The document provides an overview of key metrics, terms, and growth strategies for building a billion dollar SaaS unicorn company. It discusses 11 important SaaS metrics including MRR, ARR, CAC, LTV, NPS, churn, cohort analysis, and revenue per employee. It also outlines typical growth phases like the "T2D3" model of tripling revenue twice and doubling revenue three times to hit benchmarks like $2M, $6M, $18M, and $72M in ARR. Finally, the document emphasizes the importance of product-market fit and conducting customer interviews in the early "lean startup" phase.

1. Building the
Billion Dollar
SaaS Unicorn
The CEO Guide of Key Insights and Metrics
for B2B Software as a Service Companies
By Kelly Schwedland

2. Rising Table Stakes
Christopher Janz, SaaS Investor
http://tomtunguz.com/table-stakes-saas/
Note:
Tom Tunguz noted Blogger and VC With firm
Redpoint noted in a recent vLog that copying a
business model is typically not a good idea, since
they have diminishing value over time as more
folks copy.
That said, it is increasingly important to
understand what the business models of
successful companies look like as a sanity check
for the numbers that you are seeing and
projecting

3. Why a $Billion? – It’s Investable
* Each investor has their own
investment thesis, certain
products, markets or business
models that they prefer. Look
for a good match to your
product offering and market
validation
Typical Investor Interests:
• $1B+ Market
• Scalable Solution
• Recurring Revenue
• Past Successes
• Full team
• Traction
https://www.saastr.com/tam-is-great-but-what-really-matters-is-that-you-believe-you-can-hit-100m-in-7-years/
Note:
One of the top questions asked by Investors.
What problem do you solve and how big an
opportunity (market) is that?
Generally investors are interested in opportunities
that have a $B+ market potential and growing.
Since SaaS companies are recurring revenue idealy
with high operating margins, a Billion Dollar
valuation requires roughly $100M+ in annual
recurring revenues
(Whether your product and team can get there
are the other two other biggies.)

4. Growth Stage Key Points
I. Terms & Metrics
II. Roadmap
III. Sustaining Growth
IV. Benchmarks

5. I. Key Terms & Metrics for SaaS
1. Cash Flow
2. MRR/ARR
3. CAC & LTV
4. SEI
5. ACV
6. NPS
7. Churn
8. LVR
9. TtV
10. Cohort analysis
11. Revenue per Employee
If you only read one article on SaaS metrics this is it:
http://www.forentrepreneurs.com/saas-metrics-2/
For an alternate look at metrics:
https://updata.com/insights/saas-metrics-framework/
For Developing a KPI dashboard for a SaaS company:
http://christophjanz.blogspot.de/2013/04/a-kpi-dashboard-for-early-stage-saas.html
Leading
Indicator
Leading
Indicator
Note:
For those that are on their first time building a
SaaS business with institutional investor backing,
here are some of the key terms you are going to
need to learn and track.

6. Ron Gill, NetSuite:
If plans go well, you may decide it is time to hit the accelerator (increasing
spending on lead generation, hiring additional sales reps, adding data center
capacity, etc.) in order to pick-up the pace of customer acquisition.
The thing that surprises many investors and boards of directors about the
SaaS model is that, even with perfect execution, an acceleration of growth
will often be accompanied by a squeeze on profitability and cash flow.
1. Cash Flow - Don’t run out of money
Note:
While this seems the most obvious. Running out
of cash is the end of any startup or scale up.
So needless to say, this is the the most import
number to keep track of.
Understanding the rate of your growth and being
able to predict the cash burn effectively is of
paramount importance while scaling.

7. 2. MRR & ARR
There are two kinds of SaaS business:
• Those with primarily monthly
contracts, with some longer term
contracts. In this business, the primary
focus will be on MRR (Monthly
Recurring Revenue)
• Those with primarily annual contracts,
with some contracts for multiple
years. Here the primary focus is on
ARR (Annual Recurring Revenue)
(In practice MRR and ARR often are used with both types of businesses interchangeably to
describe current monthly revenue recognized or monthly revenue annualized)
Tip:
Reverse Engineering MRR Growth
• The First $1M ARR Goal – 6 months
• Simple Math:
• $1M ARR = $83K MRR
• $83K/ $1000/mo. ACV = 83 customers
• 83/6 mo. = ~ 14 new customers per
month
(or one new customer every 2 days,
simple!)
http://sixteenventures.com/saas-secret-to-one-
million-dollars

