• If you like to do something and can be paid to do it, but aren’t very good at it, learn to do it well. When measuring engagement, don’t just look at a coarse metric like visit frequency. “Quantitative data abhors emotion; qualitative data marinates in it.”. And ideally, the people you’re speaking to are begging you for the solution. Here at SAS, we believe everybody should have the chance to learn data analytics while studying, and in this article we'll look at five reasons why. Key Benefits “It’s easy to find people that want to make money; it’s much harder to find people that want to spend money.”. A good metric is understandable. “If you find a causal relationship between something you want and something you can control, then you can change the future.”, Key performance indicators (KPIs) => specific metrics that drive the business, “Much of Lean Analytics is about finding a meaningful metric, then running experiments to improve it until that metric is good enough for you to move to the next problem or the next stage of your business.”. As you build and test your product, you’ll iterate constantly. Some applications simply aren’t meant to be used on a daily basis. Define an active user. Leading metrics are better because you still have time to act on them—the horse hasn’t left the barn yet. By ignoring growth from virality (for now), you can simplify how you decide what to build next into your MVP. Was the interviewee engaged and focused throughout the interview? Is that good or bad? Consider a project management startup that lets users try its product, but charges for more than three concurrent projects. Don’t fall victim to customer counting. But most of the time, experiments end up right in the big fat middle. Your goal is to prove that you’ve solved a problem in a way that keeps people coming back. Are people getting enough value out of it? There are two ways to simplify it. The next step in the process is the solution interview, so if you get there with people that’s a good sign. In the preceding example, we could do several things to push the viral coefficient toward 1: Good leading indicators have a few common characteristics: You find leading indicators by segmentation and cohort analysis. Data science jobs rose 29% over the last year and will continue growing. It’s one of the first metrics you use to assess how you’re doing. First, ad space: too many ads leads to lousy content and reduced visitor loyalty. iOS App Android App. To decide whether a change worked, test the change on a subset of your users and compare that subset’s results to others. The company cares about the following key metrics: Describing a customer lifecycle in this way is a good method for understanding the key metrics that drive your business. Another metric is the average days since last visit, although you need to exclude users who are beyond some cutoff limit (such as 30 days) from this calculation; otherwise, churned users will skew your numbers. The leading indicator should be clearly tied to a part of the business model (such as users, daily traffic, viral spread, or revenue). Not only do you want to know what percentage of people bought something, you also want to know how much they spent. Agree on what that change will be before you collect the data: if the pink website generates more revenue than the alternative, you’re going pink; if more than half your respondents say they won’t pay for a feature, don’t build it; if your curated MVP doesn’t increase order size by 30%, try something else. A UGC site thrives on its visitors’ behavior, and key among those behaviors is sharing. For unpaid search, you’ll be more focused on good, compelling content that improves your ranking with search engines, and on writing copy that includes the desirable search terms your paying customers tend to use (so you’ll be featured in search results because of your relevance). If you’re building something genuinely disruptive, you need to consider the technology adoption lifecycle, from early to mainstream. Did they return of their own accord, or in response to an email? What percentage of your users/customers is active? Cycle time makes a huge difference—so much so, David feels it’s more important than viral coefficient. If it takes only a day for someone to use the site and invite others, you’ll see fast growth. The key at this stage is engagement, which is measured by the time spent interacting with you, the rate at which people return, and so on. Others, like the Engines of Growth and the Startup Growth Pyramid, offer strategies for knowing when or how to grow. Perhaps the goal is weekly or monthly use. If you’ve got a one-time, big-ticket transaction, then more money will help a lot, because you’ve got only one chance to extract revenue from the customer and need to leave as little money as possible on the table. Your goal is to find a problem worth solving and a solution that’s sufficiently good to garner early traction. A Window Into Your Process. Agile Software Development Model was as Lean Software De… You might also segment key metrics like revenue or percentage of visitors who exit on a particular page by author, topic, or layout. Having reviewed these frameworks, we needed a model that identified the distinct stages a startup usually goes through, and what the “gating” metrics should be that indicate it’s time to move to the next stage. It’s also hard to demonstrate enough value, quickly enough, to keep people from churning. ... Business Analytics BADM 790 - Summer 2017 ... 