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Monetization in the trenches 012511


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Monetization in the trenches 012511

  1. 1. Monetization in the trenches <ul><li>Metrics, tips and tricks for making money with software </li></ul>
  2. 2. About me <ul><ul><li>I don’t smoke a pipe. </li></ul></ul><ul><ul><li>Founder and CEO of RescueTime </li></ul></ul><ul><ul><li>Founded and sold a recruiting software startup </li></ul></ul><ul><ul><li>Founded and sold a 20ish person web consultancy in Anchorage, Alaska </li></ul></ul><ul><li>contact: </li></ul><ul><li>@webwright (Twitter) </li></ul><ul><li> (Email) </li></ul><ul><li> (interweb site) </li></ul>
  3. 3. About Rescuetime <ul><ul><li>Helps people get more productive by: </li></ul></ul><ul><ul><ul><ul><ul><li>showing individuals and businesses exactly how they spend their time and attention (with no data entry!) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Giving people tools to focus better including “nudges” or actual blocking of sites under certain conditions. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Feature I’m most excited about: “Focus Button” </li></ul></ul></ul></ul></ul><ul><li>more info: </li></ul><ul><li> </li></ul><ul><li>[email_address] </li></ul>
  4. 4. Two truths <ul><li>#1: There are virtually no examples of software that people really really love going out of business. </li></ul><ul><li>#2: The most amazing businesses have a great story about how they make money. </li></ul>
  5. 5. Let’s talk about metrics
  6. 6. What’s the most important startup metric?
  7. 7. Profit!
  8. 8. Startup Success funnel
  9. 9. Metrics <ul><li>Each step has associated metrics: </li></ul><ul><ul><ul><ul><ul><li>Visitors / Pageviews (acquisition) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Bounce Rate & time on page (“they get it”) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Clicking “sign up” (action) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Successful signup (signup) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Successful credit card charge (purchase) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cohort retention (1st cycle and “happy customer”) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Tweets and blog posts (evangelism) </li></ul></ul></ul></ul></ul>
  10. 10. Cohort ANALYSIS
  11. 11. BUILD METRICS FROM DAY 1 <ul><ul><ul><ul><ul><li>(But once you have the metrics, which do you work on?) </li></ul></ul></ul></ul></ul>
  12. 12. It depends
  13. 13. “skinny parts with big opportunities” <ul><li>Find the part of your funnel that gets skinny </li></ul><ul><li>Take a guess at how “low hanging” the fruit is </li></ul><ul><li>Goal is maximizing the ratio of time/$ investment and how how much it improves the output </li></ul><ul><li>When in doubt, aim low on the funnel </li></ul>
  14. 14. healthy funnel
  17. 17. SO JUST MEASURE THE FUNNEL AND FIX THE SKINNY PARTS? <ul><li>(Almost! Let’s talk about leverage) </li></ul>
  18. 18. Leverage! <ul><li>Leverage is focusing on revenue opportunities that provide ongoing value. </li></ul>
  19. 19. low leverage example <ul><li>What’s the biggest thing you could imagine doing to improve your web app metrics this week? </li></ul>
  20. 20. Buy a superbowl ad <ul><ul><ul><li>Huge 1-time shot in the arm for traffic </li></ul></ul></ul><ul><ul><ul><li>Monsterous credibility boost </li></ul></ul></ul><ul><ul><ul><li>Big acquisition boost moves down the funnel and helps all of your metrics </li></ul></ul></ul><ul><ul><ul><li>Short Term Result: Big win (100,000 new customers when you normally only get 1,000 per month) </li></ul></ul></ul><ul><ul><ul><li>Long Term Result: Back down to about 5,000 next month and 1,200 the month after that. </li></ul></ul></ul>
  21. 21. high leverage example <ul><li>What one thing could you improve that’d have the biggest effect on profit for the longest period of time? </li></ul>
  22. 22. bump retention from 80% to 90% from 80% to 90% <ul><ul><ul><li>No meaningful revenue impact that month. </li></ul></ul></ul><ul><ul><ul><li>Short Term Result: Meh. You retain 900 of your customers that month instead of 800. </li></ul></ul></ul><ul><ul><ul><li>Long Term Result: After 1 year, 282 of the 1,000 are still around instead of 68. So a 300% revenue increase for that cohort! (and it’s a gift that keeps on giving) </li></ul></ul></ul>
  23. 23. Trip up the funnel!
  24. 24. Evangelism & happy customers happy customers <ul><li>Make your product really freakin’ good. Give WAY more value than you ask for. </li></ul><ul><li>Make your product FEEL really freakin’ good. </li></ul><ul><li>Make sharing/talking about your product an implicit part of the experience </li></ul><ul><li>If people start evangelizing on their own, build features that help them do it! </li></ul><ul><li>Reward evangelism (with love/thanks/recognition) </li></ul><ul><li>Build features from customer requests </li></ul><ul><li>Great support (Zappos, Wufoo) </li></ul><ul><li>Other ideas? </li></ul>
  25. 25. 1st cycle retention retention <ul><li>Great new user experience - you’ve only got a minute or two to hook them </li></ul><ul><li>Nag/survey on abandons - “Hey, we noticed that you didn’t get up and running... What did we miss? Here are a few links to help you out!” </li></ul><ul><li>Checklists - Give users a list of things to check off to get oriented. </li></ul><ul><li>Any other ideas? </li></ul>
  26. 26. people “get it”, take action, & purchase action, & purchase <ul><li>Beware the “curse of knowledge” - the more you grok your product, the worse you are at explaining it. </li></ul><ul><li>Action/Signup isn’t about ease. It’s the ratio of how much they care to how easy it is. Make them care more! </li></ul><ul><li>Minimize steps to signup - less screens, less form fields </li></ul><ul><li>Don’t sweat fraud - fewer fields means higher credit card transaction costs, but it’s worth it. </li></ul><ul><li>Minimize Customer Risk with clear pricing, free trials, demos, screencasts </li></ul><ul><li>Sell Benefits not features. </li></ul><ul><li>Show, don’t tell. </li></ul><ul><li>Credibility (design, writing, clear contact info, press coverage) </li></ul><ul><li>Social Proof - show that other people use/love it </li></ul><ul><li>BABB - Big ass beveled buttons. Everywhere. With drop shadows. </li></ul><ul><li>Any other ideas? </li></ul>
  27. 27. Acquisition <ul><li>Get enough users to experiment but “solve” the bottom of the funnel if you have the luxury to do so. </li></ul><ul><li>SEO - it’s slow to build value, but SEO is truly a gift that gives forever. </li></ul><ul><li>Don’t chase PR - focus on being worth talking about. Empathize with reporters/bloggers and give them a story that rocks. </li></ul><ul><li>Viral wins, but don’t staple it on - “tell a friend” links don’t work if people don’t think you’re awesome. </li></ul><ul><li>Word-of-mouth is not a marketing strategy. Seriously. </li></ul><ul><li>Don’t buy eyeballs unless your conversion and retention are solid. </li></ul><ul><li>After TechCrunch comes the trough of sorrow. Worth it for SEO, but converts poorly. See “don’t chase PR!” </li></ul><ul><li>Any other ideas? </li></ul>
  28. 28. Questions? comments? <ul><li>Reminder contact info: </li></ul><ul><li>Me: </li></ul><ul><li>@webwright (Twitter) </li></ul><ul><li>[email_address] (Email) </li></ul><ul><li> (interweb site) </li></ul><ul><li>RescueTime: </li></ul><ul><li> </li></ul><ul><li>[email_address] </li></ul>