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Big data and freemium
1.
Big Data Analytics
For Freemium Startups Rags Srinivasan @rags Pinching Pennies from Consumers: Iterative Path Charging For The Extras Math Marketer Copyright © 2012 Rags Srinivasan
2.
Freemium Businesses are
Based on Hope Free Marketing Users to WoM Marketing Customers Users sign-up Users fall in love Users tell their friends because it is free and upgrade and followers Math Marketer Copyright © 2012 Rags Srinivasan
3.
Lack of Predictability
Poses Business Challenges How many will How much to invest? upgrade? Effect of WoM What is the valuation? marketing? Math Marketer Copyright © 2012 Rags Srinivasan
4.
Current Aggregate Data
are Not Enough When a user signs up what is the likelihood she will upgrade? Fixed cost: $250,000/yr Revenue per customer: $0.25/yr Total Users: 3MM Total Customers: 100,000 Knowing 2-3% of your current user base are paying customers does not help Math Marketer Copyright © 2012 Rags Srinivasan
5.
What if You
Can Improve Your Knowledge About Your User Base? Know your Know if a change in Know if a user will customer mix marketing mix will never upgrade help What is the information worth to you? Math Marketer Copyright © 2012 Rags Srinivasan
6.
Your Users are
Creating Enough Data – Can You Put that to Work? Clickstream Stimulus - What is the Response expected lifetime value of this user? Interactions Should you keep her or show the door? Math Marketer Copyright © 2012 Rags Srinivasan
7.
Probabilistic Marketing Can
Help Before your eyes glaze over – let us start with a standard pack of cards Bayesian Statistics and Logistic Regression Math Marketer Copyright © 2012 Rags Srinivasan
8.
Let us Start
With Simple Probabilities of Drawing a Card I draw a card at random and ask you the probability it is a Jack Probability of drawing a Jack: = 4/52 = 1/13 Math Marketer Copyright © 2012 Rags Srinivasan
9.
Suppose You Can
Ask Me A Few Indirect Questions Now we are in the realm of conditional probabilities introduced by Bayes Math Marketer Copyright © 2012 Rags Srinivasan
10.
You ask –
Is it a red card? If I answer yes If I answer no Probability it is a Probability it is a Jack is 2/26 =1/13 Jack is 2/26 =1/13 Not all questions are useful, but … Math Marketer Copyright © 2012 Rags Srinivasan
11.
You Ask –
Is It a Picture Card? If I answer yes If I answer no Probability it is a Probability it is a Jack is 4/12=1/3 Jack is 0 Some questions are immensely useful in increasing your knowledge – from 1/13 to 1/3 Math Marketer Copyright © 2012 Rags Srinivasan
12.
Your Users and
Prospects Can Be Modeled Just Like a Deck of Cards Not quite But using Logistic Models and Bayesian Regressions Math Marketer Copyright © 2012 Rags Srinivasan
13.
How Likely is
that a Freeloader will Upgrade within 1 Year? What is the Information Worth to you? Do- Yes Apostles Gooders WoM Marketing (See here for details) Freeloader Customers No s No Pays Premium Yes Math Marketer Copyright © 2012 Rags Srinivasan
14.
Ask me how
Math Marketer Copyright © 2012 Rags Srinivasan