2 pages. If you’re efficiency-focused, you’re trying to reduce costs; if you’re differentiation-focused, you’re increasing margins.”, “You’ll look at compensation, API traffic, channel relationships, and competitors at this stage—whereas before, these were distractions.”, “As you grow, you’ll need to have more than one metric at a time. How could you speed it up? This 80/20 split exists throughoutthe activities you want your users to accomplish. What’s your viral coefficient? If you’re in a relatively unique market, then your line in the sand is enough inventory that buyers’ searches are returning one or more valid results. You can compare cohorts against one another to see if, on the whole, key metrics are getting better over time. Set up a hierarchy of metrics that keeps the strategy, the tactics, and the implementation aligned with a consistent set of goals. If your product isn’t a daily use app, establishing a minimum baseline of engagement takes longer, and the time it takes to iterate through a cycle of learning is longer. A simple approach is to score your problem interviews. In each case, you want to know which keywords drive traffic that turns into money. The Lean Analytics Cycle At Work Original Hello Bar installation screen Metrics Figure out what to improve Hypothesis Make an educated guess Experiment Test your guess Act … Each group of users is a cohort—participants in an experiment across their lifecycle. If you’re competing with others, then your line in the sand is an inventory of sellers that’s comparable to that of your competitors, so it’s worth a buyer’s time to search you. This relies on statistical analysis of the results to see which of many factors correlates strongly with an improvement in a key metric. Pareto analysis states that 80% of a project's results are due to 20% of the work, or conversely, 80% of problems are traced to 20% of the causes. The second wrinkle comes from how you tier pricing. You’re still trying to find the right product, or the right target audience. 4 pages. Can You Measure the Effect of the Feature? The metrics you’ll care about first are around the attraction, engagement, and growth of this seed group. How Much Risk Is There in This New Feature? Page 28: Page 38: Humans do inspiration; machines do validation … change favors local maxima; innovation favors global distruption. First, you want to be sure you have what people are after. Here are the 5 best release note examples from your favorite companies via Twitter, email, blog posts, and in-app messaging—plus best practices for writing your own. It should also be an early extrapolation so you get a prediction sooner. In addition to viral coefficient, you care about viral cycle time. Direct Analysis vs. Headspace Analysis. Usually, those metrics matter because they relate to your business model— where money comes from, how much things cost, how many customers you have, and the effectiveness of your customer acquisition strategies. A real estate service that simply publishes realtor listings wouldn’t qualify, but a for-sale-by-owner site would. Strategic • Enable strategic planning and then drive deployment of the actions required to achieve strategic objectives • Ensure alignment of behavior and initiatives with strategic objectives • Focus the organization on its priorities 2. expand the scope of your efforts and move into doing some quantitative analysis, forces you to formalize your discussions, moving from subjective to objective, tests whether you can command the attention—at scale—that you’ll need to thrive, gives you quantitative information you can analyze and segment, which can reveal patterns you won’t get from individual groups, respondents may become your beta users and the base of your community. Myth #3 Myth Lean Startups are small bootstrapped startups. You want to be breakeven—meaning your revenues exceed your costs on a regular basis. As a result, your metrics shift from usage patterns to business ratios.”, “The core equation for the Revenue stage is the money a customer brings in minus the cost of acquiring that customer. It will allow you to iterate much more quickly on a highly engaged segment of the market. There was some success, but it wasn’t out of this world. To keep users coming back and engaged, you’ll need to notify them of activity through email and other forms of “interruption.”. Lean Project Closure.pdf. The key here is analytics. Lean Analytics Part 1: An Introduction to Analytical Thinking. More people means adding users, ideally through virality or word of mouth, but also through paid advertising. The content your users create has a value. It has the lowest cost of customer acquisition and the highest implied recommendation from someone the recipient trusts. At the end of this course you are able to analyse and interpret data gathered within such a project. Think of this as the piñata phase, where you beat on your business model in different ways until candy pours out.”, “You’re moving from proving you have the right product to proving you have a real business. Because the number of churns in a particular period is affected by the entire period, but the number of customers at the beginning of a period is a moment-in-time snapshot, calculating churn in this simple manner can give misleading results in startups