8. LTV > 3x CAC
Months to recover CAC < 12 Months
3. CAC & LTV: Viability Test
Business model viability, in the majority of startups, will come down to balancing two variables:
• CAC: Cost to Acquire Customers (Sales, Marketing & Customer onboarding)
• LTV: Lifetime Value of a Customer or The ability to monetize those customers
http://www.forentrepreneurs.com/startup-killer/

9. 9
4. GEI – Growth Efficiency Index
GEI then is how long it takes before new customers start being additive to Revenue
(A GEI of .5 = half a year, 1 = 1year, 2 = 2years, etc.)
Growth Expense = Marketing, Sales, Customer Success onboarding
https://www.zuora.com/guides/subscription-finance-basics/
Answers the Question:
“How much new recurring revenue can
we get out of a given investment?”
Lets say you spend $1 on Growth
(sales, marketing, onboarding.)
How many new recurring revenue
dollars does that buy you?

10. 5. Matching CAC, LTV & ACV
• Product Pricing, Sales Strategy and Product are all interconnected.
http://vcwithme.co/2015/03/30/optimizing-the-ltvcac-ratio/
http://pando.com/2013/06/15/what-the-data-reveals-about-how-to-make-SaaS-secret-sauce/
Average SaaS Companies
Well marketed, easy to use
and easy to implement
ACV= Average Contract Value
VS.

11. 11
6. NPS – Net Promoter Score
http://www.netpromotersystem.com/about/why-net-promoter.aspx
Bain analysis showed that sustained value creators—
companies that achieve long-term profitable growth—have Net
Promoter Scores (NPS) two times higher than the average
company. And Net Promoter leaders on average grow at more
than twice the rate of competitors.
Leading
Indicator
* As a leading indicator this will likely tell
you what churn will look like in the months
ahead

12. 7. Churn = Customer Health
Big impact on value over time
Churn at a per customer basis is always
going to happen with closings and
turnover.
But on a dollar level this isn’t
necessarily true.
Target upselling and cross-selling to
effect negative dollar Churn
Note:
A handy quick guide: Churn Quick Ratio =
new $MRR this month / $MRR lost
What’s good, what’s bad
What you want
Get to $1M ARR ~12 months after launch
Net New MRR keeps increasing quarter over quarter
Maintain a Churn Ratio > 4
What to watch out for
A Churn Ratio < 2
churn is too high /new sales aren’t working
Net New MRR is flat or down quarter over quarter
Takes 18+ months to get to $1M ARR
http://www.slideshare.net/03133938319/saastr Churn = loss of ARR (MRR) to total ARR (MRR).
http://www.forentrepreneurs.com/why-churn-is-critical-in-saas/

13. 8. Cohort Analysis
http://andrewchen.co/the-easiest-spreadsheet-for-churn-mrr-and-cohort-analysis-guest-post/
• The only way to truly know net MRR growth
• A simple way to understand Customer Retention/ Churn through multiple
product iterations.

14. 9. LVR - Lead Velocity Rate
• Qualified Lead Velocity Rate (LVR), your
growth in qualified leads, measured month-
over-month, every month.
• Grow your LVR about 10-20% greater than
your desired MRR growth — you’ll hit your
revenue goals.
• You’ll see the future of your business 12-18
months out, clear as can be.
http://www.saastr.com/why-lead-velocity-rate-lvr-is-the-most-important-metric-in-saas/
Leading
Indicator
* As a leading indicator this will likely tell
you what Sales will look like in the months
ahead.

15. 10. TtV- Time to Value
• How fast can a customer derive value from your product?
• Ways to Improve:
• Simplicity wins…
be feature-complete, not feature-rich
• Hack the onboarding flow
• Document, Document, Document
• Quantify, Set goals and Benchmark
http://www.rre.com/blog/89

16. Median revenue per Employee by year since
founding
11. Revenue per Employee
• Two development tracks one goal
• Product Value and Internal
Efficiency always seem to be
competing for internal talent,
but they are flip sides to the
same productivity coin.
• Use Rev/Emp as a priority
decision guide.
http://tomtunguz.com/employee-productivity-patterns-saas/
Note: Best in class companies like Salesforce and
FinancialEngines are able to achieve more than
$300k in revenue per employee per year

