Startup Roadmap
This is an introduction blog to some knowledge (basic) and vocabs I have learnt building mobile products.
Mobile Product Skill Radar Chart đź§
For any Internet startup, you need to know your advantages and disadvantages just so you don't get lured down a blind alley.
Customer Acquisition​
At the basic level, you need to know how and how much you spend to acquire a customer. Without knowing this, your product can't even reach the market.
Impressions:
Number of times your ad is shown
A rough benchmark as of 2024
Platform Impressions per $1 spent Notes Facebook 500-1,500 Good for targeted demographic reach Google Display 1,000-4,000 Wide reach across websites TikTok 2,000-5,000 High engagement with Gen Z Reddit 800-2,000 Good for niche communities Twitter 400-1,200 Best for news/trending topics LinkedIn 300-800 Higher costs but B2B focused
CTR (Click-Through Rate):
Measures the percentage of people who click on an ad after seeing it
Platform CTR Benchmark Facebook Ads 0.5-1.6% Google Search Ads 1.5-3% Display Ads 0.1-0.3% Factors affecting CTR:
- Ad creative quality
- Targeting accuracy
- Ad placement
CVR (Conversion Rate):
Install rate after clicking the ad
Typical benchmarks:
Platform Conversion Rate App Store 30% Google Play 25% Facebook App Install Ads 20-35% TikTok App Install Ads 10-20% Affected by:
- App store optimization
- Screenshots quality
- Reviews and ratings
CPI (Cost Per Install):
Platform Average CPI Range Notes iOS Higher $1.00 - $3.00+ Generally higher due to perceived higher value of iOS users. Can be higher for competitive categories like gaming or finance. Android Lower $0.50 - $2.00 Varies depending on app category and region. CAC (Customer Acquisition Cost):
- Total marketing spend / Number of new customers
- Includes all costs: ads, content, personnel
- Should be significantly lower than LTV
- Example benchmarks:
- B2C Apps: $1-10
- B2B SaaS: $100-200
- Total marketing spend / Number of new customers
Case Studies:
- Any web era startups: Google, Yahoo, Portal sites
- Modern social apps:
- TikTok: High impressions, strong CTR due to algorithm
- Instagram: Strong CVR through visual appeal
- LinkedIn: High CAC but justified by B2B focus
for more updated data for each of these metrics, refer to Business of Apps
Mutliplier​
The multiplier effect in startups refers to the rate at which a product or service spreads among users. It can be exponential or linear, impacting growth potential significantly.
Exponential Growth:
This occurs when each new user brings in more users, creating a viral loop. It's often driven by network effects, where the value of the product increases as more people use it.
- Example: Social media platforms like Facebook and TikTok, where user engagement and sharing lead to rapid user base expansion.
Linear Growth:
This is a steady increase in users over time, often through consistent marketing efforts rather than viral spread.
Net Promoter Score:
- A metric that measures the likelihood that customers will recommend a product or service to others.
- A score of 10 or above is considered excellent, while a score below 0 is considered poor.
Example: Subscription services that rely on steady acquisition through advertising and word-of-mouth.
Case Studies:
Uber: Utilized network effects by incentivizing both drivers and riders, leading to rapid adoption in new markets.
UberEats: Expanded quickly by leveraging Uber's existing infrastructure and user base, demonstrating a strong multiplier effect in food delivery.
Understanding and leveraging the multiplier effect is crucial for startups aiming for rapid growth and market dominance.
Screen Time​
The time users spend glued to your app. More time = more engagement!
Amount of time the user uses your app on daily basis.
Basic Benchmarks:
- TikTok: 100 minutes of addictive scrolling.
- Facebook: 45 minutes of social fun.
- Toutiao: 75 minutes of AI-curated content.
Boosting Screen Time:
- Personalize: Show users what they love.
- Gamify: Add fun challenges and rewards.
- Notify: Send timely nudges to bring them back.
- Beautify: Make your app a joy to navigate.
Retention​
Definition: Retention measures how long users continue to use your app after their initial download. It's a critical metric for understanding user engagement and app longevity.
Retention Rates:
- 2nd/7th/30th Day Retention: These metrics indicate the percentage of users who return to the app on the second day, after a week, and after a month, respectively.
- 4-2-1: Considered average (40% on the second day, 20% after a week, 10% after a month).
- 6-4-3: Exemplified by top apps like TikTok, Facebook, and Google.
- 5-3-2: Indicates strong retention, suggesting potential for an IPO.
- 2nd/7th/30th Day Retention: These metrics indicate the percentage of users who return to the app on the second day, after a week, and after a month, respectively.
DAU/MAU Ratio:
- This is another common web metric equivalent to retention rates, calculated as daily active users divided by monthly active users.
- 20%: Average retention.
- 60%: Comparable to TikTok's retention.
- 66%: Comparable to Facebook's retention.
- This is another common web metric equivalent to retention rates, calculated as daily active users divided by monthly active users.
Other Metrics:
- Because not all business model needs everyday usage, i.e. Airbnb, Booking.com
- Repeat Purchase Rate: Measures the percentage of users who make a second purchase within a certain period.
- Churn Rate: Measures the percentage of users who stop using your app within a certain period.
- Time between sessions: Measures the average time between consecutive sessions.
- Because not all business model needs everyday usage, i.e. Airbnb, Booking.com
Examples:
- Consumer Apps: TikTok, Facebook, Snapchat.
- B2B Apps: Salesforce, Slack, Tableau, which often have mandatory retention due to their necessity in work environments.
ARPU (Average Revenue Per User)​
Definition: ARPU is the average revenue generated per user per month. It's a key metric for understanding user value.
ARPPU (Average Revenue Per Paying User): A metric that measures the average revenue generated from users who make a purchase, providing insights into monetization effectiveness.
LTV (Lifetime Value):
- LTV estimates the total revenue a business can expect from a single customer account throughout its relationship with the company.
- Significance: Understanding LTV helps businesses determine how much they can spend on acquiring new customers (CAC) while remaining profitable. Ideally, LTV should be significantly higher than CAC.
- LTV estimates the total revenue a business can expect from a single customer account throughout its relationship with the company.
Examples:
- Airbnb: High ARPU due to premium pricing and low operational costs, despite low screen time.
- Netflix: High ARPU driven by subscription-based model and a vast library of content, with moderate screen time.
Branding​
Top Internet Companies with Strong Branding:
Apple: Design excellence, user-friendly products, loyal customer base
Netflix: High-quality content, personalized recommendations, global presence
Airbnb: Community-driven, trust-focused, storytelling-based marketing
Google: Data-driven innovation, seamless integration, user-centric services
Tesla: Cutting-edge technology, sustainability focus, disruptive innovation
Key Branding Strategies:
- Build consistent brand identity
- Create emotional connections
- Adapt to market changes