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Web 2.0 Expo – Startup Marketing Web Metrics

Posted on Apr 23rd, 2008
Written by Lee Odden
In this article

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    The second workshop of the day at Web 2.o Expo, “Startup Metrics 101: Product & Marketing Workshop” provided attendees a glimpse into the vast depth of knowledge from Dave McClure of 500 Hats who offered some pirate speak, “AARRR” to help delegates remember his model for building web businesses.

    Hiten Shah of CrazyEgg and KISSmetrics provided practical examples and Vanessa Fox of Ignition Partners and Nine By Blue offered a combination of SEO centric tips, analytics and examples.

    First up was the Web 2.0 Pirate, Dave McClure with his “AARRR” model:

    • Acquisition – Where users come to your site from the web
    • Activation – First positive experience
    • Retention – Keep them coming back
    • Referral – Refer others to the site
    • Revenue – Users conduct some kind of monetization behavior

    Startups need to decide what their business model is going to be. For many startups, the key is to focus on:

    Getting users – Acquisition, referral
    Driving usage – Activation, retention
    Making money – Especially profitable revenue

    To help attendees understand these focus areas, McClure asks questions of key roles within startups starting with the CEO.

    Role: Founder/CEO

    Which metrics and why?
    Focus on critical few actionable metrics. Ultra important to your business, and few (3-5) and they are the kinds of metrics you are taking action on. If you’re not taking action on the metrics you’re tracking, it doesn’t make a difference to your business.

    How can you get to more actionable decisions and metrics?
    Hypothesize customer lifecycle – high value to the users and also high value to you.

    Target those three to five steps, test and measure. Consistently refine. Measure against key metrics and measure success.

    Have different people in your organization manage the different metrics and the CEO can serve as a tie breaker

    Role: Product/Engineering

    What to build and why?
    Build features that increase conversion

    Wireframes = conversion steps
    Measure, A/B test, iterate fast – daily/weekly
    Optimize for conversion improvement – 80% on existing feature optimization and 20% on new feature development

    Conversions drive feature set development. Measure success on feature development depending on how well they contribute to conversion.

    Role: Marketing / Sales

    What channels, which users and why?
    High volume, low cost, high conversion

    Design and test multiple marketing channels + campaigns then pick the best performers. Common channels include: blogs, SEO/SEM, landing pages, automated emails. Find out which channels are driving high volume, low cost, high conversion rate customers.

    Next up is Hiten Shah who will talk about the various types of online marketing channels.


    Five of the most popular and productive online marketing channels:

    1. SEO and SEM. Do your keyword research. Find out how users are converting on the site via SEM and leverage that knowledge for your SEO. You can use search marketing to drive traffic and conversions before the product is developed.
    2. Blogs – Focus on industry specific blogs.
    3. Email – Capture emails as a microconversions
    4. Social media and social networks – Creating pages on Facebook/MySpace, social news promotion for exposure and traffic
    5. Domains – Create different microsites or register domains anticipating type in traffic.

    Keyword Vocabulary ( at TopRank we call this a Keyword Glossary)

    McClure stresses the importance of keyword research and application early on, during product development, naming and as a way to understand consumer demand.

    What to research when developing a keyword vocabulary:

    • Top 10 -100 words
    • Brands, products
    • Customer needs benefits
    • Competitors
    • Semantic equivalents. derivatives
    • Misspellings

    Things to analyze: sources, volume, cost and conversion

    Where are users coming from?
    Key metrics for a PPC campaign: quantity, cost and conversions. How are the campaigns and various keywords converting. Setup a good conversion funnel and track signups to see how keywords are performing.

    Acquisition Tools:

    • Google Analytics
    • Google Keyword Tool
    • SEO Book keyword tool

    Acquisition Resources:

    • Social Media Manual (SEL)
    • Andrew Chen article on how to ruthlessly acquire users


    Understanding acquisition sources and how they convert on home pages and landing pages is critical. Lots of A/B testing and landing page testing. Make iterations fast so you can learn what to change faster.

    What do users do on their first visit?

    Types of activation conversions:

    • Click on something
    • Account sign uip, prov ide email address
    • Referrals and tell a friend
    • Widgets and embeds elsewhere
    • Low bounce rate

    The text for conversions need to be user centric – what’s in it for them?

    Activation Tips:

    • Less is more. Don’t throw up everything to see what sticks. Pick 5 things you want to test for with 5 different landing pages or home pages. There might also be multiple versions of each home page and landing page variant. Look at the results of each to find out what works best.
    • Focus on the user experience
    • Provide incentives and call to actions
    • Test and interate continuously

    If you have to test things individually, be sure to test them quickly.

