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    Lean Startup

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    Challenges

    • Management
      • Setting priorities
      • Defining key metrics (and creating 'dashboards')
      • Reporting progress
    • Product/Service
      • Building the “right” features
      • Getting product out in a timely fashion
      • Testing for user conversion and adoption
    • Marketing
      • Accessing appropriate channels (Search, Social, New Media, etcetera)
      • Cost-efficient distribution

    Three core models

    • Business models: define one-page business model [customer segments + desired actions and behaviors]
    • Conversion dashboards: identify critical conversion events and dashboard for each segment and prioritize
    • Marketing channels: test and develop marketing channels [measure Volume (#), Cost ($), and Conversions (%)]

    Principles

    • Optimize products and marketing by means of fast iterations cycles and A/B testing
    • Collect usage metrics in real-time
    • Decisions are based on measured user behaviour – measure conversions; compare 2+ options and optimize for conversions
      • Design and optimize for conversion
    • Focus on user experience [and distribution]
    • Keep it simple and actionable

    Optimize for “happiness” [both user and business]

    • Define states of user and business value
    • Prioritize (estimate) relative value of each state
    • Move users from lower value states to higher value states
    • Achieve low cost and high value at scale

    Discover meaning

    • Top 10-100 words
      • Brand/Products
      • Customer needs/benefits
      • Competitor's brand/products
      • Semantic equivalents (and misspellings)
    • Relevant images
      • People
      • Products
      • Problems
      • Solutions
    • Call-to-action
      • Words
      • Images
      • Context
      • Emotion

    Alternative high-level business models

    • Get users (= Acquisition and Referral)
    • Drive usage (= Activation and Retention)

    Metric activities [AARRR]

    • Acquisition: users/visitors come to the site(s) from various Channels
    • Activation: users enjoy 1st visit, that is, they have a “happy” experience
    • Retention: users come back, visit site multiple times
    • Referral: users like the product/service enough to refer others
    • Revenue: users conduct some monetization behaviour

    Roles and accompanying functions

    • 'BizDev'
      • Q: Which metrics? Why?
      • A: Focus on critical few actionable metrics
      • Hypothesize customer lifecycle
      • Target ~3-5 conversion events
      • Test, measure, iterate to improve
    • Marketing/Sales
      • Q: What channels? Which users? Why?
      • A: High volume (#), low cost ($), and high conversion (%)
      • Design and test multiple marketing channels and campaigns
      • Select and focus on best performing channels/themes
      • Optimize for conversion to target CTAs, not just site/landing page
      • Match/drive channel cost to/below revenue potential
      • Low hanging fruit
        1. Blogs
        2. SEO/SEM
        3. Landing pages
        4. Automated emails
      • Example marketing channels
        1. Public Relations
        2. Contests
        3. Business Development
        4. Direct Marketing
        5. Radio/TV/Print
        6. Dedicated Sales
        7. Email
        8. SEO/SEM
        9. Blogs/Bloggers
        10. Viral/Referral
        11. Affiliate/Cost-Per-Acquisition (CPA)
        12. Widgets/Apps
    • Product/Service Development
      • Q: What features to build? Why? When are you done?
      • A: Useful, unique features that increase conversion
      • Wire-frame your conversion steps
      • Measure, A/B Test and iterate fast (daily or weekly)
      • Optimize for conversion improvement

    Simplified business model [users + conversions + priorities]

    • Q1: What types of people visit/use your website?
      • Visitor [average user/buyer]
      • Contributor [content contributor/seller]
      • Distributor [fan (unpaid)/affiliate (paid)]
    • Q2: What actions could they take to help you or them?

    Marketing plan [AARRR]

    • Marketing plan = Target customer acquisition channels
      • Three important factors: Volume (#), Cost ($), Conversion (%)
      • Measure conversion to target customer actions
      • Test audience segments, campaign themes, CTAs
    • Match channel costs => revenue potential
      • Increase volume and conversions, decrease costs, optimize for revenue potential
      • Average Transaction Value (ATV), Average Revenue Per User (ARPU), Customer Lifetime Value (CLV)
      • Design channels that (eventually) cost <20-50% of target ATV, ARPU, CLV
    • Consider costs, scarce resource trade-offs
      • Actual $ expenses
      • Marketing time and resources
      • Product/Service time and resources
      • Cash-flow timing of expenses vs. revenue/profit

    Principle: focus on one step at a time

    • Make a good product/service [Activation and Retention]
    • Market the product/service [Acquisition and Referral]
    • Generate revenue

