Choosing the Metric that Matters, Pirate Metrics & Mapping Your Funnel

Growth by Seeking Wisdom podcast

Welcome to #Growth, a brand new podcast from Seeking Wisdom hosted by Matt Bilotti, Senior Product Manager on Drift’s Growth team. On our first episode, Matt digs into choosing the metric that matters. Plus, Pirate Metrics, mapping out your funnel and more. In this season you can expect to learn how to run growth experiments, get exclusive interviews from growth leaders and everything else you need to run a successful growth team.

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In This Episode

0:13 – Introduction to Matt, the host of #Growth
0:44 – What is #Growth?
1:13 – Choosing the lever that matters
1:46 – An example: Facebook
2:29 – Start with AAARRR (pirate metrics)
3:39 – A caveat for startups
4:03 – Map out your funnel and locate drop-offs
4:58 – Get the low-hanging fruit
5:29 – Go deep on one thing
6:09 – Should you start at the top or bottom of the funnel?
6:43 – Pick something, run with it, and try to move the lever.
6:56 – A warning to the listener who’s new to this
7:24 – Getting the right anchor point
7:48 – Having right expectations

Full Transcript

Matt Bilotti: Hello and welcome to #Growth, which is a brand-new track here within Seeking Wisdom. I am your host, Matt Bilotti. I am a product manager here at Drift. I’ve been around for a little while, so if you have been a Drift fan or a member of the community or a customer for some time, then you probably recognize me from some of the product videos, whether that was product launches, walkthroughs, any of those things. Many have dubbed me the guy with the beard or beard guy, which is relatively accurate. I usually have a beard. There are some scenarios in which I don’t have a beard, but I digress.

What is #Growth? What are we going to talk about? We’re going to talk all about what it means to move your business to the next step, whether that’s focused on experimentation, moving certain metrics, what the process looks like to run growth teams or experiments. We’re going to interview some quantitative thinkers or very analytical people and get a sense of how they think about their business and ways to, as some may say, growth hack.

Today, we’re going to focus on choosing the lever that matters. Doesn’t matter what company size you are, you’re going to have to do this at some point. You should be doing this all the time, really. As you grow, you’re going to have one core metric that your company is focused on, so generally, if you’re in B2B, that’s going to be revenue. If you’re in something like consumer, it’s going to be a lot more around users. If you’re in eCommerce, it’s going to be number of sales or maybe revenue. Your business is going to be focused on that one number, and your team needs to start focusing on specific levers.

A really great example of this is the famous one around Facebook. What Facebook determined was their lever around activation … Activation is the point in which someone signs up for Facebook and then does some critical activity that is core to the product. In Dropbox’s example, it would be to upload a file. In something like Snapchat, it would be to add your friend. Facebook learned that, if they can get a new user to add 7 friends within 10 days, there’s an extremely high likelihood that that user is going to continue to come back and engage in their platform.

How do you think about your own business and pick out these levers and learn those insights? I recommend starting with what’s called AAARRR. It’s literally called pirate metrics, and it stands for A-A-A-R-R-R, which is awareness, acquisition, activation, revenue, retention, referral. It’s all the points in which someone first hears about your product or service or brand to the point in which they tell other people to also sign up for. It’s the whole funnel. While your business has one north star, you may really need to start digging in. We now have a growth team, which I’m on and, about each month, we focus on a new lever to drive that metric.

Here’s a great example. We looked at all of our AAARRR metrics. We’ve looked at all of those, and we noticed that there were some really big gaps along the way, one of those being the point in which they created their account, so the onboarding, really solid, and from the point that they created their account to having their first conversation using Drift, there was a pretty significant drop-off. We recognized that that was a thing that we wanted to focus on first.

When you’re thinking about this, if you’re early and you’re really just starting to think about levers and how you drive those numbers, one caveat that I will say is don’t do it too early. If you’re a really small startup and you’re just getting started, don’t get so focused on moving the activation rate or those kinds of things. Focus on qualitative and then, over time, you graduate more into quantitative. Once you’re at that point, you have some product market fit. Things are repeatable.

Then map out your funnel using AAARRR. The way to do this is, step one, make sure that things are being tracked. Make sure that you’re tracking the amount of people signing up, then the amount of people doing an activity, the amount of people who are then giving you a credit card and paying for the service. Map that out and visualize it. Put it on a big screen, look at it, and see where the most significant drop-offs are. You may notice that your onboarding is great, your sign-up flow is really spectacular, but the point at which they have to then do an activity falls of a cliff. Maybe the rate of sign-up to sign-up completed is 50%, and then sign-up completed to doing the first activity is 5%. That is a big red flag. I would focus there.

Once you really zone in on one of these levers, get all the low-hanging fruit. If there are a lot of gaps across your whole funnel, don’t try to go tackle them all at once. You’re going to just dilute your ability to really focus on that lever and move it. If you know that activation rate was at 5%, then focus there, get it to 20, and then move on to the next one. The idea here is that you get all the low-hanging fruit first across your funnel. There’s going to be a lot of really easy things that you can tackle.

Then, over time, once you knock those out, once things start to get harder to move, then you go really, really deep on a specific thing, and you can come out of it on the other side with those magic equations of 7 friends in 10 days. Oftentimes, I think people are little to stuck on finding that perfectly magical number like 7 friends, 10 days. These things are still approximations. The more important part is that you know what those ratios look like, and you can start to learn what are the things that you can do that you’re not doing today to drive that number? If there’s a huge, huge hole in your funnel, focus on that, see how you can move it.

There are different schools of thought in terms of should you start at the top of the funnel, should you start at the bottom of the funnel? Well, if you start at the top of the funnel and you’re focused on sign-ups, then you’re pushing people into a leaky bucket because they’re just going to fall off later. If you start from the point of revenue, you barely have any volume to work with to really see if you’re moving levers. I really don’t think that it matters that much early on. Arguments can be made either way. The important part is not to get paralyzed by, “Oh, but we can move this thing, and should we do this one first? I’m not really too sure.” Just pick something, run with it, see if you can move the number. If you can move the number, amazing. Keep moving it until you’re not moving it a lot, and then move on to the next low-hanging fruit.

It’s most likely that, if you’re just starting to think about this stuff, it’s going to take you a few months to knock out all those big things. You’re going to see really, really large jumps early on, and then moving the number is going to get harder and harder and harder. That’s okay because then you’re getting to a point where you’ve built out your process to look at this stuff, to tackle it. You’ve made progress on your funnel. You’ve chosen levers that matter at that time.

To kind of bring this all back together, your company has a north star. That is great. Don’t anchor all of the things that you’re doing to that north star. If your anchor is revenue, don’t look at all the activities that you’re doing to get people signed up. Don’t measure that stuff in revenue. Measure it within that lever, the sign-up to sign-up completion rate or the website visit to sign-up rate. Focus on that, move that number, move on to the next thing. Don’t expect to be able to find super magical numbers or formulas right early on. Expect to move in months in this stuff if you’re just getting started. Then, over time, you could start moving into testing these things out in weeks and that kind of thing.

All right. That’s it for me for today. Thanks so much for listening. ⭐️⭐️⭐️⭐️⭐️⭐️ reviews only as DC and DG would request me to say. I’ll catch you on the next episode.