Lean Analytics Book Summary

Each startup has a mission to search for a good business model that’s both scalable and repeatable. Eric Ries wrote Lean Startup, a book that came before Lean Analytics. It’s about efficient product and business development as a framework, or to be more clear, about:

  • Customer Development,
  • Agile Software Development methodologies, and
  • Lean Manufacturing practices.

Startups were the target of this process, but it’s become so popular that companies of all sizes use it for improvement. What makes it so popular is that it isn’t about being small or cheap, but making quick and efficient changes without leaving waste. That makes Lean Startup great for any company out there, big or small.

The core concepts of Lean Startup are:

  • Build
  • Measure
  • Learn

KickAssGrowth Build Measure Learn

With Lean Startup, you can create and work on a fully established vision by developing marketing strategies, and Lean Analytics is what takes it to the next level. Lean Analytics focuses on measuring. For any organization following this concept, it’s important to go through the cycle as quickly as possible, because it leads to quick results.

Logic follows, so if your product scales faster and better, it has a high chance of being a success. But don’t think of this cycle as a simple way of improving your product; it’s much more than that.Innovation Accounting is what gets the minimum product together, thus providing an actual measure of how well you’re doing.

Lean Analytics is what quantifies your innovation and gets you one giant step closer to your goals. Being viral requires focus.

Let’s take a look at how several companies hacked their way to the top:

Airbnb

leananalyticsimg2

 

At the beginning, Airbnb’s main focus was on their photo quality. Their team had an idea that high quality pictures would make an impact on the number of rentals per month. They hired 20 professional photographers to take pictures of all hotels and apartments Airbnb offered, thus putting the Concierge MVP* concept to the test. That required little to no effort, yet it gave Airbnb outstanding results.

Once their experiment showed good results, Airbnb made it live for all visitors. Their photographers were available to anyone, and within a year, Airbnb went up to 10 million nights booked.

Lean Analytics – Lesson Learned:

Most of the times, you cannot expect what your main source of growth will be. Once you found your test idea, make sure to invest as little money and time as possible. Make a firm definition of what your success story should be before testing. If your idea is the right one, plan on what you’re going to do with it.

* A Concierge MVP is a Minimum Viable Product that creates value you promised to your audience. It doesn’t necessarily scale, but for the short term, it’s easy to create. Why “concierge”? Because when creating a startup, you’re the main man in engaging your first batch of customers-most often in person.

 

Circle of Moms

leananalyticsimg3

When Facebook’s API allowed web devs to integrate their own apps, Circle of Friends was founded as an independent social graph app, but with a huge issue. It was hitting the wrong market, even though it opened at the right time.

A simple, yet effective analysis of each user’s engagement / behavior was what led to a good solution. As soon as they found their target, Circle of Friends changed its name and purpose to Circle of Moms. It was a huge risk, but one that brought significant changes. Be prepared to burn some bridges.

Lean Analytics – Lesson Learned:

Circle of Moms was willing to dig deep into their data and find patterns that meant the most. Their leader, Mike, stumbled upon an “unknown area” that led to a complete makeover—one that focused on a more specific niche. What’s important is that it was focused on data itself. Although Circle of Moms faced retention issues, it’s always better to have an easily searchable, but small target audience you can work on.

 

SEOmoz

leananalyticsimg4

Ever since its inception, SEOmoz has been all about metrics, but that does not necessarily mean it has to swim in data. Back in 2012, SEOmoz relied on so many KPIs that it was counterproductive. One of their investors suggested to rely on one metric only, and make it more valuable than all others: Net Adds.

This KPI was the best option for SEOmoz, because it’s nearly impossible to improve on various KPIs at the same time.

Lean Analytics – Lesson Learned:

Tracking many metrics can often be a great thing, but you lose focus quickly. A good solution is picking as few KPIs as possible, because that’s the best way to organize your team.

 

Clearfit

leananalyticsimg5

In its early stages, Clearfit focused on revenue based on subscriptions. Their own customers misinterpreted it, as they thought low price tags were a weak offer.

