Saturday, January 10, 2015
Sunday, July 14, 2013
Tuesday, July 2, 2013
Anyway, as a rough rule of thumb, I like to suggest that startups might like to use a 12 month break even for a spending hurdle, so long as it is applied on a campaign by campaign basis and not an average for all channels and campaigns. There are three reasons I think a roughly 12 month break even is a very comfortable place to start.
1) There is so much spillage in marketing measurement that I am certain that even in pretty tight channels, you are going to get a bunch of customers that you are not able to attribute to the spend. Want to learn about channel interaction and spillage? I think my friend Dave Schwartz is going to share some of his immense knowledge and experience at this month's Agile Marketing Meetup, so follow it and sign up when his talk is announced. But basically, for every account that clicked through on your banner ad, setting a utm (urchin still really?) tag, there was another that just typed your domain into their browser or a google search bar that showed up as branded search or direct type in traffic. And unless you have a solution that can nail down every banner impression to later traffic like Cold Creek Tech's or you are paying an agency like AdRoll that can do something similar when they serve your ads, you are going to identify that customer as direct type in traffic or branded search if you are on your game enough to track granularly with blunt instruments like Google Analytics. Similarly, even if you are using a best in class conference lead tracking solution like Bloodhound, there will be some people that saw your booth, maybe even talked to you or approached it while you are busy, and they Googled your brand later. So you won't be able to attribute every lead to their source. The same can be said about every channel. I will write another post sometime about measuring spillage.
2) There will likely be many customers that continue to generate revenue beyond 12 months. So if you break even at 12 months, you will be building out the gravy train for all those longer term customers. That will help you put snow on the revenue snowball and barrel down the hill.
3) Using the value that a new customer brought in over the trailing 12 months should be conservative. I hope that any startup worth their salt can provide immensely more value and extract more revenue out of customers in the next year than they did in the last year. If you can't, stop reading this blog and go fix that before you figure out how to ramp up paid marketing : ) In my favorite vernacular, I would say that your forward looking cohorts should be a lot better then your backward looking ones. So if you spend to break even on your backward looking ones, you should be fine.
Now if you know you can beat these things, I would say do whatever you are comfortable with. For instance, if you know that you have 50% spillage on a banner campaign, then consider relaxing even more to account for that. And if you know that over the next twelve months your cohorts will generate 50% more revenue than the past 12 months, consider raising the bar 50% higher. And if your attrition is really low and only getting lower, consider using more than 12 months of revenue for a customer. Heck, consider discounting a long tail of years of revenue if you can model it and feel confident in it. If you can make investors confident in it then more power to you, right? And if 90% of your revenue arrives in the first 7 days of a cohort, then there is likely no need to wait twelve months to call it. But I have seen 12 months applied to a lot of different industries and it has worked out pretty well as a rough starting point.
What? You can't wait 12 months to see if something worked out or not? I will write another post about working out proxies for 12 month value.
Happy distribution and growth engineering : )
Thursday, May 23, 2013
All kind of questions start swirling. Are we better off making desire just a tiny bit better than friction everywhere? Stop effort once we have motivated conversion, anything beyond that is wasted. Are there business models where desire distributions or friction distributions should be dictating approaches that we are not thinking about that well yet? Probably. Gimme some time to grok on that or some help at least.
Simple enough I guess. But it is rare that the conversion event is enough. Loyalty, LTV, advocacy all go way past conversion. So even if we get the conversion event perfectly modeled it may not help us succeed better. If upfront conversion and promoter score were independent, maybe, but we all know they are not.
So if you have the data to think about audience desire and friction distribution, and can build these things independently and impact downstream behavior. You should use a more refined equation perhaps. But for most of us, we are better off keeping it simple probably. Geez, it is hard enough getting statistical significance on a test as we fragment markets more and more anyway. I will probably stay with the directional goal of increase desire and reduce friction broadly most of the time for now. But I am keeping my eye out for a place to apply a more refined view to good effect. I am sure it is out there for some high scale consumer model. Seen it?
Monday, April 8, 2013
But as someone whose degree is in engineering who wrote code for 7 years before becoming an internet product guy, I must confess that I have never liked to look upon myself as a hacker of any sort. I know there are hackathons, and maybe I am just a little too old school and taking it personally. But I remember staying up late nights and busting to get a change done right instead of hacking something together. And I took great pride in considering myself NOT a hacker. So I am reluctant to accept this label today even though I have not written real code for a long time.
