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How to Optimize Growth Funnel (Case Study 2X Revenue Growth)

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App Masters12:05Open on YouTube
Chapters show their main points

The bottom line

Doubling an app's revenue comes from finding the one leaking step in the growth funnel, diagnosing it by talking to users, and fixing it cheaply. That fix buys the cash flow to keep improving the app.

Key takeaways

  • A funnel that converts well still loses money until enough users enter it. 2:58
    • Time Clock got about 90 downloads a month. 21 became accounts (23%) and 14 became customers (67%).
    • Its profit margin was under one person's pay, because fixed technology costs ate the revenue.
  • Adding users to the funnel exposes where it leaks. 4:15
    • Growth of over 1,000% produced 901 new accounts and free trials.
    • Only 16 of those became paying customers, about 2%.
  • Talking to users shows why they drop off. 6:13
    • Only 42 of the 901 finished onboarding, and 16 of those 42 paid.
    • Users were office managers at construction firms with 20 to 30 employees. They were not technical and wanted onboarding in two to three simple steps.
  • A simple fix aimed at the exact hole lifts revenue fast. 10:07
    • An email series with 15-second GIF tutorials took a week to build.
    • Onboarded users rose 81%, which points to a 45% margin and a company going from $100K to $200K.
  • The first fix is only a start, so the work continues. 11:01
    • Onboarding rose only from 5% to 8%, which is still a low rate.
    • The extra cash funds in-app tests to push that one metric higher.

The secret sauce was tapping into our knowing who we're talking to and then tapping into that insight.

Jordan Bryant

Chapter summaries

0:00 The six-stage funnel

A business finds its leaks only by tracking every stage of the funnel, down to profit.

  • Six stages of the funnel are tracked from first download to profit. 1:05
    • The stages are acquisition, activation, retention, revenue, loyalty and profit.
    • Examples of metrics are downloads, first launches, accounts created, fully onboarded users and active users.
    • The time it takes a user to become a customer is a metric worth shortening.
    • How long they stay a customer measures retention.
    • Revenue and profit per user and per customer show what each new user is worth.

2:07 Time Clock: adding water to the bucket

Time Clock's funnel looked healthy, so the way to find a leak was to push more users through it.

  • Time Clock's funnel runs from download to a paid subscription. 2:07
    • Employees clock in and out to track their time.
    • Users download the app, create an account and get 30 days of free access.
    • Paying customers are charged $10 per month.
    • Full onboarding means adding employees, adding devices and clocking in.
  • More users were the only way to expose the leaks. 4:03
    • Jordan Bryant's team worked with App Masters to add users.
    • The conversion rate for accounts created doubled.
    • With no major holes known, the plan was simply to throw some water in that thing.
  • Tracking what happens after sign-up shows where users drop off. 5:15
    • Most users dropped off before finishing onboarding.
    • Those who did finish converted well, so the problem was onboarding itself.
    • Onboarding is only three actions: add an employee, add a device, clock the employee in.
    • Users didn't understand how to complete them.

6:03 Diagnosing the hole

Surveys and interviews with both droppers and buyers show who the users are and why they stall.

  • Surveys and interviews close the gap between users who finish and users who drop off. 6:15
    • Surveys first capture who is actually using the app.
    • Interviews then cover users before they convert and customers who already did.
    • Before-conversion interviews ask what they expect coming in and what they do along the way.
    • Customer interviews ask what they thought and did to get fully onboarded.
  • The office manager downloads the app, hands it to staff and decides the purchase. 7:18
    • The app is their first step in digitizing the company.
    • They have never put a digital process in place, so it is a leap of faith.
    • That is why they need guidance at every step.
  • Onboarding has to be simpler, with less clutter and plainer words. 8:37
    • Users should focus on just the one step in front of them.
    • The work covers simpler terminology, simpler steps and less on screen.

8:53 A cheap fix, then reinvesting

The user insight, not the email tactic, made the fix work, and its payoff funds the next round of tests.