Then a paid listing model was introduced, which increased sales by ~300%, thus making the revenue ten times greater. This means the problem was in the pricing itself, rather than the business model.

Lean Analytics – Lesson Learned:

If you consider SaaS a recurring service, then it doesn’t have to be priced like one. Your job posting platform should offer more transactional price tags, because, as the book says, “pricing is a tricky beast”. Obtain customer feedback whenever you can, because for Clearfit, a low price does not always mean something valuable is up for grabs.

 

Lean Analytics: What Makes a Good Metric?

Drawing business formulas: chart

First of all, let’s define what a good metric is:

A good metric is something comparative and understandable. A metric is basically a ratio or rate, and it aims to change how you behave.

Prior to choosing the right metric, here’s what you have to know:

  • Qualitative metrics are not structured and most of the times very hard to aggregate. Quantitative metrics are those that involve numbers and statistics. They give you the numbers you need, without any concrete insight.
  • Vanity metrics don’t impact on the way you act. The ones that change your behavior are actionable metrics. Their mission is to help you pick a course of action.
  • Leading metrics give you an insight into the near future, whereas lagging metrics give more info on the past. The ones that are better here are leading metrics, because you can still make impact on them.
  • Finally, if two metrics change in parallel, they are correlated, causal otherwise.

Also, use the One Metric That Matters. Why? Because:

  • It answers the most important question you have.
  • It forces you to draw a line in the sand and have clear goals.
  • It focuses the entire company.
  • It inspires the art of experimenting.

 

Conclusion

businessman leaning against a concrete wall with color city concept

Make Things Simple to Digest

A good metric can be interpreted with ease. There’s absolutely no need to provide an abundance of unnecessary numbers. This frustrates people, and to make things worse, it can mislead them. Once they’re looking at the wrong numbers, you know something’s not right. Metrics are often very valuable, but when not used right, they lead in the wrong direction.

Don’t forget the One Metric That Matters. Use it to ease people into your analytics.

Ask good questions

Startup or not, it’s mandatory to know your market. Each click, subscription, like, share, or purchase counts from the moment they hear or read about you all the way to them ditching your services for good. You can start making changes when and if you have data on your consumers. For you, that data is an exclusive insight into their needs and lifestyles. Times changed from a leader telling others there’s no use in consumer data to having so much valuable data up for grabs. The change tells us to focus on the most important metrics only. A disciplined approach helps identify and overcome all risks. Nowadays, leaders only have questions they can ask their consumers, so go ahead and ask good questions!

 

For the full, 400+ page version of Lean Analytics, click here to purchase it and crush your competition!

Facebook Inception More Precise Facebook (Re)Targeting

The inspiration for this technique comes from the movie Inception. This technique is a part of a deeper marketing philosophy where you use ads in a more complex way. Basically, what you do is build a more concrete audience inside an existing audience you thought you couldn’t segment more. Can you see the connection with the ‘dream within a dream’ movie reference?

For every Facebook marketer, this is reality inside reality, and a possibility to achieve killer ad results. By the time our KickAssGrowth team got around to creating this blog post, this technique had already found its place and become known as Inception. There was no disagreement on it. As movie buffs, we decided to use Christopher Nolan’s movie as the inspiration for the name. Those of you who watched the movie know that we had a good reason for doing that.  

Prepare yourself to go deeper and  think much bigger as we delve into the secrets of the Facebook Inception technique. Learn all the rules of the dream world of Facebook CA (Custom Audiences) and adopt this elegant and thought-provoking solution for an audience-in-an-audience trick.

inception-facebook-technique

What will you get here?

The Facebook Inception Technique is a technique we, the KickAssGrowth team, developed and adopted to deliver great results for our clients. We used this technique in order to reduce CAC and increase CTR. This article will show you how to implement this technique into your FB campaigns, reduce CAC and increase CTR. If you have any questions, feel free to reach out to us.