    Hiten gives an example using CrazyEgg heatmap tool. Conversions increased by users spending more time on the site – which happened as a result of making tests and edits to the site.

    Launch early with a small user base. Be slower to launch with big splash and PR. Until you know for sure that your product doesn’t suck, it’s better not to throw tons of marketing budget. Get in front of a small universe of users early. Use search marketing to attract users and test refine test refine.

    Once you have solid data and testing, soft launch and when you know your web site and product works then put signifcant marketing dollars towards promotion.

    Activation Tools:

    Activation Resources:

    Emails and alerts, blogs, RSS, system events and time based events.

    • Automated emails are simple and easy retention, but don’t overdo it.
    • Lifecycle emails @ +3 +7 +30
    • Status emails – weekly or monthly
    • Event emails as they occur BUT make it easy to unsubscribe

    What compelling words and calls to action that drive users to your site? Spend 80% of your time on the subject of your email and 20% on the body text.

    How do users come back?

    • Automated emails
    • RSS – news feeds
    • Widgets and embeds – example YouTube and Slideshare

    Example goals: Users visit once per month or once per week means you have a relationship with that customer.

    • Open rate of 20% and a 2% CTR (a bit high)
    • High deliverability and low spam rating
    • Long customer life cycle and low decay
    • Identify cheerleaders for your site and tap them as testers and evangelists

    Test, test, test email subject lines and don’t confuse customers with content in the body text. Find out what subject line text drives user behavior.

    Key metrics to track? Source, quantity, conversion, loyalty (return visits) and session length.

    Retention Tools:

    Retention Resources:


    Focus on driving referrals “after” users have a positive experience. 8-10 users are happy with activation experience before you initiate any viral campaigns.

    How do users refer others?

    • Send to friend email IM
    • Social media
    • Widgets
    • Affiliates

    Referral Visual Growth Factor

    Viral Growth Factor = X * Y * Z

    • X is percent of users who invite others
    • Y is the average number of peole that they invite
    • Z is the percent of users who accepted an invitation

    A viral growth factor >1 means an exponential organic user acquisition. Caution is that you might not want to focus on this if your user experience isn’t great yet.

    Referral Tools:

    Referral Resources:


    What do you have to offer that’s worth charging money?

    Revenue Tips:

    • Don’t rely on AdSense
    • Start Free > Go Freemium. Get a free model to one where a small percentage pays a premium.
    • Subscription / Recurring transactions
    • Qualify your customers – Lead gen (arbitrage)
    • Sell something! physical or virtual

    One interesting concept from McClure: Unsubscribe is more of a hassel than paying. Not such an appealing goal but gives you a sense that if you can’t capture a small % of all the leisure spending that happens, then you may have a problem with your offer or your model.

    Now we get to hear from Vanessa Fox, Founder of Nine By Blue with a presentation on, “Search metrics for startups”. Afterwards, Fox explained the reason to start Nine By Blue but I’m still not sure what it means or if there is a story behind that specific name. Maybe she has nine cats and blue is her favorite color?

    30% of all sites on the web get their traffic from search. If your site isn’t getting at least that much natural search traffic, you have an opportunity. One of the biggest reasons search engines don’t send a site traffic is that the content is not “discoverable”. If search engines can’t find a site’s content, it basically doesn’t exist.

    Fox gives an example of Arbor Snowboards and Vans that don’t offer text content. The sites are basically invisible to search engines. As a resource, Google WebmasterCentral can be used to see if a site is having search engine accessibility issues.

    Search Discoverability: Can searchers find your site?

    • Fox gives an example of a search on “superbowl” and the Superbowl site doesn’t show on the first page.
    • Gives another example of Vans with a search for “skate shoes” which has the Vans site showing on page 122 in Google.

    Search Conversion: Do searchers click on your result and stay on your site?

    • Fox gives example of Dania, a home furnishings retailer where “Dania” is the title tag on all pages of the web site. That makes it difficult for users and search engines to quickly distinguish pages.
    • She also shows the site again and that it is invisible on a smart phone browser

    Measuring search:

    • Google Website optimizer
    • Webmaster Central
    • Google Analytics

    Accessibility Measurement:

    • Who well is the site being indexed?
    • Are site errors decreasing?

    Search Conversion Measurement: Bounce rate, average time on site, pages per visit

    Key questions:

    • What content are external sites linking to the most?
    • What is the conversion rate of key terms?
    • What queries do you rankin highly on but aren’t getting clicks?

    Fox gives an example of her own blog, getting a spike in traffic. But was it the right traffic? The reality was, people were looking for “vanessa” and “vanessa nude” because of nude pictures of an actor named Vanessa from High School Musical that leaked online.

    After this there were site reviews of 10 or more startup websites (except for HP Small Medium Business).