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http://leananalyticsbook.comAn Introductionto Lean AnalyticsBen Yoskovitz@byosko

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A bit about me...http://instigatorblog.com1996 - 20062007 - 20102010 - 20112011 - ....

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Why did I write it?h"p://loreindustries.com/wp-­‐content/uploads/2012/05/Monkeys-­‐typing.jpg

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We’re all liars.

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The basics of Lean StartupEveryone’s idea isthe best right?People lovethis part!(but that’s not always agood thing)This is where thingsfall apart.No data, nolearning.

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Analytics is the measurement ofmovement towards yourbusiness goals.What is analytics?

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In a startup, the purpose of analyticsis to iterate to product/market fitbefore the money runs out.And for startups?

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Good Metrics are:1 Understandable4 Behavior Changing2 ComparativeActive Users vs.Active Users/month3 Ratio / Rate% MonthlyActive Users

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If it won’t changehow you behave,it’s abadmetric.If a metric won’t change howyou behave, it’s ah"p://www.flickr.com/photos/circasassy/7858155676/

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h"p://www.flickr.com/photos/maCmaCla/3822631755/Types of Metrics

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Warm and fuzzy. Cold and hard.Unstructured,anecdotal,revealing, hard toaggregate.Numbers and stats;hard facts but lessinsight.Qualitativevs.Quantitative

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Discover qualitatively.Prove quantitatively.Quantitative vs. qualitative data

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Speculative, tries tofind unexpected orinteresting insights.Predictable, keepsyou abreast ofnormal, day-to-dayoperations.The cool stuff. The necessary stuff.Exploratory Reportingvs.

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Finding the answer in the data•Started as Circle of Friends•Leveraged Facebook early•Grew to 10M usersBut engagement sucked!

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Moms are crazy!(in a good way)Engagement solved!• Messages to one another were on average 50% longer.• 115% more likely to attach a picture to a post they wrote.• 110% more likely to engage in a threaded (i.e. deep) conversation.• Friends, once invited, were 50% more likely to become engaged users.• 180% more likely to click on Facebook news feed items.• 60% more likely to accept invitations to the app.

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Historical metricthat shows youhow you’re doing:reports the news.Number today thatshows a metrictomorrow: makesthe news.Try and get here.Start here.Lagging Leadingvs.

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h"p://www.flickr.com/photos/bloke_with_camera/401812833/sizes/o/in/photostream/Analytical Superpowers(or what the heck is growth hacking?)

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110100100010000Ice cream consumption DrowningsJan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

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SummerIce creamconsumptionDrowningCorrelatedCausalCausalTwo variables thatchange in similar ways,perhaps becausethey’re linked tosomething else.CorrelatedAn independent factorthat directly impacts adependent one.Causalvs.

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Correlation lets youpredict the futureCausality lets youchange the future“I will have 420 engaged usersand 75 paying customers nextmonth.”“If I can make more first-timevisitors stay on for 17 minutes Iwill increase sales in 90 days.”Find correlation Test causalityOptimize thecausal factorCausality is a superpower, because it letsyou change the future.

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Lean Analytics Frameworkh"p://www.flickr.com/photos/ikhlasulamal/2331176652/

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Your Business + StageWhat businessare you in?What stageare you at?•E-Commerce•SaaS•Free Mobile App•2-Sided Marketplace•Media•User-Generated Content•Empathy•Stickiness•Virality•Revenue•Scale

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business models

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The 2-Sided Market Customer LifecycleVisitsSELLERSSellervisitsAccount createdListings createdListing countNew listings/dayFraud rateFraudulent / FlaggedResults% blank searchesAdditional ServicesOther revenueConversion ratesDeliveryTransactionClick-throughsGood resultsConversionsShortlistBuyer rates SellerRatings, rateRepeat SellerAccount Cancelled Listing Expired DisengagementChurn RateSeller churnSeller lifetime valueVisitsBUYERSSignup rateAccount createdNotificationsDisengagement /opt-outRepeat BuyerBuyer lifetime valueEmail bounceOpenClicksBuyerchurnClick-through rateSearchesSearches / visitSeller ratesBuyerRatings, rateOne-timepurchaseGross revenueNet revenue

