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A Roadmap to Success

This is an introduction blog to some knowledge (basic) and vocabs I have learnt building mobile products.

Startup Skill Radar Chart 🧭

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

      PlatformImpressions per $1 spentNotes
      Facebook500-1,500Good for targeted demographic reach
      Google Display1,000-4,000Wide reach across websites
      TikTok2,000-5,000High engagement with Gen Z
      Reddit800-2,000Good for niche communities
      Twitter400-1,200Best for news/trending topics
      LinkedIn300-800Higher costs but B2B focused

  • CTR (Click-Through Rate):

    • Measures the percentage of people who click on an ad after seeing it

      PlatformCTR Benchmark
      Facebook Ads0.5-1.6%
      Google Search Ads1.5-3%
      Display Ads0.1-0.3%

    • Factors affecting CTR:

      • Ad creative quality
      • Targeting accuracy
      • Ad placement

  • CVR (Conversion Rate):

    • Install rate after clicking the ad

    • Typical benchmarks:

      PlatformConversion Rate
      App Store30%
      Google Play25%
      Facebook App Install Ads20-35%
      TikTok App Install Ads10-20%

    • Affected by:

      • App store optimization
      • Screenshots quality
      • Reviews and ratings

  • CPI (Cost Per Install):

    PlatformAverage CPIRangeNotes
    iOSHigher$1.00 - $3.00+Generally higher due to perceived higher value of iOS users. Can be higher for competitive categories like gaming or finance.
    AndroidLower$0.50 - $2.00Varies 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

  • 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
info

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.

  • 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.

  • 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.

  • 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.

    ARPU=Total RevenueNumber of Users\text{ARPU} = \frac{\text{Total Revenue}}{\text{Number of Users}}

  • 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.
      LTV=ARPU×Average Customer Lifespan\text{LTV} = \text{ARPU} \times \text{Average Customer Lifespan}
    • 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.

  • 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