The lives of many Community Managers and Ad Specialists have been saved since Facebook implemented Pixel Retargeting. It helped them reduce CPC (cost per click) and CPA (cost per acquisition) much quicker. However, people still struggle with structuring Facebook Campaigns that will target the most converting audience. That’s why we want to share the most effective strategy we implemented. Thanks to this strategy, our clients have words of praise for our team: ‘Guys, you’re geniuses!’, ‘I don’t know what you are doing, but we’re very satisfied with the results.’, ‘You guys kick ass!’.

This Facebook Ads Technique is named Facebook Inception (kudos to our awesome Social Media team leader for being the godfather) because there are many campaigns inside campaigns inside campaigns… inside campaigns…

The first thing you’ll need to implement is Facebook Pixel. Standard Facebook Pixel has standard event codes for different AARRR funnel steps:

– View Content
– Search
– Add to cart
– Add to wishlist
– Initiate checkout
– Add payment info
– Make purchase
– Lead
– Complete Registration

Facebook Pixel

*you can check the Facebook Pixel Implementation Guide here
**and you can learn more about the AARRR funnel here

It really depends on what type of a product you have, but standard Facebook Pixel events cover most of the steps one e-commerce site has. If, for example, you’re a social network, then you will probably need just a few events such as View Content and Complete Registration. We suggest you cover most of the events in order to get more detailed tracking. After you prioritize which part of the funnel you want to track, you should paste the Facebook Pixel script into your website (a little bit technical, but it’s very easy).

The next step is to create Custom Audience in Facebook Ads Manager or, like we did, – in AdEspresso (a very popular tool for running Facebook Campaigns and tracking Facebook ads analytics and data).

The Facebook Inception Technique has 4 steps for optimizing your ads to get the most converting audience:

  1. Custom Audience (Re)Targeting
  2. Lookalike Audience based on Interests or Job Titles
  3. Lookalike Audience
  4. Interest Data

1. Custom Audience (re)Targeting (Current Users Vs. Email List)

How to Create Custom Audience (AdEspresso): Go to Tools → Custom Audiences → Create Custom Audience → Data File Custom Audience or Custom Audience From Your Website

Facebook Targeting Options

Facebook Custom Audiences

 

Custom Audience Data

There are two main types of Custom Audiences:

  • Your Current Website Visitors/Users
  • Potential Users from Email Lists

The visitors who didn’t convert in the past ( buy, subscribe or give you an email address ) have the most potential to convert in the future. They have already shown an interest in your product/service and are planning to buy it. So, when you’re targeting these audiences, you can expect very low CPC and CPA.

If you are looking for potential new users and already have an email list, or you have bought one,  you should create your Custom Audience from that email list. Not only will you achieve low CPC and CPA (if you have the right list), but you will also find an audience that converts well.

2. Lookalike Audience based on Interests or Job Titles

How to Create Lookalike Audience (AdEspresso): Go to Tools → Custom Audiences → Create Custom Audience → Lookalike Audience from Conversion Pixel

Facebook Lookalike Audience

Lookalike Audience (LAL) based on Interests or Job Titles (depends on personas) is the second most converting audience, because we target those users who are the most similar to people that we get from Custom Audience. We suggest that you create LAL audiences 1%, 2%, 3%, 4% and 5% (similarity optimized) in order to test the most converting ones. Look at this as some kind of A/B testing for the most converting audience. When you create these audiences, you should specify the audiences by using interests and job titles based on your personas (useful personas template).

3. Lookalike Audience

This is similar to the aforementioned LAL audience based on Interests or Job Titles, just without the interests and job titles. This is useful if you’re targeting a B2C audience for e-commerce shops, and because LAL audience based on Interests or Job Titles is small and narrow. However, for some products, it can be better to target LAL audience without interests, job titles or any specification. You might be skeptical about this, but this audience will convert far better than the one where you just targeted random people based on Interest data.

