Growth Hacking RoadmapMaximize the Growth of Your Most Valuable Customers

Anglo-American UniversityMark Andersen

August 22, 2015

CZECH STRENGTHS & SILICON VALLEY: AN OVERVIEW

• Unique creativity & technical expertise: Zlate Ceske ruce

• More advantages of being in Czech Republic: easier and less expensive to hire developers, slower "burn rate",

• Advantages of being in or part of Silicon Valley: massive startup ecosystem, know how, access to capital; cons: cost of living, difficulty in hiring engineers, group think (clean tech, mobile apps, MOOCs, Google Glass, Internet of Things..)

• Silicon Valley mindset: anything is possible; huge expectations; success is celebrated, but failure isn't stigmatized--it's a test & learning experience

• Gregor Mendel's 29,000 pea experiments

ROMAN HORACEK: CZECH INVEST

• Czech startups are very strong technically & can improve on the business side. Most of the startups I have seen have technology far better than their competitors, however, they don’t execute/sell as well.

• Often the projects are being built on local assumptions and once the company wants to scale, it realizes that their existing business model is not viable / their assumptions are not valid for new/different markets (product/market fit).

• We don’t have enough role models and people with global entrepreneurial experience thus this is something we must work on. We can do that by sending the companies overseas and exposing them to more developed startup ecosystems such as Silicon Valley.

• The good thing is that Czech founders tend to be strongly motivated and they can generally run the company with much lower costs = lower burn rate. Additionally Czech are experts in inventing simple nonorthodox/innovative solutions and using a lot of common sense.

Growth Hacking Roadmap for tech startups

Create Your Business

Model

Product / Market Fit

Most Valuable Customers

Early Behavior of Most Valuable

CustomersWow! Moment

Virality

Optimize Conversion

Funnel

Content Marketing & Social Media

User & Social Networks / App Stores

Online / Mobile Advertising

Lean Canvas

Step 1

Product Market Fit: Are you indispensable for users?

Step 2

• "Product/market fit means being in a good market with a product that can satisfy that market": Marc Andreessen

• "Make something people want": Paul Graham (Y Combinator)

• "Make insanely great products": Steve Jobs

• "A great brand is a promise of benefit that's persuasive and unique": David Ogilvy

How do you know if you have it?

• Would at least 40% of your customers say they'd be "very disappointed" without your product (Survey.io)

• Clearing Net Promoter Score (NPS), retention and lifetime net value hurdles

• Word of mouth is one of your biggest acquisition channels; virality (K value > 1)

Product / Market Fit

• AirBnB: after 1 year in business: $200 / week in revenue--"do things that don't scale"

• PayPal: eBay power users

• Twitter didn't start to become what it is

Step 2

Success stories

Product / Market Fit"How to lose $170 million in VC funding"

• AllAdvantage after 18 months: 13 million members, Top 20 site, $170 million from VCs, 3 weeks from IPO

• Why did it fail? Too much focus on acquisition & not enough on retention, never achieved p/m fit

Step 2

Most Valuable CustomersUsing Lifetime Net Value Across Acquisition Channels

Step 3

0

25

50

75

100

Email Blog Retarg SEO Blog FB eBooks SEM Affiliate

CUSTOMER LIFETIME NET VALUE: MONTHLY MARGIN & RETENTION ARE

2 MOST IMPORTANT DRIVERS• Monthly margin: How much does the customer give us

each month?

• Retention: How long does the customer stay with us?

• Customer Lifetime Net Value: The lifetime value of a customer

• Equation: Monthly margin X retention = Lifetime net value

CALCULATING LIFETIME NET VALUE

• $10 per month for an average retention of 5 months = $50 in lifetime revenue

• -$6 in hosting & streaming fees / customer for 10 months

• -$8 in customer support / customer for 10 months

• = Gross lifetime value: $36

• -$19: Cost of acquisition (CAC), I.e., SEM, Facebook ads...