17. II. Roadmap

18. 5 ways to build a $B business
http://christophjanz.blogspot.com/2014/10/five-ways-to-build-100-million-business.html
http://tomtunguz.com/2015-saas-multiples/
In SaaS to get a Billion Dollar valuation you need somewhere
over $100M in Annual Revenue.
You essentially need:
~ 1,000 enterprise customers at $100k+ /Yr or
~ 10,000 medium-sized at $10k+ /yr or
~ 100,000 small businesses at $1k/yr or
~ 1 million consumers at $100+ /yr each or
~ 10 million active consumers who you monetize at $10+ per
year each by selling ads
Examples: 2014 Rev Valuation*
HUBS $115M $1.3B
ZEN $127M $1.9B
MKTO $149M $1.1B
*Also dependent on growth rate and Cost of Revenue. Avg 5-10 x Rev multiples
Note:
Understanding which segment of the market you are going after is vital
in determining your strategy for building the company
(I.e. if you are going after a Million consumers at $100/yr then you
probably can’t afford a direct sales approach.
In fact, You probably can’t even afford an advertising approach, as
Dropbox found in tests, advertising cost them $287 per paid $100 user.
So the incentivized/ viral strategy became necessary.)

19. “T2D3” Growth Phases*
*T2D3 = Triple twice, Double three times
Note:
Neeraj Agrawal at Battery Ventures was nice
enough to share some insights from several of
their SaaS investments.
Starting from the $2M ARR several seemed to
follow a very similar path.
While it is possible to arrive at $100M ARR from a
variety of paths, having guideposts to shoot for is
a very helpful tool.
https://www.linkedin.com/pulse/saas-adventure-
triple-double-1b-neeraj-agrawal/

20. T2D3 Cont’d
• Phase 1: Establish a great product-market fit
• Phase 2: Get to $2 million in ARR (annual recurring revenue)
• Phase 3: Triple to $6 million in ARR
• Phase 4: Triple to $18 million
• Phase 5: Double to $36 million in ARR
• Phase 6: Double to $72 million
• Phase 7: Double to $144 million
http://techcrunch.com/2015/02/01/the-saas-travel-adventure/

21. Phase 0: Lean Startup Process
http://www.slideshare.net/KellySchwedland/lean-startup-basics-evidence-based-entrepreneurship
Also: The 20 Interview rule
http://www.saastr.com/planning-to-do-a-saas-start-up-dont-forget-the-20-interview-rule/
Note: If you are still starting out, then you need this presentation:
Note:
Without taking up too much time, use a lean
Startup approach combined with Agile
development to get to viable product
( There is an entire other deck on that process)
At a minimum use the 20 interview Rule before
writing the first line of code.

22. Phase 1: Product/Market/ (Team) Fit
• The Simple definition – When your problems shift to keeping up
with demand rather than finding more customers.
• The only thing that matters: Market
• Warning signs you aren’t there:
• Product Market Fit Myths
http://pmarchive.com/guide_to_startups_part4.html
http://vcwithme.co/2014/11/10/five-signs-your-product-market-fit-isnt-real/
http://www.feld.com/archives/2015/01/illusion-product-market-fit-saas-companies.html
Note:
Product market fit is the hardest thing to capture since there doesn’t seem to be any consensus on what
it will truly mean for your company. From my experience, in hindsight, it was probably when our focus
shifted to internal scaling issues rather than the question of how how do we find customers.
Mark Andreesen has a very simple approach that the only thing that matters is the Market.
In a great market -- a market with lots of real potential customers -- the market pulls product out of the
startup. ~Rachleff’s Corollary of Startup Success (named after Andy Rachleff formerly of Benchmark
Capital)
And you can always feel product/market fit when it's happening. The customers are buying the product
just as fast as you can make it -- or usage is growing just as fast as you can add more servers. Money
from customers is piling up in your company checking account. You're hiring sales and customer support
staff as fast as you can….
Warning signs you aren’t there:
You have ten to twenty customers… …and have for a while
Founders sold the product but the sales people you’ve hired can’t figure it out
Services are > 25% of your revenue
You can’t get access to senior deciders
Your first round of renewals goes horribly wrong
Myth’s on Product Market Fit
Myth #1: Product market fit is always a discrete, big bang event
Myth #2: It’s patently obvious when you have product market fit
Myth #3: Once you achieve product market fit, you can’t lose it.
Myth #4: Once you have product-market fit, you don’t have to sweat the competition.

23. Building a replicable model*
http://www.slideshare.net/KellySchwedland/generic-system-strategy-flow-chart
*Documenting the systems
throughout the business so
that they can be replicated
by the next hire.
Example of a system strategy flow chart
Note:
Working with growing companies I’ve found that
the first inhibiter to growth was that the founder/
owners had everything in their head.
Replication requires that it be transferable to
other individuals.
The diagram is designed to be a thought exercise
in thinking through the processes inside the
company and then documenting and releasing to
others to use and then build on/ modify.
I’ve found that focusing on the key results/
metrics of the process helps allow for
improvements to the process.

