Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers

www.PathfinderSoftware.com888-986-2914

@PathSoftpathfinder-software

Todd Wyder, CEO of Pathfinder Software, is obsessed with creating great software that users love, and he is also very passionate about building the Chicago-tech community, currently serving as organizer for both the Chicago Product Management Association and the Chicago Lean Startup Circle.

Over a decade of delivering successful software applications, providing clients with the technology to enable business breakthroughs and competitive advantage. Companies hire Pathfinder to design, develop and deliver Healthcare software products faster and better than they can do themselves.

You have found a really painful problem

You discovered a target market who has that problem

You have created a solution that customers tell you really solves the problem

So, you build your MVP and invite your first customers to use it

Then what happens?

Nothing

So, you buy some Adwords and get more sign ups. Then, what happens?

1 2 3 4 5 6 70

Product Usage

Your product sucks & you don’t know why

The Trough of Sorrow

Most startup founders focus heavily on product but most of a startup's risk lies in distribution

Dave McClure

Marketing

CustomerDevelopment Data

GrowthHacker

AcquisitionBring prospective customers to your site

ActivationSign up

RetentionEngage users

Referral

Seven Steps to become a Growth

Hacker

1. No Beta!!!

2. Install Analytics

Google Analytics is Worth What You Pay For It

People, not page views, buy software

Don’t Focus on Acquisition When Activation and Retention are Low

Visited Site Signed Up Activation Billed

14 3 1

0.6% 21.4% 33.3%0.0%

3. Create a Dashboard

4. Perform A/B testing

LinkBaitPro

Get Started

LinkBaitPro

Get Started

What to/Not to Test

LinkBaitPro

Get Started

For recreational use only. Do not staple or paper clip. All models over 18 years of age. Prize not redeemable for cash value. If condition persists, consult your physician. No user-serviceable parts inside.

Test theHeadline

Image vs.Video

Call to actiontext and color

Don’t spend alot of timetestingthe copy

Classic A/B Testing

I’m on Twitter Follow me on Twitter

Follow me on Twitter You should follow me On twitter

You should follow me On twitter

You should follow me On twitter here

115%173%

User States

1.Login

2.Upload Photos

3.Tag Photos

4.Share Photos

5.Comment on Others photos

5. Create Interventions

Signed Up Login Uploaded Photos

TagPhotos

16.8% 11.2% 7.3%0.0%

• Email

• In App

Bugsnag captures errors from your web and mobile applications. The first email they send to new signups is very simple, but has been yielding great results.

Hey {{ first_name }},

I'm James, CEO of Bugsnag. I wanted to reach out to see if you need any help getting started.

Cheers,

Surprise Personal Email

We've missed you on CouchSurfing! It's been a long time since we've seen you around! The last time you logged into CouchSurfing was four months ago.

Props to Segment.io

The Last Email You Will Ever Send

A lot has changed since you left – so we'd like to offer you another FREE trial!

Come back to Netflix and enjoy newly added TV shows & movies – for free. Now including Wii, PS3, Xbox 360, iPhone, iPad,

Android and more.

Questions? 1-888-357-1516 / 24 hours a day

In App Intervention

6. Preform Cohort Analysis

Track User States Across Cohorts

Onboarding

7. Determine the OMTM

At least 7 friends within 10 days of signing up

Getting a new user to link a device and add a file

Once a user follows 30 people, they’re more or less active forever

If someone comes back a day after signing up for a game, that is a leading indicator of them becoming an engaged and paying user.

Post Launch Stages

1. Stickiness

DISENGAGED USER

ENGAGEDUSER

REACTIVATE

TRIAL OVER

PAYING CUSTOMER

DISSATISFIED

RESOLUTION

DISENGAGED

REACTIVATE

CANCEL CANCELACCOUNT CANCELLED OR

BILLING INFO EXPIRES

Free userdisengagement

PaidConversion

SupportData

ReactivatonRate

FreemiumChurn

TrialAbandonment

Disengagement

Post Launch Stages

1. Stickiness

2. Traffic

DISENGAGED USER

ENGAGEDUSER

REACTIVATE

TRIAL OVER

PAYING CUSTOMER

DISSATISFIED

RESOLUTION

DISENGAGED

REACTIVATE

PaidConversion

SupportData

ReactivatonRate

FreemiumChurn

TrialAbandonment

Disengagement

PAID DIRECT SEARCH WOM

Customer Acquisition Cost

VISITOR

FREEMIUM/TRIAL OFFER

ENROLLMENT

Long funnel health

INHERENTVITALITY

INVITE OTHERS

Viral coefficientViral rate

Post Launch Stages

1. Stickiness

2. Traffic

3. Revenue

DISENGAGED USER

ENGAGEDUSER

REACTIVATE

TRIAL OVER

PAYING CUSTOMER

DISSATISFIED

RESOLUTION

DISENGAGED

REACTIVATE

PaidConversion

SupportData

ReactivatonRate

FreemiumChurn

TrialAbandonment

Disengagement

PAID DIRECT SEARCH WOM

VISITOR

ENROLLMENT

Long funnel health

INHERENTVITALITY

INVITE OTHERS

UPSELLING

CAPACITY LIMIT

FORMER USERS FORMER CUSTOMERS

Tiering

UpsellingRate

Unpaid Churn Rate Paid Churn Rate

User Lifetime Value Customer Lifetime Value

Post Launch Stages

1. Stickiness

2. Traffic

3. Revenue

PAID DIRECT SEARCH WOM INHERENTVITALITY

VISITOR

ENROLLMENT

INVITE OTHERS

DISENGAGED USER

ENGAGEDUSER

REACTIVATE

TRIAL OVER

PAYING CUSTOMER

UPSELLING

CAPACITY LIMIT

DISSATISFIED

RESOLUTION

DISENGAGED

REACTIVATE

FORMER USERS FORMER CUSTOMERS

Long funnel health

PaidConversion Tiering

UpsellingRate

SupportData

ReactivatonRate

FreemiumChurn

TrialAbandonment

Disengagement

Unpaid Churn Rate Paid Churn Rate

User Lifetime Value Customer Lifetime Value

• Measure engagement

• DAU/WAU – What does active mean?

