[500DISTRO] Measuring for SaaS Monetization: Choosing Metrics, Running Experiments & Deciding When To Charge

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Jean-Denis Greze, Engineering Lead, Growth & Engagement, Dropbox

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  • Growth, Engagement & Monetization @ Dropbox Jean-Denis Greze @jgreze
  • Jean-Denis Greze (@jgreze) Outline Part I: What is growth? Part II: Metrics Part III: Growth & engagement in practice
  • CONFIDENTIAL Part I: What is growth? Process or product
  • CONFIDENTIAL At a minimum Getting people to your page A great logged-out experience Signup On-boarding Engagement & Retention* Virality * pre-condition (but LinkedIn)
  • CONFIDENTIAL Growth = data driven Its just an approach to solving problems that should permeate all of your decisions Warning: as you growth, you need an increasingly strong advocate for the data-driven approach. Thats your growth team.
  • Jean-Denis Greze (@jgreze) Growth v. product: avoid holy wars At Dropbox, extremes on both sides Growth v1: pure bizops, number crunching, optimized parts of the funnel but never changed the experience as a whole Growth v2: design something perfect that resonated well during user studies but not worried about numbers Monetization got it right (Team Ca$h, Prowth)
  • Jean-Denis Greze (@jgreze) Dont think small Dont just reduce steps / friction Dont forget that there are fundamental human problems to people understanding, seeing a need for, coming back to, and adopting your product into their daily lives.
  • Jean-Denis Greze (@jgreze) Understanding the user journey Acquisition Activation* Engagement Virality * Dont forget me
  • Jean-Denis Greze (@jgreze) Virality Virality that drives growth Users bringing in non-users Virality that drives engagement Users bringing in other existing users Think about this stu from day 1: its hard to add vitality after-the-fact
  • CONFIDENTIAL Part II: Metrics What to measure > how to measure
  • Jean-Denis Greze (@jgreze) Metrics Be way of *AU (DAU, WAU, MAU, 3MAU) You have dierent kinds of active users (e.g., sync users v. backup users) Activity is a means to an end what is your business model? Measure activation Facebooks 7 friends in 10 days Figure out the highest predictors of retention Signin up != active
  • Jean-Denis Greze (@jgreze) Actually, why metrics? Obvious: goals to aim for Less obvious: communication (makes it easy to explain what you are going to VCs, the rest of your organization, etc.)
  • Jean-Denis Greze (@jgreze) Revisit your metrics often Examples Two sharing models at Dropbox Email subject lines Referral at Dropbox If you dont always pay attention, you will make bad product decisions Ask yourself: Is the funnel I am looking at the real and current funnel?
  • Jean-Denis Greze (@jgreze) $aaS (I) Should growth look at metrics through monetization? No (maybe?) Dropbox example: free space as cost Free users as happy people deriving benet Free users as cost-center Free users as potential self-serve revenue Free users as qualied leads (sales)
  • CONFIDENTIAL $aaS (II) Monetization like growth is data-driven, but its purview is turning existing users into paying users
  • Jean-Denis Greze (@jgreze) A/B testing (I) One rule: statistical signicance is hard (you dont have enough exposures) When you are a startup, go for big wins and dont worry about small optimizations: they wont be the dierence between a sustainable startup and a failing one
  • Jean-Denis Greze (@jgreze) A/B testing (II) A/B tests do not understand your users With this variant, a user is more likely to click on X You dont know why or what the user is thinking If you want to understand your users (a little bit), conduct user research
  • CONFIDENTIAL Part III: Growth & engagement in practice Somewhat applicable advice
  • Jean-Denis Greze (@jgreze) Easy v. dicult (anecdotal) Hard Reactivating dormant users Making your product awesome by changing a button color Easy Going from nothing to something No onboarding to onboarding No email reminders to email reminders (or notications) Focusing on channels that are already doing well and bringing in high-value AUs
  • Jean-Denis Greze (@jgreze) Virality templates (I) Big splash Dropbox space race NYTimes dialect quiz Trade your product for shares (i.e., the Dropbox model) Referrals -> free space E.g., Uber
  • Jean-Denis Greze (@jgreze) Virality templates (II) Achievements Broadcast something that makes your user look good or interesting E.g., Foursquare, tness apps Caveat: Signing up is not an achievement
  • Jean-Denis Greze (@jgreze) Virality templates (III) Network building E.g., Facebook, WhatsApp If you have this Id love to invest Pro-tip: your users phone contacts / address book is the best way to kickstart this Only takes 1 permission, cost to you is small (SMS / user), no one controls it (yet) Network riding (e.g., Airbnb, Instagram & Twitter)
  • Jean-Denis Greze (@jgreze) Virality templates (IV) Word of mouth Content SEO Partnerships E.g., Chrome (really?)
  • Jean-Denis Greze (@jgreze) Progressive engagement Activity & quality Activity: 3MAU to MAU or MAU to WAU Quality: MAU -> high-value MAU E.g., reminder to get users to complete actions People forget what they are doing E.g., have one set of users re-engage another set Tip: opt-in beta program
  • Jean-Denis Greze (@jgreze) Growth & freemium $aaS: Cost of giving your product for free v. Ads, outbound sales, paid-for leads, partnerships Its not just self-serve! Freemium for growth: Trade for vitality (shares) Trade for better UX (address book makes it easier for your users to share in the future) Trade for a better product (upload all of your photos makes albums better)
  • Jean-Denis Greze (@jgreze) Gating freemium When do you break things and ask people to pay you? Usage (e.g., space) Social (# of people you are collaborating with) Content type (Word v. Excel) Functionality for subset of users (e.g., IT) Make sure the subset has purchasing power Time-bounded Experiment early (you can have multiple gates)
  • Jean-Denis Greze (@jgreze) Parting advice Every company/situation is dierent Be wary of learning specic lessons from Dropbox, Google, Square, Github, etc. We may be optimizing for very dierent things We may not be optimizing (things going too well) We may be stuck at a local maxima Get ideas, test them, talk to others, be creative, etc.
  • Jean-Denis Greze (@jgreze) Good luck Get some growth/prowth advisors Ak questions / get answers Growth is probably not a competitive advantage (and everybody can see what you are doing)