24. Focus: Marketing, Sales, Revenue
http://www.bvp.com/blog/new-whitepaper-released-%E2%80%9C30-qa-every-saas-revenue-leader-needs-know%E2%80%9D
“30 Answers that Every SaaS Revenue Leader Needs to Know”
Note:
While having an overall system strategy is
important, In order to scale, sales and customer
success becomes one of the critical processes.
Fortunately Bessemer was nice enough to give us
30 key questions that we need to be able to
answer to own growth.

25. III. Sustaining Growth
http://chaotic-flow.com/media/saas-growth-strategy.pdf
Note:
I’ve rarely ever seen a company with one product
and one go to market channel sustain growth.
Eventually you run out of ads to buy or emails to
send.

26. Median GP Ratio by year for Public
SaaS companies
How fast should we grow?
• Rule of thumb – Growth Rate + Profit should equal 40%
• Starting from around $1m ARR
growth should be higher but
should still best the rule of 40
(100% growth + -60% profit = 40% GP)
• If not, retool sales and operations
before growing.
http://tomtunguz.com/rule-of-40
https://feld.com/archives/2015/02/rule-40-healthy-saas-company.html

27. Accelerating Customer
Acquisition and Retention
• Remove Buyer Roadblocks:
• Increase Awareness
• Facilitate Evaluation
• Streamline Purchase
• Simplify Onboarding
• Improve Retention
• Remind Customers of Value they are getting
• Triggered up-selling and cross-selling that expanded usage of your service
(and revenue)
http://chaotic-flow.com/SaaS-marketing-accelerating-customer-acquisition/
http://sixteenventures.com/customer-retention-profitability

28. Improving Lead to Conversion Ratio
• Measure and optimize each conversion channel.
http://blogs.salesforce.com/company/2014/11/b2b-sales-benchmark-research-finds-some-pipeline-surprises-infographic-gp.html
B2B Sales Benchmark Research by Implisit using Salesforce data

29. Overcoming the Growth Challenge
http://www.slideshare.net/500startups/alex-moore-25097027
Polynomial Growth: The Additive Value of new Sales Channels
Polynomial Growth By Alex Moor, CEO of Baydin
Note:
Investors aren’t at all excited about linear growth
companies and everyone want to see the
exponential hockey stick growth.
In reality very few B2B companies scale
exponentially. Which is why it’s important to
understand that during the growth process there
are several levers that may need to be added to
sustain growth.
Alex Moore, CEO of Baydin, lays out the case that
most true scaling companies that are investor
darlings actually have a series of additive elements
that as they are applied create a Pseudo
exponential growth curve that he calls Polynomial.

30. IV. Benchmarking
• How Does your SaaS business stack up?
• Growth
https://benchmarks.openviewpartners.com/
• Pacific Crest SaaS survey data (2017)
http://www.forentrepreneurs.com/2017-saas-survey-part-1/
• Sales Reps
https://blog.bridgegroupinc.com/2017-saas-ae-metrics-report
• Conversion rates
https://blog.capterra.com/average-b2b-conversion-rate/
• Customer success
http://customer-success-resources.totango.com/h/i/266476515-2016-customer-success-salary-survey-state-of-
the-profession-report