• = Lifetime net value: $17

Early Behavior of Most Valuable Customers

Step 4

• Facebook: connect with 7 friends within first 10 days

• Dropbox: upload your first file

• Location Labs: check an early confirmation email

Wow! MomentWhatsApp's 10 step Onboarding process + 16 minutes to my Wow! Moment

Step 5

App Store downloadPermission to get contacts

Permission to send push notificationsEnter phone number

Connecting my numberReceive the verification code and enter it

Validate the codePrompted to fill out my profile.

Approve the Facebook permission.Automatically shows favorites

Wow! Moment

Step 5

Video

ViralityLocation Labs

Step 6

Single greatest driver of word-of-mouth: a great product

DriveSmart: "hey, I'm driving, DriveSmart is keeping me safe..."

Optimize Conversion FunnelYour fastest way to increase Lifetime Net Value

• Start by improving existing opportunities, not new traffic

• Learn about people who don't visit key conversion pages

• Find the points where people abandon your site: ask them via exit survey: "Is there something preventing you from checking out?"

• Test & measure pages, flows & cohorts

• Testing speed is critical. A/B only tells us "what." We have to do user testing to figure out "why."

Step 7

Optimize Conversion FunnelTools to increase conversion rates, retention & LTV

• Analytics: SQL, Google Analytics, KISSMetrics, Mixpanel

• A/B testing tools: Optimizely, Visual Website Optimizer

• Testing a lot of landing pages: Unbounce

• Identify the "why" in friction points: Qualaroo, UserTesting.com

Step 7

Content Marketing & Social MediaOnline petitions: CREDO Mobile's 275,000 Likes on FB

Step 8• Clif Bar & Mint: 170,000 Likes

Content Marketing & Social Media

Blogs: Salesforce. Webinars: KISSMetrics, Qualaroo

Step 8

Content Marketing & Social MediaVideo content that drives results

Step 8

• Wren's "First Kiss" (clothing label in LA): 80 million views, sales in their online store increased13,600% vs week before First Kiss was released: youtube.com/watch?v=IpbDHxCV29A

• Red Bull's jump from space: 35 million views, youtube.com/watch?v=FHtvDA0W34I

• GoPro's "Pelican learns to fly": 3 million views: youtube.com/watch?v=_YEyzvtMx3s

User & Social Networks / App Stores

API integrations enable invitations, notifications & sharing of activity

• B2B open APIs: LinkedIn, AppExchange, Yammer

Step 9

Online / Mobile AdvertisingLendingTree & Netflix

Step 10Total

Customer Value

Analytics • Net Promoter Score

• Retention

• Lifetime net value

Growth Metrics (ignore total registrations)

• active users

• activity levels: DAU/MAU, D1, D7

• cohort retention

• revenue

Actionable Analytics & ResearchKPIs

4/7/2014 4/14/2014

First Time Visitors

Total Visitors

Conversion Rate

% New Customers

Retention Rate

Num Orders

Average Order Size

Total Sales $20,000

$125

160

3.35%

18.06%

3.92%

3,955

1,986

$26,040

$210

124

2.89%

15.32%

3.01%

4,123

1,822

Apr 2 Apr 4 Apr 6 Apr 8 Apr 10 Apr 12 Apr 14

14 Day Trend

USER TESTING• Most valuable user testing is asking what problems

they have: don't start by showing your product & asking what they think

• Live is best, phone/skype is fine

• Y Combinator: two most valuable things startup founders should be doing: talking to users & building product

SummaryIf you takeaway nothing else...

• Product/market fit is most critical: user testing, user testing, user testing...

• Don't accelerate your acquisition spend until you've achieved p/m fit, optimized your funnel & positive Lifetime Net Value

• Setup your analytics asap

• Cohorting & most valuable customers critical

• Common mistake is focusing too much on acquisition & virality and not enough on retention

Resources

• "How to start a startup": Y Combinator's class on YouTube

• Paul Graham's essays

• Steve Blank: "Four steps to the epiphany" & videos

• Dave McClure

• More resources on the bottom of my infographic

Contact info

• VP of Marketing & Growth: eCorinth.com

• MarkDAndersen@gmail.com

• www.linkedin.com/in/markandersen

• @MarkAndersen