4. Interest Data

We create campaigns based on the personas we have and their interests, job titles and other detailed specifications Facebook provides. To get the most converting audience from these campaigns, it’s very important to have very detailed information about your personas. It’s best if you can create personas from your existing data, but if you’re just launching your product, then focus on Customer research and Competitors’ audiences. Also, when you target audiences based on the Interest Data only, and assuming you have already tried to target Custom Audiences and LAL Audiences, make sure you exclude Custom and LAL audiences, because there is a possibility you will target the same Facebook users you have already targeted with those campaigns.

Exclude Facebook Custom Audience

Ad Creatives

At KickAssGrowth, we have a starting point for Ad Creatives where we test 3 different images vs. 3 different Ad texts vs. 3 different headlines (3 X 3 X 3= 27 different ad sets).

Usually we A/B test:

– Product Images VS. People Images
– Long VS. Short text
– Direct VS. Indirect Call to Action in Headlines
– Symbols VS. No Symbols in Ad Texts

Because of these A/B tests, we know exactly what types of campaigns convert in which country after a few weeks of testing. For example, we tested a cartoonized image of Joey from Friends in the UK and Sweden. CTR in the United Kingdom was more than 5%, but Sweden was very bad, so we had to turn off the ‘Joey’ ad set in that country.

Optimizing Results

AdEspresso shows the most relevant data for all the campaigns and ads you are running. In order to compare your results, you can use AdEspresso’s standard Ad comparing feature that gives you a quick insight into which metrics are good and which are bad (you can data pause bad metrics directly from that feature). We compare Ads data from ‘All Ads’, where we can compare more and quickly optimize our campaigns for the most converting images, texts, ad sets or placement (depending on what you choose to track when you’re at the final step before starting your campaign). We always make sure we have enough data (enough impressions and clicks) before we pause the campaign and optimize it for the best results. It really depends on the campaign, but it often takes around 5 days until we have some relevant data for optimization.

Quick Facebook Ads Data Tips

  • In AdEspresso, you can split campaign tracking and see the best results by different categories (Interests data, Gender, Placement, Device etc.)
  • Always check your frequency stats. It’s very important to keep the frequency below 5, otherwise your ads will be shown too often and your clicks will be more expensive
  • Test different visuals, texts and headlines in order to find the most converting one. We always create 27 different ads in AdEspresso (3 texts X 3 images X 3 headlines)
  • Track your best periods and create Dayparting if you see huge differences in conversion and click time
  • Compare Ads data – some important differences can surprise you
  • Track and document your changes and learnings from Facebook campaigns

inception-facebook-technique-2

Don’t forget, this blog post does not represent a dream within a dream. This is just an online version of our team’s real-life brainstorm.

What do you think, is Inception a fitting name?
Is it all just a dream? Is the top still spinning for you? 🙂

Please leave us your thoughts in the comment section below.

 

Square Growth Case Study

Square helps small and medium businesses accept credit cards, manage sale systems and offers for SMBs so that they can grow more quickly. Square was initially a credit card reader for the iPad, iPhone and Android smart phones and tablets, and as such was the easiest way for businesses to accept credit card payments. Square now operates in the United States, Canada, and Japan.

Before Square started delivering this phenomenal service, card payments were an expensive and difficult process for merchants. Namely, merchants had to set minimum purchase limits and their commissions were too low.

Jim McKelvey wanted to sell his piece of glass at an art fair, but he couldn’t accept credit cards. He decided to solve the problem, but he needed a great partner. Jim found the best possible co-founder and partner – Jack Dorsey, the co-founder of Twitter. Dorsey loved the solution Jim was trying to implement, so he used his influence and sent a list named “140 Reasons Why Square Will Fail” to investors and early customers. If you’re not familiar with this list, make sure you Google it. Every time he came in front of the investors, he was prepared and had an explanation for every single thing on the list. This approach received huge attention from the tech press.