where growth is varied or unusually fast. After all, if you can’t convince a hundred users to stick around today, you’re unlikely to convince a million to do so later. Not mashing up your data with data from other sources, Product/Market Fit (decide what you sell to whom, and prove it), Stack the Odds (find a defensible unfair advantage), Scale Growth (new markets, products, and channels), OMTM (One Metric That Matters) => at any given time, the one metric you should care about above all else. As this happens, you’ll make changes to your business model. Construction IQ and data analytics brings actionable insight to the job site every day, right from BIM 360. I plan on cleaning them up eventually, but until then, I apologize. Once you’ve got both sides of the market together, your attention (and analytics) will shift to maximizing the proceeds from the market—the number of listings, the quality of buyers and sellers, the percentage of searches for which you have at least one item in inventory, the marketplace specific What Is People Analytics? While tweeting and liking content is useful, remember that a lot of sharing happens through other systems—RSS feeds and email, in particular. You never really leave the Scale stage, although as your organization becomes more and more like a “big company” you may find yourself having a hard time innovating. This means looking at business metrics such as operating costs, marginal costs, and so on. If you want to seed the seller side, you might crawl Craigslist and approach console owners to see if they have inventory, encouraging them to list items. 2 pages. Users who join you in the first week will have a different experience from those who join later on. That should give you more confidence that you’ve found the right problem and the right market. You can estimate inventory from visitors and pages per visit, but most analytics packages show the number automatically. With flawless predictive analytics and without limitations of storage, connectivity and computing power, all machines, theoretically, could automatically act on analysis of constant streams of data. The number of people who abandon a funnel at each of these stages is the abandonment rate. Regardless of how you value content, you’ll want to measure it by cohort or traffic segment. We’ve seen many startups struggle with this. You’re frequently changing the activity you analyze. The seller is responsible for listing and promoting the product. When you know users keep coming back, it’s time to grow your user base. Hibernation Breakeven => If you reduced the company to its minimum could you survive? “Experimental” metrics, like the results of a test, help you to optimize the product, pricing, or market. You need to track the number of searches that return no results—this is a lost sales opportunity. No notes for slide. You start this process by conducting problem interviews with prospective customers.”, “Problem validation can happen in two distinct stages.”, “A convergent problem interview gives you a clear course of action at the risk of focusing too narrowly on the problems that you think matter, rather than freeing interviewees to identify other problems that may be more important to them.”, “Don’t just ask questions. Qualitative metrics are notoriously easy for you to bias. Fraud prevention is a significant amount of work for a UGC site. Agile Software Development Model is like building a new thing which is for the first time and that too only for one time whereas Lean Software Development Model is a kind of building the same thing, again and again, that too on the same thing. Are people using the product as expected? After enough interviews you’ll know the difference between someone who’s focused and engaged, and someone who is not. To find ways you might improve things, segment users who do what you want from those who don’t, and identify ways in which they’re different. The users who experienced the trial in month one will have a different onboarding experience from those who experience it in month five. Ultimately, you need to prove two things before you can move on to the Virality stage: Don’t drive new traffic until you know you can turn that extra attention into engagement. Even though you’re building the minimal product, your vision should still be big enough to inspire customers, employees, and investors— and there has to be a credible way to get from the current proof to the future vision. Revenue per customer (or lifetime value) is important for all types of e-commerce businesses, regardless of whether you’re focused on new customer acquisition or loyalty (or both). In this file, go to the data sheet Investigation time. The reason Google has a free analytics product is because the company makes money from relevant advertising, and wants to make it as easy as possible for you to buy ads and measure their effectiveness. Some use what the buyer has purchased in the past; others try to predict purchases from visitor attributes like geography, referral, or what the visitor has clicked so far. Describe how. In the Empathy stage, your focus is on gathering qualitative feedback, primarily through problem and solution interviews. Those with a console to sell can list it, and those looking for a console to buy can browse by a variety of criteria. A good metric is comparative. There is an important lesson around business models and Lean Startup—you