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Slide 1: Metrics-Driven Marketing Strategy (+ a little Product Strategy too) Dave McClure Visiting Lecturer Stanford Facebook Class (CS377W) 11/15/07
Slide 2: Summary • Marketing Plan / Strategy = Target Customer Acquisition Channels – 3 Important Factors = Volume, Cost, Conversion – Focus on conversion to target customer lifecycle actions – Measure as deep down the conversion funnel as possible • Estimate Customer Lifecycle, Conversion, Revenue Potential – Hypothesize Customer Lifecycle & Critical Conversion Points – Estimate Conversion , Revenue Potential when designing marketing plan – Understand “Annual Rev. Per User” (ARPU) & “Customer Lifetime Value” (CLV) • Match Marketing Channel Costs to Customer Revenue Potential – Design channels that costs <20-50% of target ARPU / CLV – *NOTE: “Cost” has multiple meanings • • • • • actual dollars marketing costs product development time & resources time profit vs cashflow
Slide 3: Agenda • Quick Review of Pirate Metrics • Example Mktg Channels • Brainstorm 3 Scenarios
Slide 4: Customer Lifecycle: 5 Steps • • • • • Acquisition: users come to the site/page/app from various channels Activation: users enjoy 1st visit: "happy" user experience Retention: users come back, visit site multiple times Referral: users like product enough to refer others Revenue: users conduct some monetization behavior AARRR!
Slide 5: Facebook App / User Conversion App Directory Feeds Profile App CrossMarketing Invites 1. ACQUISITION Ads Active: Initial App Invites Emails Canvas Pages N ET E 3. R Feeds, Profiles N T IO CTA, Copy & Graphics E 4. R RAL FER Passive: Feeds & Profiles App CrossMarketing n atio ctiv 2. A Ads, Lead Gen, Subscriptions, etc nu eve 5. R $$ e$ Your App
Slide 6: Conversion Dashboard (example below; customize for your use) Category Acquisition Acquisition Activation Activation Activation Retention Retention Referral Referral Revenue Revenue User Status Visit Site (or landing page, or external widget) Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks) Happy 1st Visit (views X pages, stays Y sec, Z clicks) Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit) Acct Signup (includes profile data) Email Open / RSS view -> Clickthru Repeat Visitor (3+ visits in first 30 days) Refer 1+ users who visit site Refer 1+ users who activate User generates minimum revenue User generates break-even revenue Conv % 100% 70% 30% 5% 2% 3% 2% 2% 1% 2% 1% Est. Value $.01 $.05 $.25 $1 $3 $2 $5 $3 $10 $5 $25
Slide 7: Questions / Focus by Role • Founder / CEO: – What do you measure & why? Who’s responsible? • Product Manager / Developer: – How do you choose what to build? • Marketing – What channels do you choose / who do you target?