31. 54%
Co's offer
PS along w/
Subscriptions
25%
Co's give quota
relief for PS but
no commissions
Avg. PS Rev
as % 1st
Year ACV
25%
3
Months new
ISR Ramp Time
60%
$2.2-2.5k 6
$150-180k
4-5x
$130k
$630-720k
1:7
3x
1:5
50%
50%
60%
30% $80-100k 60%35 1:75
2
70
60%
40%
10
$70k
1:2
20%
80%
36% 93%
8.5%
6%
55%
40%
87%
13%
15%
30%
30:70
66%
91%
50%
90% = 81%
2%
6 40% $5.5-7k 3-4
$200-330k $800k-1.3M$220k
3-5x 4:15x
Co’s give quota
relief on 1st
year ACV only
Co’s pay
~ nothing for 2+
yrs on contract
Avg. quota
achievement
Avg.
commission on
NBB ARR quota
Avg.
commission on
upsell ARR
Co’s pay full
commission
for upsells
Co’s offer
add’l team
bonuses
NBB from
new logos
NBB from
net upsells
Conversion
rate: SQL to
opportunity
Conversion rate:
Opportunity
to closed deal
Ratio vertical mkt
territories: geo
Co’s offer trials
(try-before-
you-buy)
Months new
BDR ramp time
Calls/contacts
per day
Cold calls
MQL
follow up
Target # of
SQL’s/wk
OTE: 60/40
Base/Variable
Ratio
BDR : FSR
of BDR teams
report to mktg
Promoted
from BDR
MRR
per deal
ARR
quota per Q
Closed
deals per Q
ARR annual
quota
Ratio
ISR quota:salary
Beg. Q pipeline
coverage
Ratio
Manager : ISR
Ratio
SEs : ISR
OTE:
50/50 B/V
Co’s compensate
on Cust. Sat
(e.g. NPS)
Co’s compensate
on renewal ARR
AMs
responsible
for upsell ARR
Time spent
on customer
support
OTE:
70/30 B/V
Co’s give bonus
for cust. case
study/press
Avg. acct
renewals per Q
Avg. Ratio
AMs : customers
Median
annual gross
$ retention
Retention
equiv. in
SMB vs. VSB
Churn in VSBs is
uncontrollable
on avg.
Median renewals
commission
rate
Months new
FSR ramp time
Promoted
from ISR
MRR
per deal
Closed
deals per Q
ARR quota
per Q
ARR annual
quota
Ratio
FSR quota:salary
Beg. Q Pipeline
Coverage
Ratio
ISR:FSR
OTE:
50/50 B/V
1:3
Ratio
SE: ISR
30-50%
Avg.
NPS score
BUS DEV
REPS (BDR)
INSIDE SALES
REPS (ISR)
FIELD
REPS (FSR)
NEW BUSINESS
BOOKINGS (NBB)
RETENTION
ACCOUNT MANAGERS PROF. SERVICES
INSIGHT’S PERIODIC TABLE
OF SAAS SALES METRICS
MQL = Marketing Qualified Lead
SQL = Sales Qualified Lead
Net Upsells = Upsells less customer downgrades
OTE = On-Target Earnings
SMB = Small-Medium business < 1000 employees
VSB = Very Small Business < 50 Employees
MRR = Monthly Recurring Revenue
ARR = Annual Recurring Revenue
ACV = Annual Contract Value, equ. to ARR Quota
SE = Sales Engineer/Solution Architect
B/V = Base Salary/Variable Salary
Legend:
https://www.insightpartners.com/ideas/metrics/

32. “Make no small plans for they have no power to stir the soul.” ~ Niccolò
Machiavelli.

33. 33
Have questions?
See something I missed?
Let me know.
Kelly Schwedland
219-405-5723
Kellys@elevateventures.com
ElevateVentures.com

34. Extras
34
• SaaS Resources
• Rules of thumb in SaaS
• More Periodic tables metrics
• Standard Conversion metric tracking

35. More SaaS Resources
• http://www.saastr.com/
• http://tomtunguz.com/categories/saas/
• http://www.forentrepreneurs.com/saas/
• http://sixteenventures.com/page/?s=B2B+SaaS
• Pitching a VC
• http://www.bothsidesofthetable.com/pitching-a-vc
• https://www.linkedin.com/pulse/target-investment-pitch-kelly-
schwedland/

36. SaaS Metrics -Rules of Thumb
http://chaotic-flow.com/saas-metrics-guide-to-saas-financial-performance/

37. http://chaotic-flow.com/saas-metrics-guide-to-saas-financial-performance/

38. 38
SaaS Financial & Operating Metrics
https://www.insightpartners.com/ideas/metrics/insights-periodic-table-of-saas-financial-operating-metrics/

39. INSIGHT’S PERIODIC TABLE
OF B2B DIGITAL MARKETING
METRICS

40. 40
Software Development Metrics
https://www.insightpartners.com/ideas/metrics/insights-periodic-table-of-software-development-metrics/

41. Sample Conversion Metrics
Stage Conversion Status Conv.
%
Est. Value
(*not* cost)
Acquisition Visitors -> Site/Widget/Landing Page
(2+ pages, 10+ sec, 1+ clicks = don’t abandon)
60% $.05
Activation “Happy” 1st Visit; Usage/Signup
(clicks/time/pages, email/profile reg, feature usage)
15% $.25
Retention Users Come Back; Multiple Visits
(1-3x visits/mo; email/feed open rate / CTR)
5% $1
Referral Users Refer Others
(cust sat >=8; viral K factor > 1; )
1% $5
Revenue Users Pay / Generate $$$
(first txn, break-even, target profitability)
2% $50
Source: David McClure, 500Hats