bring an early version of your product to the market, test its usage, and look for where it’s got the highest engagement among your customers. You should also look at the search terms themselves. More often means stickiness (so people come back), reduced churn (so they don’t leave), and repeated use (so they use it more frequently). Five distinct stages by the Lean Analytics framework . On websites, you segment visitors according to a range of technical and demographic information, then compare one segment to another. If you have trouble finding the Excel file or finding the specific data file, see this video. That’s fair, but it doesn’t answer the real question: How many new customers per week do you need? Evaluate the complaints you’re getting from users. And if your efforts are insanely successful, you’re going to know that as well. Instead, optimize for good customers and segment your activities based on the kinds of customer those activities attract.”, “It’s vital to know if you’re focused on loyalty or acquisition. These lecture notes are an introduction to undergraduate real analysis. “I almost always recommend modeling the buyer side as your primary focus, and then you model supply, more in the sense of total inventory,” he says. Try to extend the lifetime of the customer so he has more time to invite people. If you’re not ruthlessly honest, you’ll hear what you want to hear in interviews. If we assume that an ad will get industry-standard click-through rates, then the more people who visit your site, the more money you’ll make. Let’s start first by asking what is Analytics: Its the measurement of movement toward your business goals. Here are some rules of thumb for what makes a good metric—a number that will drive the changes you’re looking for. Could this be higher? Let’s say that you’ve decided “New Customers Per Week” is the right metric to focus on because you’re testing out new ways of acquiring customers. These are signs that you won’t be able to scale independent of your own organizational growth. Your choice needs to match the kind of segmentation you’re doing, the time it takes for a user to become a paying customer, how easy it is to use your service, and how costly an additional drive-by user is to the business. They may like it, but if they won’t pay, click ads, or invite their friends, you may not have a business. But it really is how you use data to make and check business decisions. To find out, we use cohort analysis. Some, like the Lean Canvas, help you map out the components of your business model so you can evaluate them independent of one another. Early on, you’ll keep copious notes. If there’s a subsection of users who are hooked on your product—your early adopters—figure out what’s common to them, refocus on their needs, and grow from there. Cohort experiments that compare groups like the one in Table 2-2 are called longitudinal studies, since the data is collected along the natural lifespan of a customer group. But a Lean mindset reverses this: you sell the business model—not the plan—without a lot of prediction, and then rely heavily on analytics to decide whether to kill the product or double-down on it.”, “This analyze-after rather than predict-before model is possible because many of the costs of innovation can be pushed later in the product development cycle. You need to segment real, valuable users from drive-by, curious, or detrimental ones. If churn is higher than that, chances are you’re not sticky enough.”, “You’ll have a very good indicator of stickiness when site visitors are spending 17 minutes a day on your site.”, “For many metrics, there’s simply no ‘normal.’”, “Nearly any optimization effort has diminishing returns.”, “In most cases, enterprise sales involve bigger-ticket items, sold to fewer customers.”, “Zero Overhead Principle: no feature may add training costs to the user.”, “…most B2B-focused startups consist of two people: a domain expert and a disruption expert.”, “In their book Confronting Reality (Crown Business), Larry Bossidy and Ram Charan list the six habits of highly unrealistic leaders: filtered information, selective hearing, wishful thinking, fear, emotional over- investment, and unrealistic expectations from capital markets.”, “Critics of Microsoft’s reactions complain that the company isn’t changing; rather, it’s managing to stay the same and exert its dominance, avoiding or delaying market change. The five stages we identified are Empathy, Stickiness, Virality, Revenue, and Scale. The first step of a two-sided marketplace—and the first thing to measure—is your ability to create an inventory (supply) or an audience (demand). At the end of every interview, you should be asking for referrals to other interviewees. Knowing an industry baseline means you know what’s likely to happen, and you can compare yourself to it. If you can’t test features in this way without fallout—the customers who didn’t get the new feature might get angry—then at the very least, compare the cohort of users who joined after the feature was added to those who came before. You will be able to use Minitab to analyse the data. For intrapreneurs, this means applying Lean methods to new product development, rather than starting an entirely new company. A failed interview is OK; it may lead you to something even more interesting and save you a lot of heartache. 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