Personally I always always spoke of distribution. I always felt like Marketing as a title was frowned upon by some folks deep in tech. I remember a time when I met one of the iconic tech founders for the first time, introduced by another former hardcore tech CEO now turned venture capitalist. And both wrote plenty of code for sure. And at the time I had a Marketing title as opposed to some points in my career where I held a Product title. As soon as I was introduced, there were qualifications thrown out. "But he is not a Marketer, he worked for Boeing as an engineer." It confirmed what I had already felt previously. So I always tried to speak of distribution as I felt it did not have a stigma attached.
But I do like the growth label, as that is definitely what it is all about. So I wish the label were Growth Engineer. Perhaps it is not because folks without engineering degrees feel less comfortable calling themselves engineers? Not sure, would love to hear some feedback. I think there is some real process focus that is engineering-esque, but there is definitely some art as well. Growth Maestro or Growth Conductor might have been fun too, but perhaps it does not respect the tech enough? I stole the word Maestro applied to this game from Geoff Clapp, who I heard use it once for this.
Anyway, the boat left a while ago, and I love the direction it is sailing, but I had to go on the record just to get it off my chest. And for the small unrealistic hope that lives somewhere within me that hopes others might prefer to be Growth Engineers as well. hehehe
Tuesday, March 19, 2013
Books and other more permanent quintessential works
Predictably Irrational - Dan Ariely's book on decision making. Dan makes the case that buying decisions are not as rational on the micro level as economics on the macro level would have us believe, but it is at least predictable and can therefore be engineered to be effective on that basis. Dan is a very sharp guy.
Designed Addiction - this is a talk by Nir Eyal about his desire engine structure of looking at the world. It is rock solid.
UXD, About Face 3 - from our own local Alan Cooper, the freakin' man
UX testing, Gorilla Style - Steve Krug is classic and spot on
Designer Portfolio Sites - I like looking at the well reviewed portfolios for inspiration : )
Dave McClure's - Startup Metrics for Pirates - is a classic and solid growth structure
Sean Ellis' blog - He invented the term Growth Hacker and also has a company called Qualaroo (formely KISS insights) that is interesting. My favorite quote form him is Conversion = Desire - Friction
Andrew Chen's favorite articles - This guys articles are what led to the popularization of the growth hacker label. He is a solid product and distribution guy in his own right, legit.
Tom Eisenmann's best blog posts of 2012 - solid reading list, perhaps a bit verbose
11/25/2012 How to be a better manager, spouse, and parent, all in one11/23/2012 Peter Theil's startup class - Pretty solid stuff all the way around wrt to startup
11/09/2012 Kalzumeus.com article on AB Testing10/30/2012 http://blog.getvero.com/ - optimizing the email channel
10/29/2012 Quantifying Event Impact - ideas from around the web
05/25/2012 Why startups fail - data from Noam Wasserman based on thousands of startups over a decade
07/14/2013 (when I found it) Some basic mobile app store tips
Monday, November 17, 2008
These guys are all about sales. They are especially good with copy. They sometimes distract onto esoteric things, but they are smart and know what they are doing selling online.
http://www.grokdotcom.com/ and particularly this article about copy http://www.grokdotcom.com/2007/10/29/copywriting-101/ or this one with links to free web resources http://www.grokdotcom.com/2008/11/13/33-free-tools-to-make-your-website-better/ or go to http://www.grokdotcom.com/archives/ and search for "top 10 online retailers by conversion rate" to get articles with monthly listings as well as some benchmarks.
Ralph Wilson (the owner, author and very good guy) gives very practical tips. Not overly sophisticated, but good advice and very practical because of that.
Jared Spool gives pretty good stuff out though mostly usability focused and not online Marketing per se
Jakob Nielson is the father of web usability. He has a lot of studies and things that are useful. He's a geek and his info is pretty good.
Another usability character involved with early Apple days has this list of bugs I like.
Random, some articles are good and some are less important, but there are a broad list of topics
This blog gives as good perspective of affiliate programs from a publishers perspective and I try to use it as my proxy to keep in tune with what publishers REALLY are thinking (I already know and accept that they are just using me, but it is mutual so I don't mind).
The classic Search site started by Danny Sullivan (but later sold I think)
Classic association of online marketers. The DMA for online.
Another search site from Jill Whalen who has been in the search space for a long time. http://www.highrankings.com/