42. Step 1: Acquisition
Users come to the site/app from various channels:
• Affiliate
• Develop affiliate program, create rewards scheme
• Identify target affiliates
• Apps & Widgets
• Create widget to embed in other websites, facebook, outlook, email
• Build API for others to build on top of, encourage open development, create revenue sharing model
• Free tool
• Biz Dev
• Identify and calling/networking with target industries e.g. Jones Lang
• Channel partnerships
• Blog
• Create original blog content
• Share useful content relevant to target users e.g. Hubspot
• Create videos and podcasts
• Share features e.g. Producthunt, Facebook like, twitter tweet, LinkedIn share, stumble upon,
• Campaigns & Contests
• Running online contests, giving away gifts
• Sponsor Hackathons and local events
• Industry events ( raffle off free subscription to capture interested individuals)
• Advertising
• TV, Radio, Print
• Online paid adverting e.g. Google Adwords, Facebook Ads, industry, online publications
• Software review sites: (G2 Crowd, Capterra)

43. Step 1: Acquisition Contd…
Users come to the site/app from various channels:
• Domains
• Registers multiple domains focused on specific elements
• Email
• Obtain targeted email lists, send out emails e.g. SalesLoft
• Pay email marketing firms e.g. constantcontact
• PR
• Press releases
• Placement on sites like Yahoo News, Google News
• Mentions on tech websites e.g. Techcrunch, mashable,
• Communication and relationship with journalists
• Communication and relationships with tech bloggers, magazine writers,
• Develop a PR package to download
• Paid PR
• SEM & SEO
• Find most relevant and popular terms and embed in website
• Get linked/mentioned on other websites
• Create backend tools e.g. web analytics, log file analyzing
• Social Networks
• Facebook, Twitter, LinkedIn pages
• Youtube, Pinterest, Instagram
• Startup blogs and networks e.g.
• Tapping into IRL networks
Metrics to Track by source:
- Quantity(#)
- Cost ($)
- Conversion (%)

44. Step 2: Activation
Users enjoy 1st visit i.e. “happy” experience
• Homepage/Landing Page
• Conduct A/B testing of UI, impact of various of colors, placements and UI
• Track page views, clicks, time spent on site
• Keep page clean and simple
• Downloadable Whitepapers, Ebooks, Case studies
• Set activation goal e.g. get emails
• Product Features
• Test success of different product features
• Iterate fast
• Provide incentives and encourage call to action
Metrics to Track by source:
- Pages per visit
- Time on site
- Conversion (%)

45. Step 3: Retention
Users comeback to visit site multiple times:
• Emails & Alerts
• Lifecycle emails e.g. 3 day, 1 week, 1 month
• Status emails e.g. best of week/month
• Event based emails “something happened”
• Easy to unsubscribe
• Easy to read emails (Important info in subject, small body)
• Blogs, News Feeds, Twitter Feeds
• Track Impressions
• Track commentary
• System Events & Time-based Features
• Release features with maturity /demand of customers
• Release features around events
• Cohort Analysis
• Conduct cohort analysis
(dist. of visits over time, rate of delay, customer lifecycle)
Metrics to Track:
- Source
- Quantity
- Conversions
- Visitor Loyalty
- Session Length

46. Step 4: Referral
Users like product enough to refer others:
• Viral Loops
• Create incentive for sharing e.g. rewards
• Create same-side networking effect so users benefit from inviting others
• Make sharing easy
• Track viral growth(Growth factor = X*Y*Z where X = % of users who invite others, y = avg
number of people invited, Z = % users who accepted invitation). Track growth of different
channels
• Emails, Widgets & Social
• Make it easy for users to invite others from app/web
• Penetrate a specific customer segment with widgets
• Build API for others to build on top of, encourage open development
• Affiliates, Contests
• Ads, Affiliates, Cross-promote app with other developers

47. Step 5: Revenues
Users conduct some monetization behavior:
• Revenue
• Freemium/ Free Trial Model – figure out optimal model, price
• Subscription/Recurring Transactions
• Create API for other developments, profit sharing
• Track profitability: Lifetime value > Cost per acquisition + Cost of service (paying & free)
• Build profitability model
• Biz Dev
• Create channel partnerships
• Form alliances versus competing
• Target tech savvy users/early adopters initially
• Target industries and functions