CH 21 - Am I Good Enough? ( Case Study ( knowing cancellation number…
CH 21 - Am I Good Enough?
Intro: find a baseline for the conversion rate. It's changeable based on times.
knowing cancellation number isn't enough; you need to understand why people are abandoning your product or service.
Went out and found a benchmark for cancellation rate.
For established hosting companies, 2% is a best case scenario benchmark for cancellation rate per month.
This changes your perspective.
WP Engine built a healthy WordPress hosting business, but losing 24% of customers every year concerned its founders.
By asking around, the founder discovered that a 2% per month churn rate was normal - even good - for that industry
Knowing a good line in the sand allowed him to focus on other more important business objectives instead of trying to over optimize churn.
Price is related to what your customers are prepared to pay!
Average Isn't Good Enough
What Is Good Enough?
Focus on growth too soon is bad. We have seen how inherent virality - that's built into your product's use - is better than artificial virality you have added as an afterthought.
Premature scaling, such as firing up the paid engine before your are sticky, can exacerbate issues with product quality, cash flow, and user satisfaction.
While rapid growth can accelerate the discovery of product/market fit, it can just as easily destroy the startup if the timing isn't right.
Technology lifecycle adoption model: it takes a lot of work to move from early adopters to laggards as the product becomes more mainstream and the barriers to adoption fall.
Start-up goes through three distinct growth phases:
slow: where the organization is searching for a product and market to tackle
fast: where it has figured out how to make and sell it at scale
Slow again: it becomes a big company and encounters internal constraints or market saturation, and tries to overcome Porter's hole in the middle.
Number of Engaged Visitors
30% - 10% - 10%
當滿足30% 10% 10%表示可以邁向下一個階段：Virality
Socialight: Social platform
B2C -> B2B
Customer Acqusition Cost
獲取客戶的成本 < 1/3客戶終身價值
Acqusition cost 可能算錯
可即早驗證預設的 CAC 是否合理
Decide with your business model, target margin, investment to drive the margin
Artificial Viral(Dropbox) v.s. Inherent viral(Skype)
Mailing List Effectiveness
Open rate 20-30%
Click through rate 5%
Few people check mail on weekends
new subscribers are more likely to click
Open rate are mainly useful for testing subject lines/different contact list for a single campaign
Uptime and Reliability (計算機或通信系統正常工作的總時長)
Must keep user updated about outage
1 min per page (Landing < Non-landing)
First-time visitor: < 5s
People will leave if loading time > 10s