The Sacred, The Profane, and the Pivot

Transcription

1 The Sacred, The Profane, and the Pivot A Brief Case Study of Applied CDM, AARRR Metrics, and Lean Principles

2 Definitions Sacred - Steve Blank s Customer Development Model (CDM). I follow it religiously. Profane - Dave McClure swears every third word. Oh, and his Acquisition, Activation, Retention, Referral, Revenue (AARRR) model is awesome. Pivot Eric Reis s concept of strategic shifts predicated on learnings. (Sorry, no pithy witticism for this.)

3 CDM Approach A) Establish Hypotheses Test -> (Iterate or Exit) B) Sell Test -> (Iterate or Exit)

4 CDM (Discovery - Phase A) Category Hypothesis Product State what you are selling. Problem State the customer problem you are solving. Channel State how you are going to sell your product. Demand State how you are going to generate demand for your product. Market Type State the market type (existing, re-segmented, new) you re in. Competitive State the competition you face.

5 CDM (Validation - Phase B) I could explain in detail, but basically boils down to: prove you can sell by actually selling before you scale.

6 AARRR Model (AKA, Metrics for Pirates) Metric Description Acquisition Users visit Activation Users sign up Retention Users come back Referral Users like and refer Revenue User pay something for something

7 AARRR Model (cont.) The Model measures: Conversion rates for each step Expected value at each step (not included in this study.) A one-slide pitch deck. Have these numbers, and you need nothing else.

8 Slight Differences The CDM has you look at and test the whole business model. The AARRR assumes the model rolls up in the customer metrics.

9 How They Complement The CDM teaches you to test assumptions, but isn t as specific on how to measure results. The AARRR gives metrics to know what s good, but not how to correct what s broken.

10 Case: Votizen Social Network for Registered Voters Civic Participation Made Simple and Meaningful Voter-Focused (as opposed to politicianfocused) approach to $5B Political Market. Independent, non-partisan, simple and fun!

11 CDM (Brief) Category Hypothesis Product Social Network for Registered Voters ( LinkedIn for Politics ) Problem Traditional campaign techniques #fail in a web 2.0 world. Channel The internet is the primary source of voter information. Demand Social networks are both the product and the demand-generator. Market Type Resegmented; displace current market for direct-mail & robocalls. Competitive Hyper-fragmented.

12 AARRR (Brief) Metric Description Acquisition Creates account on system. (Precursor-requirement) Activation Certifies voting record (Authenticates - gives voter the power) Referrals Forwards to friends (Acquisition model) Retention Uses system to affect change (Validates lifetime value) Revenue Private! (Sorry, not appropriate for a public document.)

13 Applied Started with MVP - Minimum Viable Product. Just enough to get feedback (cost: $1206) Metric MVP Acquisition 5% Activation 17% Referrals - Retention - Revenue -

14 Applied Gained customer feedback on MVP and launched V1. Significant, immediate jump in initial metrics. (Spend ~$10K) Metric MVP V.1 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - -

15 Then Hit the Wall No improvement on retention No improvement on referrals Time for a pivot!

16 The Pivot Eric Reis concept: shift direction while grounded in learning I took learning and created new product. So, $10K sunk cost -- buh-bye! Needed to fire current developers, hire new ones.

17 The Pivot (cont.) Time, money and effort to learn. Not a waste! Learned from the customer experience and what they wanted. I always wanted to get more involved. This makes it so much easier. Thanks!

18 Applied New product launched as MVP on Twitter Contact all public officials at a single address. Forward results to officials offline Results? Much better R&R, and better conversion. Metric MVP V.1 New Product Acquisition 5% 17% 42% Activation 17% 90% 83% Referrals - 4% 54% Retention - 5% 21% Revenue - - -

19 Applied Next step: test revenue assumptions Provide a channel for voters to support causes and candidates in which they believe. Currently in interview discovery - no data yet Metric MVP V.1 New Product Next Iteration Acquisition 5% 17% 42%? Activation 17% 90% 83%? Referrals - 4% 54%? Retention - 5% 21%? Revenue - - -?

20 Takeaways The AARRR approach serves as a great startup dashboard. Numbers don t lie (as long as you don t lie to yourself.) When you re only making incremental gains on these metrics, iterate and re-work hypothesis (CDM) to get the quantum leap you need. Should you need to iterate, then pivot -- don t flail. Measure success by lessons learned, not by the results themselves.

21 Feedback Wanted! Would love feedback! Want to get better, so criticism is preferred. If you don t have anything bad to say, then don t say anything. dbinetti@gmail.com