Lean Analytics

Four Reasons to Use the One Metric That Matters
Solare Focuses on a Few Key Metrics
Drawing Lines in the Sand
The Squeeze Toy
Define Your OMTM

7. What Business Are You In?
About Those People
The Business Model Flipbook
Lots to Choose From
Six Business Models
Pick Your Business Model

8. Model One: E-commerce
What Mode of E-commerce Are You?
A Practical Example
Conversion Rate
Purchases Per Year
Shopping Cart Size
Abandonment
Cost of Customer Acquisition
Revenue Per Customer
WineExpress Increases Revenue by 41% Per Visitor
Keywords and Search Terms
Recommendation Acceptance Rate
Virality
Mailing List Click-Through Rates
Offline and Online Combinations
Shipping Time
Stock Availability
Visualizing the E-commerce Business
Wrinkles: Traditional E-commerce Versus Subscription E-commerce
Key Takeaways

9. Model Two: Software as a Service (SaaS)
Backupify’s Customer Lifecycle Learning
Measuring Engagement
Churn
Churn Complications
Visualizing the SaaS Business
ClearFit Abandons Monthly Subscriptions for 10x Growth
Wrinkles: Freemium, Tiers, and Other Pricing Models
Key Takeaways

10. Model Three: Free Mobile App
Installation Volume
Average Revenue Per User
Percentage of Users Who Pay
Churn
Visualizing the Mobile App Business
Wrinkles: In-App Monetization Versus Advertising
Key Takeaways

11. Model Four: Media Site
Audience and Churn
Inventory
Performance and the Sessions-to-Clicks Ratio
Ad Rates
Content/Advertising Trade-off
Visualizing the Media Business
Wrinkles: Hidden Affiliates, Background Noise, Ad Blockers, and Paywalls
Key Takeaways

12. Model Five: User-Generated Content
Visitor Engagement
Content Creation and Interaction
Engagement Funnel Changes
Value of Created Content
Content Sharing and Virality
Notification Effectiveness
Visualizing a UCG Business
Wrinkles: Passive Content Creation
Key Takeaways

13. Model Six: Two-Sided Marketplaces
What DuProprio Watches
Rate at Which You’re Adding Buyers and Sellers
Rate of Inventory Growth
Buyer Searches
Conversion Rates and Segmentation
Buyer and Seller Ratings
Percent of Flagged Listings
Visualizing a Two-Sided Marketplace
Wrinkles: Chicken and Egg, Fraud, Keeping the Transaction, and Auctions
Key Takeaways

14. What Stage Are You At?
Pick the Stage That You’re At

15. Stage One: Empathy
Metrics for the Empathy Stage
This Is the Best Idea I’ve Ever Had! (or, How to Discover Problems Worth Solving)
Finding a Problem to Fix (or, How to Validate a Problem)
Signs You’ve Found a Problem Worth Tackling
Running Lean and How to Conduct a Good Interview
How to Avoid Leading the Witness
Convergent and Divergent Problem Interviews
How Do I Know If the Problem Is Really Painful Enough?
Calculating the Scores
Cloud9 IDE Interviews Existing Customers
How Are People Solving the Problem Now?
Are There Enough People Who Care About This Problem? (or, Understanding the Market)
What Will It Take to Make Them Aware of the Problem?
A “Day in the Life” of Your Customer
Finding People to Talk To
Getting Answers at Scale
LikeBright “Mechanical Turks” Its Way into TechStars
Creating an Answers-at-Scale Campaign
Build It Before You Build It (or, How to Validate the Solution)
Localmind Hacks Twitter
Before You Launch the MVP
Deciding What Goes into the MVP
Measuring the MVP
Don’t Ignore Qualitative Analytics
Be Prepared to Kill Features
Static Pixels Eliminates a Step in Its Order Process
A Summary of the Empathy Stage
Should You Move to the Next Stage?

16. Stage Two: Stickiness
MVP Stickiness
Iterating the MVP
qidiq Changes How It Adds Users
Premature Virality
The Goal Is Retention
Seven Questions to Ask Yourself Before Building a Feature
How Rally Builds New Features with a Lean Approach
How to Handle User Feedback
The Minimum Viable Vision
The Problem-Solution Canvas
VNN Uses the Problem-Solution Canvas to Solve Business Problems
A Summary of the Stickiness Stage
Exercise #1: Should You Move to the Next Stage?
Exercise #2: Have You Identified Your Biggest Problems?

17. Stage Three: Virality
The Three Ways Things Spread
Inherent Virality
Artificial Virality
Word-of-Mouth Virality
Metrics for the Viral Phase
Beyond the Viral Coefficient
Timehop Experiments with Content Sharing to Achieve Virality
Instrumenting the Viral Pattern
Growth Hacking
Attacking the Leading Indicator
What Makes a Good Leading Indicator?
Correlation Predicts Tomorrow
Causality Hacks the Future
A Summary of the Virality Stage
Should You Move On to the Revenue Stage?

