Post on 09-May-2015
description
Will you marry me? Why engagement is the key to maximizing LTV (Lifetime Value)
Presented by: Brent Chudoba, SurveyMonkey FirstMark Online Marketing Summit October 23, 2013
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• VP, GM of SurveyMonkey Audience
• @SurveyMonkey since Apr. ’09 • Schoology BoD member
@bchudoba brentchudoba.com in/brentchudoba
Hi, I’m Brent
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• If there was one metric I could increase, at every company where I am an equity holder, it would be engagement
• Engaged users: - Convert at higher rates - Stick around longer
• Because they are getting value • Because they develop higher switching costs
- Tell you about their needs - Tell others about your product
Conversion & engagement optimization
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• Pure conversion optimization strategies and tactics are incredibly useful, and well defined - Quick to test and simpler to measure - There is often a ceiling on tactical conversion gains
• You don’t typically use conversion to drive engagement • But you always use engagement to:
- Increase conversion - Increase ARPU (average revenue per user) - Increase retention
• And I want to show you why introducing engagement metrics can drive outsized gains
Presentation goal
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• Provide you with some useful examples and ways to measure and factor engagement into your product, marketing and business intelligence roadmap
Engagement philosophy
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• If customers get value from your product they will pay you, stick around and grow - If they don’t, they’ll eventually leave
• Engagement is a tool to get users across a set of customer success milestones that translate to value - If a SurveyMonkey customer sends out surveys every year
and gets enough responses to help them make better decisions, they are getting value. How do I help get them to that point?
Conversion optimization example
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8
2008
9
2013
Tactical Improvements • “Most Popular” badge • Above the fold, simple
feature call outs • Highlight key package
differences • Feature differentiation by
package • Tiered package naming • Simple CTAs • Comparable monthly
pricing shown
Why does engagement matter?
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An engaged user is more likely to convert to a paid user, increase their spend over time, and less likely to cancel their usage of your product than an inactive, unengaged user.
• Do you agree or disagree w/ the statement above?
So, engagement matters
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But, how can we quantify how much engagement matters?
And, how can we impact it?
Quantifying engagement benefits
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• An example shows highly engaged users convert at 4x the rate of less engaged users - Essentially all highly engaged users convert
• Heat map of conversion rates by engagement level:
More
LessLess More
# of Surveys Deployed
# of Respo
nses Collected
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• Introducing more features and use cases for products creates additional value
• For SurveyMonkey customers who sign up for a paid account, every additional paid feature they use results in a drop in their churn rate
1 M
onth
Chu
rn R
ate
Number of Paid Features Used in First Month
High
Zero Zero Many
How do you drive engagement?
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Driving engagement
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• How do you integrate engagement campaigns into your metrics and roadmap? - Identify: figure out what defines an “engaged” user - Optimize: increase the % of users that “engage” - Activate: cherry pick top prospects and help them
succeed
Identify
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What are your engagement milestones?
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• Start at the end - When has a customer gotten value from your
product? • Now figure out how they got there
- What are the critical actions that customers go through to reach a full engagement milestone?
Finding your end point
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• When does your customer… - Login, smile and say, “Wow, this is
awesome. This just saved me a ton of time. This product was worth every penny, and I might even +1 or Like this company and tell a few colleagues how great this is. Yes SMB SaaS product, yes I will marry you!”
Engagement variants
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• Singular Objective Success Point - 1 main use case, or 1 main user type - “Success” looks similar for nearly all users - Ex: Nearly all SurveyMonkey users are trying to
create a survey and get responses • Variable Objective Success Points
- Multiple user types, varied “success” definitions - Ex: Schoology (students, teachers, administrators,
parents) all have different “success” definitions
Example: SurveyMonkey engagement funnel
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• What does it take for a user to engage? • We identified that sending out a survey and
getting responses was when a user derived value from our product - We decided that more than just a few test responses
was important • And then we worked through the experience to
figure out how they got there
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• Sign up for an account
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• Create a survey
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• Add a question
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• Begin collecting responses
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• Gather responses
Whoa! Awesome. I had no idea over 80% of my team had smart phones
Optimize
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Establish baselines, measure results
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• A metrics driven product agenda starts w/ a baseline understanding of the status quo
• Then tests w/ various experiments to see where it can drive measurable impact
• Lather, rinse, repeat
% o
f New
Use
rs
Time
Reach Engagement Stage 1
Reach Engagement Stage 2
Reach Engagement Stage 3
Reach Engagement Stage 4
Con
vers
ion
Rat
e
Time
Conversion Rate
Something worked here
What works?
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• Long term engagement wins are rarely easy • Engagement needs to be a success metric that is
factored in to product and marketing goals • Features designed with engagement in mind can
increase engagement
Engaging onboarding experiences
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• Are designed to get users through the engagement process • Checklists, gaming elements like profile strength are useful for both users
and your business intelligence
Engagement shortcuts don’t exist
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• There aren’t nearly as many tactics to better engage users as there are to convert them
• You need to earn your engagement, shortcuts lead to red herrings that don’t materialize in conversion
Activate
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Are all users created equal?
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• We all know, the answer is no • There are big fish swimming in your pond, and
with the right engagement strategy, they will be massive customers
Do you optimize for big fish? Or all fish?
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• Your best customers might be worth 10x your average customer
• Are you activating your 10x’rs to make sure they stick around?
How much are your best customers worth?
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• Certain models necessitate cherry picking top customers to ensure engagement
• If 10% of your customers have the potential to drive 10x+ annual revenue value, you can replicate (or exceed) subscription economics
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• SurveyMonkey Audience customers transact differently than monthly subscription customers
• They buy projects, so some of them don’t come back • But those who do, are incredibly valuable
1 2 3 4 5 6 7 8 9 10 11 12
Cum
ulat
ive
Rev
enue
Month
Avg. Year 1 Revenue from Repeat Customers
Avg. Year 1 Revenue from ALL Customers
* Actual numbers are confidential, this chart is intended to show the relative impact * Repeat customers includes any customer that purchased in month 1 and any successive month • `
How do you activate your best customers?
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• The million, or maybe billion $ question • Engagement for 10xrs has even bigger
implications - Special programs to ensure they move through the
engagement funnel are critical - Resourcing to ensure customers w/ $20k+ potential
are successful will often pay huge dividends - And the knowledge of what success means is critical
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Thank you!
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Acknowledgements • The SurveyMonkey Business Intelligence team provided all the important
data for this report • They provide all the data and insights that help SurveyMonkey make great
decisions, and they are abnormally cool people, which means we get to have quite a bit of fun while we are at it
• Thank you BI, you rock