To optimize for development, research your down-funnel metrics

You’ve managed to amass 1,000,000 customers. Wonderful.

But when 999,999 of them don’t make it by the funnel, or churn, now that’s not so wonderful.

That’s an excessive instance, however it exhibits why optimizing your development funnel is essential within the early days of your organization.

What does a development funnel appear to be? Though every startup’s will funnel will look completely different, on the core, it consists of three main pillars: acquisition, activation, and retention. I gained’t go over these pillars in depth, however let’s discuss some key optimization ideas.

Buying the precise customers

As your startup matures and strong user-level information begins flowing in, you must prioritize understanding which acquisition sources stand to draw probably the most customers. As a bonus, attempt to measure which sources add probably the most customers incrementally as effectively.

Various messaging by person cohort is your largest lever for shifting customers by the funnel.

Cross-functional groups (i.e., product, development and information) ought to repeatedly query the most effective sources of visitors at an outlined cadence, too.

Whereas main fleet development at Postmates, I shortly realized to turn into numb to outstanding upper-funnel metrics. Right here’s an instance of how we prioritized finances allocation with down-funnel metrics:

Indeed seems to be the worst acquisition channel (CPL), but ends up being the best over time (ROAS). (These are not actual results and are purely for demonstration purposes.)

Certainly appears to be the worst acquisition channel (CPL) however finally ends up being the most effective over time (ROAS). (These should not precise outcomes and are purely for demonstration functions.) Picture Credit: Jonathan Martinez

Despite the fact that Certainly has the worst CPL of the channel grouping, it nets the best revenue-producing fleet drivers, who’re probably the most energetic in Y1.

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