18. Stage Four: Revenue
Metrics for the Revenue Stage
The Penny Machine
Penny Machines and Magic Numbers
Finding Your Revenue Groove
Where Does the Money Come From?
Customer Lifetime Value > Customer Acquisition Cost
Parse.ly and the Pivot to Revenue
Market/Product Fit
Review Your Old Assumptions
Begin a Process of Elimination
Deep Dive
Find Similarities
The Breakeven Lines in the Sand
Breakeven on Variable Costs
Time to Customer Breakeven
EBITDA Breakeven
Hibernation Breakeven
Revenue Stage Summary
19. Stage Five: Scale
The Hole in the Middle
Metrics for the Scale Stage
Is My Business Model Right?
Buffer Goes from Stickiness to Scale (Through Revenue)
The Three-Threes Model
Finding Discipline as You Scale
A Summary of the Scale Stage

20. Model + Stage Drives the Metric You Track

III. Lines in the Sand
21. Am I Good Enough?
WP Engine Discovers the 2% Cancellation Rate
Average Isn’t Good Enough
What Is Good Enough?
Growth Rate
Is Growth at All Costs a Good Thing?
Bottom Line
Number of Engaged Visitors
Bottom Line
Pricing Metrics
Socialight Discovers the Underlying Metrics of Pricing
Bottom Line
Cost of Customer Acquisition
Bottom Line
Virality
Bottom Line
Mailing List Effectiveness
Bottom Line
Uptime and Reliability
Bottom Line
Site Engagement
Bottom Line
Web Performance
Bottom Line
Make Your Own Lines in the Sand

22. E-commerce: Lines in the Sand
Conversion Rate
Bottom Line
Shopping Cart Abandonment
Bottom Line
Search Effectiveness
Bottom Line

23. SaaS: Lines in the Sand
Paid Enrollment
Bottom Line
Freemium Versus Paid
Upselling and Growing Revenue
Bottom Line
Churn
OfficeDrop’s Key Metric: Paid Churn
Bottom Line

24. Free Mobile App: Lines in the Sand
Mobile Downloads
Bottom Line
Mobile Download Size
Bottom Line
Mobile Customer Acquisition Cost
Bottom Line
Sincerely Learns the Challenges of Mobile Customer Acquisition
Application Launch Rate
Bottom Line
Percent Active Mobile Users/Players
Bottom Line
Percentage of Mobile Users Who Pay
Bottom Line
Average Revenue Per Daily Active User
Bottom Line
Monthly Average Revenue Per Mobile User
Bottom Line
Average Revenue Per Paying User
Bottom Line
Mobile App Ratings Click-Through
Bottom Line
Mobile Customer Lifetime Value

25. Media Site: Lines in the Sand
Click-Through Rates
Bottom Line
Sessions-to-Clicks Ratio
Bottom Line
Referrers
Bottom Line
Engaged Time
Bottom Line
What Onsite Engagement Can Tell You About Goals and Behaviors
Sharing with Others
Bottom Line
JFL Gags Cracks Up YouTube

26. User-Generated Content: Lines in the Sand
Content Upload Success
Bottom Line
Time on Site Per Day
Bottom Line
Reddit Part 1—From Links to a Community
Engagement Funnel Changes
Bottom Line
Reddit Part 2—There’s Gold in Those Users
Spam and Bad Content
Bottom Line

27. Two-Sided Marketplaces: Lines in the Sand
Transaction Size
Bottom Line
What Etsy Watches
Top 10 Lists
Bottom Line
28. What to Do When You Don’t Have a Baseline

IV. Putting Lean Analytics to Work
29. Selling into Enterprise Markets
Why Are Enterprise Customers Different?
Big Ticket, High Touch
Formality
Legacy Products
Incumbents
Slower Cycle Time
Rationality (and Lack of Imagination)
The Enterprise Startup Lifecycle
Inspiration
Empathy: Consulting and Segmentation
How Coradiant Found a Market
Stickiness: Standardization and Integration
Virality: Word of Mouth, Referrals, and References
Revenue: Direct Sales and Support
Scale: Channel Sales, Efficiencies, and Ecosystems
So What Metrics Matter?
Ease of Customer Engagement and Feedback
Pipeline for Initial Releases, Betas, and Proof-of-Concept Trials
Stickiness and Usability
Integration Costs
User Engagement
Disentanglement
Support Costs
User Groups and Feedback
Pitch Success
Barriers to Exit
The Bottom Line: Startups Are Startups

30. Lean from Within: Intrapreneurs
Span of Control and the Railroads
Skunk Works for Intrapreneurs
Changing—or Innovating to Resist Change?
Stars, Dogs, Cows, and Question Marks
Swiffer Gives Up on Chemistry
Doritos Chooses a Flavor
Working with an Executive Sponsor
EMI Embraces Data to Understand Its Customers
The Stages of Intrapreneur Lean Analytics
Beforehand: Get Buy-in
Empathy: Find Problems, Don’t Test Demand
Skip the Business Case, Do the Analytics
Stickiness: Know Your Real Minimum
Viral from the Start
Revenue Within the Ecosystem
Scale and the Handoff
31. Conclusion: Beyond Startups

How to Instill a Culture of Data in Your Company
Start Small, Pick One Thing, and Show Value
Make Sure Goals Are Clearly Understood
Get Executive Buy-in
Make Things Simple to Digest
Ensure Transparency
Don’t Eliminate Your Gut
Ask Good Questions

A. References and Further Reading
B. About the Authors
C. The Lean Series

Index
About the Authors
Copyright