500 Startups founding partner, Dave McClure coined the term Pirate Metrics back in 2007 and shared it with the world in his now famous slideshare (included below).
Since posting this presentation, over 232,000 people have viewed the 20-slide deck and thousands of startups around the world now talk in terms of this framework. Personally, I think Dave did a great job establishing a starting point for Web Marketers and Growth Hackers alike. However, as many of you know, improving these metrics is not a simple task and you often need help in figuring out just how to do it.
Keep reading to continue your Pirate Metric journey!
For those of you who don’t remember your Pirate Metrics, I have included a point form recap below.
Acquisition – When a user to provide you with contact information. (SEOMoz, Unbounce)
Activation – When a user uses your product the 1st time. (Vero, KissMetrics)
Retention – Keeping a user coming back. (Vero, KissMetrics)
Referral – When a user gets a friend to sign up. (We’re Still Looking)
Revenue – The money you make from users. (Chaotic Flow, HubSpot)
When you are trying to improve any metric, it’s important to focus on only one or two at a time. If you try to make everything better at once, you are more likely to improve nothing and still have no idea what to do next. From my experience, I recommend you start be identifying the metric that you believe will lead to your biggest gains, identify a line in the sand that you will be happy when you reach and then dig into great resources about how to improve it.
How to Use this Guide
The In-and-Out: If you know what metric you need to focus on today, scroll down the list until you find it and only read the relevant section. I understand you have things to do. No hard feelings.
The Complete Collection: Read the following from top to bottom, starting with Acquisition and ending with Revenue. There is a great list of resources to help you optimize each metric and understand the whole process.
The first of the Pirate Metrics, Acquisition, is where every web company has to start out. It is probably one of the best-studied parts of the web sales funnel and because of this can be a little tricky to separate the wheat from the chaff.
SEOMoz provides a powerful set of tools to help your company with Search Engine Optimization (SEO) and Social Monitoring.
The simplest, but often hardest, part of customer acquisition for any online business is getting people to your web page. Intrinsically the idea seems simple. Create a great web page that talks about your awesome product and publish it for people to find, share and buy from.
If you have tried this approach you realize that it quickly falls flat. Simply put, if no one has heard of you before how will they find your orphaned website in the whole wide Internet? One of the best ways to get discovered is through Search Engines, and SEOMoz has lots of great insight into how to get to the top of the search results. The SEOMoz blog provides a ton of great resources from internal post to guest expert interviews to lessons from their CEO, Rand Fishkin.
If you’re wondering how to get more people to your company web page look at their blog here.
Unbounce is a tool designed to let your marketing team build high converting landing pages without the need for IT.
After you get people to your webpage, it’s important to turn them into a lead that you can contact again. Typically, landing pages are used to capture leads in the form of emails, phone numbers or new users signups. Unbounce’s product is focused on this exact problem and in turn they are committed to sharing great resource on optimizing your lead capture efforts.
If you’re looking for the latest thinking on building landing pages, generating more leads and converting more customers their blog is a great place to start. They regularly provide critiques on some of the top brand’s actual landing pages as well as industry best practices that mine from the thousands of landing pages that they host each day.
Take a look and subscribe to their blog today.
Activation and Retention
Activation and Retention are two very different parts of Pirate Metrics. To get a customer to experience a “happy moment” (the moment which they are truly happy with your product) inside your system is very different then getting them to come back time and time again. However, these two objectives are supported by some of the same techniques and in turn the same groups often talk about both subjects.
Vero provides a transactional email tool that makes it possible to target your customers depending on which actions they have and have not previously performed in your system.
Just because you have users signing up for your service doesn’t mean the fight is over. You need them to actually use your tools and then come back and use it again and again and again. This can seem like a product problem, which it partly is. However, this is also often a noise problem where you need to simply help your users remember to do something or better understand the benefits of your product.
Vero’s blog shares tips on how major companies have used email marketing to help with their activation and retention goals, tips on testing your emails for the best results and even how to use your emails as powerful up selling tools.
If you would like learn more about helping customers through your application read their blog here.
KissMetrics is a user intelligence tool for SaaS and ecommerce companies. Their tools allow you to track how individuals browse your website, use your tools, and ultimately generate you revenue.
When you are trying to increase user activation and retention it can be very helpful to look at what your best customers are doing. How do your best customers browse your website? How do your best customers use your tools? Which of your customers generate you the most revenue?
While these questions seem simple both measuring them and making sense of what to do with the data can quickly become overwhelming. KissMetrics continually shares great articles on how they and other companies look at their numbers to optimize acquisition, activation and retention. With interviews from well respected leads in online marketing and a all star founding team they continually put out some powerful content on how to understand your data and optimize your product based on that.
Take a look at some of their great articles and signup for their mailing list here.
This metric is a bit of the holly grail of web marketers. Generating customer referrals is something talked about a lot by people providing web based products. The power of a referral is unrivalled by any other form of marketing. However, getting referrals is not a simple task.
While there are many people who speak about referrals including Dave McClure, Seth Godin and Sean Ellis, there are not many great resources on the subject for me to share with you here. There are several blogs from industry members but the majority of them spend their time selling their products and not providing educational content.
If you know of any great resources for us to share please email me at Will@SaaSquat.ch.
After doing all the hard work of Acquiring, Activating, Retaining and Referring users they will just naturally generate gobs of profit. Wrong! Many people don’t understand this part of their company very well at all so it is no surprise that they have trouble with it.
Chaotic Flow is not like the other resources listed here. They are not tool generating great content but a guy, Joel York, sharing some of the best resources when it comes to modeling your revenue and understanding your metrics.
While it may sounds simple at first, modelling your revenue as a SaaS company can take a lot of time and energy. Joel does a fantastic job at presenting large amounts of complex data in a way that you can actually use. Further, some of the tools that he provides such as “Guide to SaaS Financial Metrics” and “SaaS Model Economics 101” are great resources to start you off building your models and ensure that you are ready for any conversation with investors.
If you are looking to better understand how to model your company’s revenue take a look at Chaotic Flow here.
HubSpot provides Marketing Automation tools for online companies. If you aren’t familiar with Marketing Automation I would recommend you google it and do a little reading. It probably won’t change your life but it is good to know about.
After doing all the hard work of Acquiring, Activating, Retaining and Referring users they will just naturally generate gobs of profit. Wrong! It is true that these users are far more likely to generate revenue for you but it is not a given. Many companies have trouble with figuring out how to collect money from their users.
One of the major goals of Marketing Automation is ultimately to increase the bottom line revenue of a company. This goal has prompted HubSpot to create a large amount of educational content around the subject of revenue and Return on Investment (ROI). They regularly share great templates, calculators and interviews that can help your company growth both a user base and a revenue base.
If you are looking for some resources to help you grow your revenue visit their blog here.
I would like to point out that many of these great resources overlap from time to time. Topics such as content marketing, analytics driven marketing and conversion optimization are so universal that it is impossible to separate them.
Hopefully you have found some new resources and some old favourites in the list above. This is just my list so please feel free to add you own favourites in the comments below for others to see.
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