Slide 8: Founder/CEO Q: What metrics do you watch? WHY? Who’s responsible? • Hypothesize Customer Lifecycle & Refine – Choose 5-10 conversion steps • Less, not More is better – Q: minimal necessary & sufficient metrics rqd to make decisions? – can you simplify to top 3? just 1? • Delegate each Metric to someone (not you) to OWN • Focus on conversion improvement; measure & iterate • NOTE: if you measure something, it should tell you something… – Use “Is it Actionable?” test to determine whether or not to track a metric
Slide 9: Product Q: how do you choose what to build (or NOT build) ? • Choose features for conversion improvement – 80% on existing feature optimization – 20% on new feature development • Just guess, then A/B test… A LOT • Measure conversion improvement • Rinse & Repeat
Slide 10: Marketing Q: what channels / who do you market to? • Design & Test Multiple Mktg Channels • Select & Focus on Channels with: – High Volume – High Conversion – Low Cost • Measure *deeper* down the conversion funnel, not just to website / landing page • Segment & Select channels & customers by conversion @ deepest possible level (ideally $$$)
Slide 11: Agenda • Quick Review of Pirate Metrics • Example Mktg Channels • Brainstorm 3 Scenarios
Slide 12: Example Marketing Channels disclaimer: these estimates of vol, cost/user, time & effort are highly subjective & very dependent on your specific business Channel Viral / Referral Email Volume Cost/user low/zero low/med Time to implement Mktg Effort low low/med Prod Effort low/med low/med (med = create templates) low/zero (med = CMS, prof design) med/hi low/med (landing pages = med) low/zero (med = prof contest site) med/hi (depends on complexity) Low (redirects/cobrand?) low/zero med/hi (reports, co-branding) med/hi (depends on rqd tracking & reporting) low/zero low/zero if no system; Med/hi if integrated SFA Med/hi (production cost) depends on CTA; size of accessible social networks / # users depends on CTA, size of your house lists, email signups Depends on # blogs in your segment, competitive scenario depends on your keywords depends on your keywords small unless big prize $ (don’t, keep it under $5K) Depends on CTA; size of accessible sites, level of adoption + bloggers depends on keywords, domain costs depends on your business & audience & news depends on partner, size of customer base, conversion depends on economics Low for FB social networks; med/hi for normal sites Low Blogs / Bloggers SEO SEM Contest Widget domains PR Biz Dev / Partner Affiliate / Lead Gen Direct / radio Telemktg TV low/med Low (if just you blogging); med (if you're setting up big CMS / evangelizing to other bloggers) Medium (depends on your search geeks) Low/med (depends on your marketing) low/med (depends on contest, site, campaign) Low/med low medium (develop story, build contacts) med/hi (capture metrics, generate reports) med/hi (need to build affiliate program, capture metrics, generated reports) medium med-high Med-high low/med Low/zero Depends low/med low/med depends Med/hi med-high Med/hi low/zero Low/med Med med low med Med/hi med/hi depends on geography depends on target demographics Potentially large (if you spend) Med/hi med-high High Med/hi High High
Slide 13: Conversion Measurement • Conversion Criteria: – best-performing (%) channels / campaigns / copy – largest-volume (#) channels / campaigns / copy – lowest-cost ($) channels / campaigns / copy • Measurement Components: – – – – – Audience Segment (age, region, profession, interest) Channel Source (social network, SEM, organic, PR, etc) Campaign Theme / Brand Promise (“save money”, “get cool stuff”) Landing Page & CTA Copy & Graphics
Slide 14: Agenda • Quick Review of Pirate Metrics • Example Mktg Channels • Brainstorm 3 Scenarios
Slide 15: Scenario I • Example: Lightweight Facebook App • Consumer target: people who poke, are frisky ;) • Customers are worth: $0-5? – currently advertising revenue – potential for sponsorship, e-commerce revenue • Company has ZERO funding / marketing budget – limited ability to raise capital – limited budget mostly from ad revenue • Questions: – – – – how to design marketing channels? Significant viral potential? Conversion to long-term customer potential? Marketing potential off-FB?
Slide 16: Scenario II • Example: Consumer Website (low-end) • Consumer target: pet owners • Customers are worth $5-25 – mostly advertising, sponsorship revenue – some e-commerce revenue • Company has modest funding / marketing budget – raised $XM in capital / not yet at break-even – spending $X00K / year on marketing • Questions: – – – – how to design marketing channels? Email marketing? SEO/SEM keyword opportunities? Blogging / Affiliate opportunites?
Slide 17: Scenario III • Example: Consumer Website (high-end) • Consumer target: people tracking their money/finances • Customers are worth $25-100+ – significant lead-gen & advertising – potential for lots of e-commerce revenue • Company has funding / marketing budget – raised $XXM in capital; approaching break-even / profitable – significant >$XM spend on marketing; known customer economics • Questions: – – – – – how to design marketing channels? SEO/SEM potential? Direct Marketing potential? Biz Dev opportunities? Viral may be less important if large vol of profitable leads