Marketing Metrics and How to Measure Them - Mike McDerment at FOWA
Posted on Feb 26, 2010
My computer was having some issues so I was unable to take solid notes
on the Paypal iPhone payment system demo (which was impressive) and Tara
Hunt's (@missrogue) excellent talk on why social media is
not a panacea for your company's marketing problems. Tara's talk was
especially impressive because she tore down a lot of the myths that many
companies have about their social media strategy.
Following that
Ryan Carson of Carsonified sat down with David Recordon of Facebook
regarding their open standards strategies. They talked about projects
like Three20 (http://github.com/facebook/three20)
Tornado (http://www.tornadoweb.org) and
PubSubHubbub (http://code.google.com/p/pubsubhubbub).
He also discussed the direction of open source and not, as a startup,
being afraid of building upon an open source infrastructure.
Following
this discussion, Mike McDerment of Freshbooks was introduced. Ryan says
he has taken Freshbooks from just him to about 40 people and is going
to discuss some of how he did this. Mike says the marketing and
awareness are a much harder part of building your web application
business than the technical aspects. He plans on discussing some metrics
that help you understand the success you are having and build upon it.
The
first metric he discusses is cost per acquisition (CPA) which is
essentially, "How much does it cost us to get a customer?" The next is
average revenue per user (ARPU) which boils down to "How much do our
customers pay us?" Following is churn which is "at what rate are
customers cancelling?" Last is lifetime value per customer (LTV) that is
a combination of all the above and its basically "how much is a
customer worth?"
He says Google Analytics is not enough because
it is less accurate, less flexible, can't correlate, too important to
outsource and tied to a vendor. He believes these systems are so
important that you should not outsource them but rather build three
systems to track these things.
The three systems begin with
cookie tracking. You want to create your own cookie and begin by
tracking three things: the referring domain, referring URL and landing
URL. Use unique landing pages. Put this data is a marketing table (step
2) in your database and tie this to a user account. The third step is
simple reporting. For example, build a search interface to get the
marketing data as it relates to account data and create simple reports
that can be downloaded and reformatted into Excel (or whatever program
they are comfortable with). There's no need for fancy dashboards, just
let marketing get the data out of the database.
Sadly the end of
Mike's presentation got mixed up with technical issues with his slide
deck. He wanted to introduce a concept called "vintages" which allows
you to track how your marketing spend in January, for example, pays out
over the course of the year. This helps you know how your marketing
dollars continue to work for you.
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