That was only the beginning of their growth hacking strategy. After installing the first hardware and software solutions for their clients, Square implemented excellent customer loyalty and satisfaction features which made small businesses (restaurants, cafés, etc. ) more intelligent and reduced their marketing expenses. They did it by optimizing their software utilizing the feedback they received from their customers and by analyzing how their clients used the product.

Their growth team could have stopped there, but they brainstormed and worked hard to make an eye-catching design. This tactic led their customers to ask the question “What is this thing?”. We saw a great consumer psychology technique here, since it is clear that consumers like to experience new things and be surprised.

In addition, their amazing Growth strategy help them sell their devices in Apple stores for only $10. They got a large number of downloads in combination with the iOS application. This strategy resulted in a strategic investment from Visa which gave them an unbelievable boost.

All of these elements helped Square cross-sell their service and reduce their retention rate. Their Customer Acquisition strategy of bringing big clients on board is an excellent example of how you can dominate the market quickly.

In January 2014, Square scored a $5 billion valuation, and they didn’t get there by accident. Growth hacking tactics like these illustrate how successful founders should think and use customer journeys to acquire new clients.

Warby Parker Growth Case Study

Warby Parker is a famous eyewear provider. designed by their team. Their mission is to change the eye wear industry and prove that having modern and quality eyeglasses isn’t a luxury.

Warby was founded in 2010, and since then it has built a strong brand with a phenomenal customer satisfaction program. Moreover, Warby Parker has a few stores across the US and they are the best-reviewed stores on Yelp. These reviews and ratings give them social proof, strong SEO and convert people who want to buy online.
In the beginning they had the Home-Try-On program that allowed customers to try five frames at home for free. This strategy is an excellent customer acquisition strategy that isn’t scalable but acquires customers very quickly.
After they sell the first pair of glasses, they also pay for the production of another pair for individuals in need. This buy-a-pair, give-a-pair program has got great press coverage and Warby has distributed half a million pairs with this strategy.
The real growth engines at Warby Parker are social media channels. They convert more than 50% customers through viral and extremely catchy social media content. They engage Tumblr and Pinterest followers and share their photos on Facebook and Twitter.
Warby Parker’s emails are unique and engage users with silly videos, funny comments and phrases. On average, an email from Warby Parker is shared up to 80 times. They know how important video is for mobile users, so all videos are optimized for mobile sharing.
Warby Parker has raised $215.5 million so far and is worth $1.2 billion. This is an example of how to implement great growth strategies and achieve ‘unicorn’ status in the first five years.

Udemy Growth Case Study

Udemy is a platform for certified and non-certified courses for self-improvement in different fields. Udemy was founded in 2010 and now has more than 16,000 courses. Every user can pay for courses and also create a course and earn money through the platform. From May 2014 to May 2015, Udemy had a 300% growth rate and raised $48 million in funding.

In the beginning Udemy had trouble creating content quickly (a classic egg-chicken problem), but they used a strategy similar to the one Quora had already implemented. They took the courses from the OpenCourseWare because their materials were free to use online. Udemy could say that their first 100 courses had come from prestigious universities like Stanford, Yale and MIT. This was a great way to get the attention from tech press like Mashable and TechCrunch. After their press coverage, Udemy got approximately 10,000 users.

They raised their first founding round of $1 million, and this amount of money was enough to get professional instructors and academics on board. However, Udemy didn’t have anything catchy until they decided to film meetings with their investors. The course named “Raising Capital for Startups” was released in different formats, and each format brought between $30,000 and $50,000 to Udemy. The platform got real traction and showed their investors its potential.

Instructors started earning more money than they used to, and in May 2013 Udemy reported that top 10 instructors had earned more than $1.6 million by selling their courses. Although Udemy is very successful now, they had to face many challenges, and building a highly scalable online-learning platform was the biggest one for sure. A combination of site optimization, A/B testing and different referral programs helped them find the best growth strategies.

These strategies got them a high level of customer satisfaction and a word of mouth that increased their LTV. Udemy is just one great example of how you can stand out from the crowd even if you have very strong competitors.