  • The first fix should be the easiest one that needs no engineering. 8:53
    • Its job is to validate that this is the right hole to plug.
    • The emails targeted only the first three steps to get started.
  • The insight is the secret sauce, and copying the email series alone will not repeat the result. 9:16
    • Users said which three steps to teach, when to send them and how to explain them.
    • Bryant warns against concluding we just implemented an email series and boom there is a successful app.
  • Results showed within a month, and top-of-funnel conversion held steady. 9:54
    • The new cash flow gives breathing room to reinvest in the app.
    • That reinvestment pays for in-app improvements.
  • With the funnel set and the metric known, the work is to keep pushing that metric up. 10:43
    • A higher rate means more customers, more profit and more growth.
    • Bryant puts it as now we just pound that metric until we get it to where we want to be.

In the growth library

Jordan Bryant, Founder and CEO of Chamber DS, an app incubator. Shows how to find and fix the weakest step in an app's growth funnel by adding traffic, locating the leak, interviewing users and fixing it cheaply. For the TimeClock app, a one-week onboarding email series lifted fully onboarded users by 81% and put a $100K company on track to double.

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Transcript307 lines
0:00

what is up app nation welcome to another amazing app masters virtual summit where we bring on awesome guests to really break down how they've optimized growth monetization and retention and today I've got a great guest for you he's a friend of mine all the way in Portland Oregon his name is Jordan Bryant he is the founder and CEO of chamber D s an app incubator we're gonna learn what that really means so without further ado Jordan welcome to the summit awesome Steve super stoked to be here thank you so much Jordan put together an amazing presentation you by far the most prepared guest of any virtual summit that we've put together so I'm gonna let Jordan take over I want to go through some of the things that he's gonna be talking about but we're gonna be really talking about optimizing your growth funnel so Jordan take it away man awesome okay let me share my my presentation here okay so like Steve

0:55

pointed out optimizing your growth funnel so we run and go through what all that entails and what chamber D s is and how an app incubator helps you get through this whole process you know we need to be understanding that funnel and there's six sections of that funnel that we track acquisition activation retention revenue loyalty profit so what we're really we're really tracking everything you need to know to actually find all of those holes and optimize your business as a whole so you know examples of these different sections downloads first launches accounts created fully on-boarded active users lifetime durations so how many how long does it take for them to become a customer so from a user to a customer that's really important so it's a metric that you can focus on to get that down if you wanted to convert more customers but also how long they stay a customer so again the retention of them so yeah

1:51

we need to track that all the way down to profitability so that we're knowing how much revenue we're generating per user per customer how much profitability you know we're for every user this is how much profit we can expect because of all of our conversion rates and we need to know these things need to know the numbers as a business owner okay so now you wanted to show an example of what this looks like in real practice so I'll use this example of project afar's where time clock they have really great conversion numbers and the whole you know point of of this platform is to track time for an employee so that's that's the concept so people would sign up to get access to this through the app store and then they clock in clock out to track their time employees do that so what the conversion funnel looks like at a very high level download the app create the account 30 day free access you're fully onboard

2:49

when you've added your employees devices you clocked in and they converted ten dollars per month that's the month so the first month that we took it on you know these are the metrics that we were saying they were getting about 90 downloads a month of those 90 downloads 21 we're becoming new accounts created so that's a 23 percent conversion rate she's not the best but not too bad then of those 21 new accounts created 14 of them were becoming customers so 67 percent that's amazing yeah so when we look at conversion in the phone looks great right you have a really great converting funnel but then you look at the profitability of the company and it had less than a one-person profit margin which means that it had a fixed overhead of maintaining the technology that was eating up all of the RET all the revenue was going to that so it really wasn't profitable but this is the best problem to have because now you know you have a

3:50

great conversion rate you just haven't added enough users to it actually profitable so what we had to do add more users to the funnel simple right though that's what no obviously Steve you helped us and work with fat masters to add more water to our bucket because we identified that we we didn't really have any major holes in the bucket we had great conversion rates so let's throw some water in that thing what when we throw water in the bucket it really helps pinpoint a core problem in that funnel so though at first there was enough users on the platform to expose any of those holes and so when we add users to the app then it exposed the first hole so we had when we added that all those users right we we had over a thousand percent growth rate boom amazing our conversion rate for accounts created actually doubled right so that's amazing so 901 accounts created and when they're creating an account they're also

