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December 30th, 2009:

The 4 Metrics of User Acquisition and the Customer Bulls Eye

To the outsider it may appear that 100% of Xobni’s engineering effort is focused on the development of our Outlook plugin. Surprisingly, this is far from true.  Anybody who has operated a software company will tell you there is a lot of engineering effort required to turn a product into a business: billing infrastructure, bug reporting, user tracking, etc.  I suspect over 20% of our engineering effort is focused on business engineering.

Behind Xobni the product is Xobni Corp. the metrics driven business – rich in engineering complexity.   I personally find this hidden Xobni almost as interesting as the core Xobni product – especially at this stage of the company, the stage I’ve previously called “engineered growth.”

One result of two engineers founding a company is that the engineering culture will bleed into every nook and cranny of the company’s culture.  Recently I was talking to Tristan Harris, the founder of Apture , about company culture.  He said the competitive advantage of the world’s greatest companies is a specific and overriding culture that is pervasive in everything they do.  Tristan previously worked at Apple and said their culture was design.  We decided Google’s is speed and Zappos is customer service.  He asked me what I thought Xobni’s culture was, and I said “measurement.”  This culture exists in everything we do, including the business aspects of building xobni – specifically driving user acquisition and generating revenue.

I want to share some glimpses into our user acquisition and monetization machine.  This is the stuff you’ll never read on our company blog or see in the press coverage.

4 Metrics Of User Acquisition

For any user acquisition channel – PR,virality, advertising, search engine marketing – we measure success on four key metrics:  engagement, virality, profitability & scalability. I visualize each customer acquisition channel as a dart on a dartboard.   Our goal is to optimize those channels so they each hit the bull’s eye.  We are also always searching for more channels to throw at our dart board.

CustomerBullseye

We’ve made systems and dashboards to track and a/b test our user acquisition funnel.  We do this for each of our user acquisition channels.

For each channel we can A/B test over 50 landing pages.  Then for each channel and landing page combination we can see how many installs we got and what the conversion rate was to install (Scale), the percentage of users active in the last 7 and last 30 days (Engagement), how many new users these installs generated through our in-application invitation systems (Virality),  what percentage of these users converted to Xobni Plus and how much we paid for one of these users (Profitability), along with several other intermediary steps to each of these objectives.

We can take several groups of users (all from the same channel) and show them different messaging on a landing page, and see the resulting effects on scale, virality, engagement, and profitability.  Or, we can run one channel at a loss simply because those users are highly viral.  This reminds me of my optimal control research from grad school, except instead of optimizing on robot speed, accuracy and energy consumption, we are optimizing on scale, virality, engagement, and profitability.

1. Virality

We are adding more and more methods by which users are telling each other about Xobni through product interactions.  Right now we only track two.  The next generation of our tracking system will have over 10 viral inputs.

2. Engagement

We record other engagement metrics beyond the active user count – like clicks per user per day, searches per users per day, etc – however right now we review these metrics in one-off manner.  I’d love to add them to our dashboard.  It’d be fascinating (and useful) to know that a user acquired with a banner ad on Facebook make 5 times as many clicks/day on our premium upsells as a user acquired through twitter.  And, I’d love to know that I can increase the number of clicks to 7 if I send these users through a landing page that messages heavily on our premium product’s features.

3. Profitability

As previously discussed, Xobni Plus is just one of 5 revenue streams that will be driving our business by the end of 2010.  We’ve already announced Xobni with Salesforce and Xobni for Blackberry.  We’ll need to add these new revenue driving products to our dashboard and I’m excited to have the new ARPU (Average Revenue Per User) to play with.

4. Scale

This is where the creativity of an artist and the tenacity of a hunter intersect.  We are always searching for new darts to throw at our dartboard.

Sound Interesting?

If this work sounds interesting to you, you are in luck.  We are currently looking for a strong software engineer to own the fidelity, accuracy, display and availability of these dashboards and build the next generation of systems that will allow Xobni to make product/company strategy decisions based on data – our preferred method of making all decisions.  The ideal candidate should have a passion for customer development and the metrics of user acquisition and monetization.  The ideal candidate has probably read much of the writings of Eric Ries, Sean Ellis, Hiten Shah & others.  They should have a strong grasp of php, html & mysql – while these are the current technologies used in our internal dashboards we are always open to using the best technologies and platforms that will accelerate our steps toward making decisions faster.  If you are interested in this stuff and want to discuss opportunities for joining Xobni, check out this job description and email me at matt at xobni