    Principle: apply “startup” model

    • Product
      • Build Minimum Viable Product/Service (MVP):
      • Demonstrate concept, reduce product risk, test functional use
      • Develop metrics
    • Market
      • Prove solution/benefit, assess market size
      • Improve product/service, expand market, test revenue
      • Test channel costs and revenue opportunities
      • Determine organizational structure, key people
    • Revenue
      • Get to sustainability
      • Marketing plan [predictable channels/campaigns and budget]
      • Scalability and infrastructure [customer service and operations]
      • Connect with distribution partners
      • Prove/expand market

    Metrics

    • Acquisition
      • From marketing channels => largest volume (#), lowest costs ($), best performing (%)
      • Key metrics
        1. Quantity
        2. Cost
        3. Conversions
      • Where are users coming from [acquisition methods]?
        1. SEO/SEM
        2. Blogs
        3. Email
        4. Social media and social networks
      • Keyword vocabulary
        1. Your brand/products
        2. Customer needs and benefits
        3. Competitor's brand/products
        4. Semantic equivalents and misspellings(?)
      • Things to analyse
        1. Sources
        2. Volume
        3. Cost
        4. Conversion
      • Tools
        1. Google/Web analytics
        2. Google Keyword Tool
        3. WordTracker
    • Activation
      • Example activation goals – what do visitors do on their first visit
        1. Click on something
        2. Account sign up/emails
        3. Referrals/Tell a friend
        4. Interact with widgets
        5. Low bounce rates
      • Activation tips
        1. Focus on user experience/usability
        2. Provide incentives and CTAs
        3. Test and iterate continuously
        4. Key metrics (Pages per visit, Time on site, Conversions)
      • Example activation criteria
        1. 10-30+ seconds page visit
        2. 2-3+ page views
        3. 3-5+ clicks
      • Do lots of landing pages and A/B testing. Iterate fast based on the results.
      • Tools
        1. Crazy Egg (visual click mapping)
        2. Google website optimizer (A/B and multivariate testing)
        3. Marketo.com (B2B lead generation management)
    • Retention (“Best practices”)
      • Life-cycle emails at +3, +7, and +30 days
      • Status/”Best of” weekly/monthly emails
      • “Something happened” emails
      • Make it easy to unsubscribe
      • Focus 80%+ on subject line (20% or less on body text) [?]
      • Q: How do users come back? How often? -> Cohort analysis
        1. Distribution of visits over time
        2. Rate of decay
        3. Effective customer life-cycle
      • Retention methods
        1. Automated emails (track open rate/CTR/quantity)
        2. RSS/News feeds (track % viewed/CTR/quantity)
        3. Widgets (track % viewed/CTR/quantity)
      • Example retention goals
        1. 1-3+ visits per month
        2. 20% open rate/2% CTR
        3. High deliverability/Low spam rating
        4. Long customer life cycle/low decay
        5. Identify fans and cheerleaders
      • Retention tips
        1. Email is simple and it works
        2. Make “Unsubscribe” easy
        3. Fanatics = virality + affiliate channel
      • Key metrics
        1. Source
        2. Quantity
        3. Conversions
        4. Visitor loyalty
        5. Session length
      • Tools
        1. Campaign Monitor (email newsletter software)
        2. MailChimp (email newsletter software)
        3. TriggerMail (site-centric email management)
        4. Litmus (email and website design testing – clients/browsers)
    • Referral
      • Focus on driving referrals after users have a “happy” experience [average score >= 8 out of 10]
      • Referral methods
        1. Send to friend via email/IM
        2. Social media
        3. Widgets [or embeds]
        4. Affiliates
        5. Viral growth
      • Tools
        1. Gigya (social media distribution and tracking tool)
        2. ShareThis and AddThis (sharing buttons)
        3. GetMyContacts (contacts importing and invitation software)
    • Revenue
      • [Pending]

    Viral

    Viral growth factor = X * Y * Z

    • X = % of users who invite other people
    • Y = average # of people that they invited
    • Z = % of users who accepted an invitation
    • A viral growth factor > 1 means an exponential organic user acquisition

    Virality principles

    • Inviting should be a core process
    • The application/website should keep pulling people back in
    • The application/website has to be useful/fun even with no other users [Del.icio.us lesson: personal value precedes network value]

    Click here to be able to create pages, upload images and file attachments, and link to other users and their pages.

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