Lean Analytics Framework

Start @ 15min

Eric Ries - The Lean Startup

Any sustainable company grows based on the actions of its customers

If a company is growing based on your actions, that's not sustainable.

The three engines of growth!

1. Stickiness Engine - Keep people coming back
   • If you have customers, and they keep coming back - you will make money.
   • Can you get customers faster than you lose them?
2. Virality Engine - Can I get people to invite their friends
   • If people invite their friends, I will grow.
   • How many will tell their friends and how fast or how quickly they do it. Cycle time is important to measure.
3. Price Engine - I am going to spend money to get some customers.
   • How much money are my customers bringing in.
   • How much can I spend to acquire them - Is it costing me less to acquire a customer, then I get from that customer?

Dave McClure - Accelerator 500 Startups... Super Angel Investor.
http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version

Pirate Metrics (AARRR) - Customer Life Cycle

1. Acquisition
   1. How do your users become aware of you?
2. Activation
   1. Can you get them to engage?
3. Retention
   1. How do I get them to keep coming back?
4. Revenue
   1. Can I extract money?
5. Referral
   1. Do users go and promote your product.

Growth Hacking - How do I increase ALL of these things.
Using a combination of Humans & Machines to scale ably increase one of these.

The Order of how things happen is important

1. Empathy (Understanding your customers need)
   • I've found a real poorly met need that a reachable market faces.
     Eg: Excellent Customer Development Example @18:30
     • Explain your product get feedback
     • End conversation - ask if they know someone who might find this useful
     • If they say NO -> it's a bad sign! they don't feel proud or smart enough.
       If they say YES - (put them on spot) ---> Ask if they can CALL them.
       If unwilling to call them - you are not proud of the idea, doesn't make you feel smart...maybe you wouldn't share even if you liked it
       If they call them - ask them to explain it to that person, now see if they tell your message to someone else.
       When they are done - Ask them if you can talk to them.
       • Customer Development is NOT soft and how they feel etc - If you end each interview with this, its easily measurable
         YOU DON'T NEED TO WRITE A LINE OF CODE TO TEST THIS IDEA
         Problem is not that you can build stuff...nobody cares.
         • % of People could name a friend
         • % willing to call the friend
         • % who picked up the phone
         • % willing to let you talk to them
         • % willing to meet. 
2. Stickiness - Can I get people coming back
   • I've figured out how to solve the problem in way they will keep using and pay for.
   • Need to know what an engaged users looks like
3. Virality - Getting them to tell their friends
   • I've found ways to get them to tell their friends, either intrinsically or through incentives.
   • No point in virality, if you don't have stickiness.
4. Revenue - take money and use it to acquire more new customers.
   • The users and features fuel growth organically and artificially.
   • Virality before revenue - because when you have virality, your cost of acquisition is cheaper
5. Scale - growing revenue or users in a non-linear way 
   • I've found a sustainable, scalable business with the right margins an a healthy ecosystem.

eg: SaaS user acquisition cost.
Avg user sticks around for say 2 years
6 months of revenue to pay the cost of acquisition --> then I am loaning every user money for six months  >> its a cash flow problem or working capital issue,
but your model works.

Question: Prepay --- its good, but you as business don't know when they abandon you (12 months later)...to minimize a load of customers falling off at the end of the year.
You want to implement "would you like to cancel" model to get feedback sooner and solve issue.
---The above applies if you are in the stickiness phase (you don't know what product you are building, still testing and improving)
If you are at Revenue & Scale - you won't be asking if user wants to cancel, you probably have other metrics to measure.