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2-Sided Marketplaces1 Do things that don’t scale2 Focus on the money5 The scale has to be enormous3 Seller quality matters4 Find extra revenue sources

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lean analytics stages

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EMPATHYSTICKINESSGROWTHRATEVIRALITYREVENUESCALELean AnalyticsStagesI’ve found a real, poorly-met need thata reachable market faces.I’ve figured out how to solve theproblem in a way they will adopt andpay for.I’ve built the right product/features/functionality that keeps users around.The users and features fuel growthorganically and artificially.I’ve found a sustainable, scalablebusiness with the right margins in ahealthy ecosystem.“Gates” needed tomove forward

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•Stage: Empathy•Model: UCG/Mobile•Real-time Q&A platform tied to locations•Needed to find out if a core behavior--answering questions about a place--happenedenough to make the business realLocalmind hacks Twitter

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Localmind hacks Twitter•Before writing a line of code, they wanted to answer this question•This was their biggest risk: if questions went unanswered, the experience would suckWould people answer questions?Test results•The response rate to tweeted questions was very high•Good enough proxy to de-risk the solution and convince the team to continueRan an experiment on Twitter•Tracked geolocated tweets in Time Square•Sent @ messages to people who had just tweeted, asking a question about the area

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•Stage: Empathy / Stickiness•Model: E-Commerce•Eco-friendly prints of your photos•Originally tied exclusively to Instagram andbuilt a custom InstaOrder featureStatic Pixels simplifies to focus onimmediate success

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★ 2x transactions★ lower bounce rate★ sign-in goals increasedwith InstaOrderClick checkoutSign into PayPalConfirmation pageConfirm orderBack to PayPalAuthorize pre-approved paymentsSuccess pagewithout InstaOrderClick checkoutSign into PayPalConfirmation pageConfirm orderSuccess pageOptimize for 1st time purchases orrepeat orders?

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skip steps at yourown risk

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One MetricThat Matters.How It All Comes TogetherThe business you’re inE-Com SaaS Mobile 2-Sided Media UCGEmpathyStickinessViralityRevenueScaleThestageyou’reat

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•Stage: Scale•Model: SaaS•SEO toolkit (product suite)•Reduced KPIs to focus on Net AddsSEOMoz reduces the KPIs ittracks

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If Net Adds: Why & Next Steps:Net Adds = “business health”indicator•Was a marketing campaign successful?•Were customer complaints lowered?•Was a product upgrade valuable?• Can we acquire more valuable customers?•What product features can increase engagement?• Can we improve customer support?•Are the new customers not the right segment?• Did a marketing campaign fail?• Did a product upgrade fail somehow?• Is customer support falling apart?

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Choose only one metric anddraw a line in the sand.Choosing your OMTM isn’t enough...

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•Stage: Virality•Model: Mobile app•Social network around the past•Focused on virality (but not theviral coefficient)Timehop aims for virality throughcontent sharing

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• Focused on % of daily active users thatshare content• Aiming for 20-30% of daily active usersto share content“All that matters now is virality. Everything else—be itpress, publicity stunts or something else—is likepushing a rock up a mountain: it will never scale. Butbeing viral will.” - Jonathan Wegener, co-founderThe One Metric That Matters:Content sharing

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Some interesting benchmarksGrowth5% / week (revenue or activeusers)Churn2% / monthEngaged visitors30% monthly users10% daily usersTime on site17 minutesPage load time< 5 secondsCLV:CAC3:1Mobile file size< 50MBFree to paid2% of free users

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Lean Analytics cycleh"p://www.flickr.com/photos/jrodmanjr/4728457415/

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Identify a key business problem,pick the OMTM, draw a line in thesand, and get started.Time to experiment

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Draw a new linePivot orgive upTry againSuccess!Did we move theneedle?Measure theresultsMake changes inproductionDesign a testHypothesisWith data:find acommonalityWithout data:make a goodguessFind a potentialimprovementDraw a linePick a KPIThe Lean Analytics Cycle

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Thank you.byosko@gmail.com@byoskoORDER!follow me.instigatorblog.comleananalyticsbook.comsubscribe.email me.