• Segment

• New Functionality• Does it improve stickiness?• How do we measure that?

• Lazy registration

Stickiness

Talk to the Customers

Viral Coefficent

Number of Active Users: 1,000

Number of Invites Sent: 100

Invitation Rate (Invites Sent/Active Users) 10%

Acceptance rate (Invites accepted/Invites Sent) If 3 invitees sign up,30%

Viral Coefficient = Multiply Invitation Rate X Acceptance Rate (.1 X .3 = o.o3)

Ideally Viral Coefficient > 1

Necessary for B2C, likely not a good metric for B2B

Virality Inherent

Collaboration

CommunicationPS: I love you,get your free emailfrom http://hotmail.com

Incentivized

Embeddable

Signature

Word of Mouth

Social

Use Platforms

Segmentation

Unit Economics

BasicsCAC – Customer Acquisition Cost

• Marketing cost/# paying customers

• Costs you spend on marketing

• Include labor

LTV – Life Time Value

• Amount of money you receive while the customer is paying you

• LTV = ARPU * (1/Churn Rate)• 1,000 Customers (not free trial users)• $25,000 Revenue• ARPU is $25• 20% Churn Rate (average length of relationship is 5 months)• LTV = $25 * (1 – 0.02) = $125

Rules of Thumb

LTV > 3 * CAC

CAC needs to be recovered in less than a year (ideally 3 months)

Churn should be 5-7% annually- 0.42-0.58 monthly

How Churn affects Lifetime

1% 2% 5%0

Lifetime vs Churn RateMonths

Monthly ChurnSource: David Skok Matrix Partners

How Churn affects LTVLifetime Value

Monthly Churn

Source: David Skok Matrix Partners

Impact of Lowering Churn

Month 1

Month 3

Month 5

Month 7

Month 9

Month 11

Month 13

Month 15

Month 17

Month 19

Month 21

Month 23

Month 25

Month 27

Month 29

Month 31

Month 33

Month 35

$(400,000)

$(200,000)

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Net Profit

Churn 1.25% Churn 2.5%

Month 1

Month 3

Month 5

Month 7

Month 9

Month 11

Month 13

Month 15

Month 17

Month 19

Month 21

Month 23

Month 25

Month 27

Month 29

Month 31

Month 33

Month 35

$(4,000,000)

$(2,000,000)

$2,000,000

$4,000,000

$6,000,000

$8,000,000

Cumulative Net Profit

Churn 1.25% Churn 2.5%

• Impact of lowering the churn rate is felt more heavily in the later years, as expected• It has a significant impact on the long term profitability of the business

A Well Balanced Business Model

Monetization(LTV)

Cost toAcquire aCustomer

The Balancing Act

Monetization(LifeTime Value LTV)

Cost to Acquire a Customer (CAC)

• Viral effects• Inbound Marketing• Free or Freemium• Open Source• Free Trials• Touchless conversion• Inside Sales• Channels• Strategic partnerships

• Scalable Pricing• Cross Sell/Upsell• Product line expansion• Lead Gen for 3rd parties

The Balancing Act

Monetization(LifeTime Value LTV)

Cost to Acquire a Customer (CAC)

• Viral effects• Inbound Marketing• Free or Freemium• Open Source• Free Trials• Touchless conversion• Inside Sales• Channels• Strategic partnerships

• Field Sales• Outbound

Marketing

• Scalable Pricing• Cross Sell/Upsell• Product line expansion• Lead Gen for 3rd parties

• High Churn Rates• Low customer

satisfaction

Questions

Get Hacking!

Need help with the design, development, and launch of your Healthcare or Medical software application? We leverage our experience with FDA and HIPAA compliance to rapidly align your product with government regulations. We increase the rate of success of our clients’ products leveraging Lean Startup + UX + Agile. Call Us Today - 888-986-2914

Growth Hacking for Lean Startups: How to Get, Keep and Grow Customers

Technology

Demystifying Lean Startups

Lean startups - att bygga startups på befintliga plattformar

Hacking 2017 - Le manifeste des startups

Growth Hacking-Where to start- Startups

{Hella Hacking} - Kapor Center · East Bay Startups & Techies Bay Area Black Designers Food Tech Startups East Bay Conscious Startup Meetup Oakland PyLadies Oaklean: The Lean Design

Lean pricing startups

Lean Startups

Lean&Agile: Metodologías para Startups

Growth Hacking For Startups - Social Media Week

Growth hacking for tech startups

Growth hacking services for startups - what. · Growth hacking services for startups 10+ ICO projects delivered with over $50m raised for our customers Turning crypto startups into

Lean UX Research in Startups

Growth Hacking - 500 Startups - Aceleradora Mexico

Hacking industry analysis: Analyst relations for startups

Customer Growth Hacking for Lean Startups: How Silicon Valley is Creating Billion Dollar $tartups

Growth Hacking for Startups 2017 (OMX Austria)

Social Media and Growth Hacking for Startups

Unscripted Hacking Design (Startups Cemtral)

Building lean-hardware-startups

Customer Development for Lean startups