMsI
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44. Recap & useful tools
1. Metrics, measure and understand your KPIs
2. Funnel, know the steps to improve your conversion
3. Cohort analysis, analyse customer behaviour
4. Churn rate, do not throw the job done
5. A/B test, what do customers prefer?
6. Source channels, email/DEM still a very interesting
channel
7. CRM, interact and learn from your customers
- Mixpanel
- Jirafe free
- Woopra
- Kissmetrics
- RJ metric
- Geckoboard
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45. My 2 cents
Do not think that doing a startup is a game.
Do not think about raising money, but think of creating a
product and to have a vision for the next 10 years.
Read up and study before taking any decisions, there is a
huge amount of information online, just know what to look
for.
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46. My sources
• Steve blank tools (www.steveblank.com/tools)
• Avinash Kaushik (www.kaushik.net)
• Quora (follow Matthew Caroll)
• Slideshare (xerox, 500startups, etsy)
• Techcrunch
• Angel.co
• Italian Startup Scene
• Indigeni Digitali
• Startupnumbers.com ;)
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47. Must read/view:
• Blog etsy (http://mcfunley.com/)
• Blog Fabrice Grinda
• Blog fab.com
• Blog google
• Blog a16z.com
• Foundat.io/n
• ecorner.stanford.edu
• avc.com
• Angel.co
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