4:54

creating a free trial so we had all these people signing up for free trials for this app then we only had 16 that were converting so a two conversion rate of the people creating an account that's terrible right very bad big hole cool but now we know there's old there but that's not enough to know that someone's creating account and then not being him again becoming a customer so in leveraging ROH metric it allows us to dig deeper into that activation part of the funnel and once they've created an account then what's taking place after they've created an account before they've become a customer really measuring all of those things and we found that most were dropping off before finishing onboarding and when we look at the onboarding so 42 were actually fully becoming on-boarded 16 of the 42 were converting so we had a really great conversion rate of onboarding to becoming a customer the problem is is

5:55

people weren't understanding how to fully become on board which is as simple as adding an employee adding a device and then clocking your employee in so once we identified that individual thing then we had to diagnose that hole so the things that we did to diagnose that hole we're adding user surveys so that we can capture some more quantitative information right of what who these people are who are the people that are actually using the app that we need to talk more about so that we have the context when we go to talk to them the next thing is doing those user interviews so talking to the people before they convert customer because we want to know what they're thinking coming into it and then what they're doing through the process before converting so why aren't they actually becoming fully on-boarded and then talking to those customers to understand the type of person that is converting you know what they're

6:55

thinking coming into it and what they're doing to actually convert so that we can bridge that gap between the people that are making it and the people that are dropping off and here's some of the things that we found so this was our target user right here on the right those who had no office space you may recognize this image so so this was the person that was using our app and converting to a customer so we found the majority of the people that were downloading and using the app or construction companies average of 20 to 30 employees so kind of a small organization small back office the the main target user that was downloading it and distributing it to their employees and then making the purchase decision was the office manager and talking to these office managers through these interviews user interviews we found that they're using time clock as that first step and to digitizing their company so

7:51

because it's a first step for them they're really not technical you know they really haven't implemented any sort of digital process into their company and so but then this is kind of like that first leap of faith so having that context we found that they're they're not technical technically savvy where they're trying they understand how to set something so they're really looking for two to three really simple steps to get fully on-boarded into using the app and so that was really the those those key learnings so these were those holes that we identified like these are the true holes but they want to on boards and you know from this user insight they want to onboard in two to three steps only so that's what we had to make happen and they needed to be easier to understand no simplified the terminology simplify the steps take away the clutter you know really have them hyper focus on the step

8:49

they need to be doing and this is this is how again no prior to going back to concept ring we want to think about what is the low-hanging fruit what is the easiest non-technical way that we can plug these holes to start to just validate that this is these are the holes that we need to be plugging so to do that we implemented an email series and 15 second gift tutorials in those emails targeting those first three steps to get started so the key thing is I don't want people to take away from this this whole case study oh no we just got the implemented email series and boom you know we'll have a successful app what we did is but the secret sauce was tapping into our knowing who we're talking to and then tapping into that insight because they told us exactly what three steps we need to give them they told us exactly when we need to give it to them and they told us exactly how to tell them about those

9:44

three steps which told us exactly that we need to implement this specific email series to start it and so with that with with implementing that this is what we saw you know within a month of doing that so we maintained our our conversion up top here but then and just implementing that basic email series which you know took us a week to implement you know we we increased our our cut our users being on boarded by 81% which then almost pulled our new customers which put us on a forty five percent margin trajectory which is going to cause us to double the company this year you know so that's taking a hundred K company and turning it to a two hundred K company which provides all the cash flow necessary to be improving and growing the application so I really just want to take a minute here to let this sink in because by making the identifying the hole properly diagnosing it and then implementing a solution it's

10:48

giving us some breathing room so that we can reinvest and back into the app because you know this this wears it out here okay these this is you know only up eight percent summers that were were on boarded its went from five to eight percent so only a couple of percentage points eight percent is not something we were excited about you know it's still a very low conversion rate but by making these tweaks it's given us the budget we need to now reinvest back into the app so first the low budget way it was you know that's great but we've identified the prop the problem and now there's other solutions we can be testing in app to help make it a better experience improving the application so that we can be increasing that even more and more and more higher conversion rate which will then correlate to more new customers more profitability more growth because the conversion funnel is set and we've identified the metric now we just

11:44

pound that metric until we get it to where we want to be check out the videos on the side if you want to see more of our amazing content and also don't forget to hit that like button and hit subscribe and leave a comment below with some of the content that you want to see I want to make sure all your questions are answered either by me or one of my expert friends