8. Hacking Monetization Flashcards
What is the ultimate goal of acquiring, activating, and retaining customers?
To earn revenue from them.
What does increasing the lifetime value (LTV) of customers refer to?
Earning more revenue from each customer over time.
What is growth hacking primarily focused on?
Devising experiments for optimizing earnings from your customer base.
What do many growth teams fail to capitalize on?
Tactics for increasing revenue, focusing mostly on acquisition and customer activation.
How do retail companies typically increase revenue per customer?
By persuading customers to purchase more of whatever it is they sell.
For SaaS companies, how is revenue per customer increased?
By getting more subscribers to renew their subscriptions and upgrade to higher-fee levels.
What is the first step in mapping your monetization funnel?
Perform data analysis to highlight opportunities in the customer journey.
What is often referred to as the purchase funnel in retail companies?
The mapping of the customer journey focusing on purchasing steps.
What are pinch points in the customer journey?
Steps where potential earnings are lost.
What common pinch point do e-commerce companies face?
Abandonment of purchases between selecting an item and completing the purchase.
What is a common underoptimized area for SaaS businesses?
Pages displaying the options for plans and their prices.
What metrics should ad-revenue-driven companies track?
Average revenue per user (ARPU) and engagement metrics.
What cohort groupings should businesses analyze for revenue opportunities?
Higher-profit vs. lower-profit customers.
How did HotelTonight increase its purchase rates?
By targeting users who connected over 3G or 4G rather than Wi-Fi.
What is a potential strategy for e-commerce companies to boost customer spending?
Encouraging users who make one purchase to buy again within 90 days.
What should SaaS companies consider when analyzing customer cohorts?
The different types of businesses and their willingness to pay.
Why is it important to analyze monetization by country?
Different countries have different payment options and service norms.
What is the purpose of creating customer personas?
To better generate ideas for ways to satisfy customers’ specific wants and needs.
What should growth teams do to find out what benefits customers want?
Conduct surveys to gather customer feedback on improvements.
Fill in the blank: The first set of cohorts to break out are the _______.
higher-profit versus lower-profit customers.
True or False: Growth teams should avoid asking customers for feedback.
False.
What is the primary mission of growth teams regarding customers?
To provide customers with services and products they find most appealing and that best serve their needs.
How can companies increase the volume of customer purchases?
By offering additional items to purchase or features to pay for.
What should growth teams do to decide on new product features?
Systematically present ideas through surveys and experiment with those products or features before wider implementation.
What was the result of the BitTorrent team’s survey regarding new features?
The battery saver feature drove a 47 percent increase in daily revenue.
What is personalization in the context of customer relations?
A tactic for building a stronger relationship with customers to help retain them.
What is a recommendation engine?
Algorithmic programs that customize which items are recommended to customers based on their search history and buying habits.
What is the Jaccard index used for?
To determine how similar two products are to each other.
How is the Jaccard similarity score calculated?
The size of the intersection of two items divided by the size of the union of those items.
What can happen if a company is too intrusive with customization?
It can backfire and be perceived as creepy, leading to customer backlash.
What incident highlighted the risks of intrusive personalization?
Target inadvertently outing a teenage woman for her pregnancy through targeted coupons.
What is one method to test the effectiveness of personalization?
Sending personalized notifications to a small segment of customers to gauge their response.
What is the challenge in optimizing pricing?
Finding the balance between pricing too low and losing revenue or pricing too high and turning away customers.
What factors should be considered when setting prices for physical goods?
Production costs, marketing, delivery costs, and desired profit.
What are ‘charm prices’?
Prices that end in 9, 99, 98, or 95, which can boost sales.
What is the recommended approach for determining the ideal price for SaaS products?
Conducting surveys asking customers about price points they find acceptable.
What is ‘persona/pricing fit’?
The alignment of valuable features and customer price points to build effective pricing strategies.
What does cohort analysis help identify?
Different types of customers and their preferences.
What might a growth team experiment with based on customer willingness to pay?
Offering higher-priced plans for customers who want more features.
Fill in the blank: To gauge customer preferences, growth teams should use _______.
surveys.
True or False: Personalization can enhance customer relationships but must be done carefully to avoid being intrusive.
True.
What should growth teams do continually regarding pricing?
Experiment with pricing just as they do with other elements of the business.
What can be a consequence of getting personalization wrong?
It can dramatically hurt revenue rather than improve it.
What does All-Access Andrew represent in customer preferences?
A customer who wants all the bells and whistles the service offers
What is a potential strategy for customers willing to pay more than the basic subscription?
Offer a higher-priced plan with additional features
What should pricing be proportional to?
The value customers are getting from the use of the product
What are value metrics?
Metrics on which charges to customers are based
What are three questions to determine your value metric?
- Does the value metric align with where your customer perceives value?
- Does the metric scale as the customer uses the product more?
- Is it easy to understand?
Why is it important to present pricing options clearly?
So customers can evaluate whether the extra charge for higher plans is worthwhile
What should growth teams experiment with regarding ad-revenue-based products?
Pricing of the advertising units and different ad unit types
What is dynamic pricing?
A strategy that continuously changes prices based on various factors to maximize purchases and profits
What is pricing relativity?
The principle that people’s perceptions of prices are influenced by the prices of other options offered
What is a decoy package?
A product option that is priced to help customers better understand the relative value of the items
What lesson was learned from the SmartShoot pricing experiment?
Adding a decoy product increased annual plan purchases by 233%
True or False: Lowering prices always leads to higher sales volume.
False
What was the outcome of Qualaroo’s pricing experiment?
Raising prices significantly boosted revenue
What is the penny gap?
The perception of a large difference between a product being free and paying even a small amount
What was the result of making Stuart K. Hall’s 7 Minute Workout app free?
Downloads surged to an average of 72,000 per day and overall revenue increased by 300%
What is a common revenue model for the highest-grossing iOS games?
Free for download with monetization through ads or in-app purchases
What percentage of users did not pay anything to use the app?
97 percent
What is the common revenue model for the top-grossing iOS games?
Free for download, monetized through ads or in-app upgrades
What is a critical strategy for monetizing free users?
Optimizing persuasion for upgrades
Which app displays premium features to encourage free users to upgrade?
Spotify
What monetization strategy do many popular games use?
Virtual goods or in-app currency
What did Electronic Arts report in revenue from in-game virtual goods in Q4 2015?
$173 million
What currency does the dating app Coffee Meets Bagel sell?
Beans
What are some revenue generation methods for freemium products?
- Advertising
- Referral fees
- Sponsorships
- Selling user data
What should growth teams measure to optimize revenue strategies?
What’s working and what customers are willing to pay for
Who is a key figure in the study of behavioral economics mentioned in the text?
Daniel Kahneman
What principle explains the human tendency to return favors?
The principle of reciprocity
How did Costco apply the principle of reciprocity?
By offering in-store samples and demonstrations
What is the principle of commitment and consistency?
We are likely to take actions consistent with previous actions
How does Amazon utilize the principle of commitment?
Through the Wish List feature
What motivates consumers to purchase according to social proof?
Desire to follow social norms
What was the result of HMRC’s social proof strategy in tax collection?
Collections jumped from 57 to 86 percent
What acronym represents effective testimonial factors?
CRAVENS
What is the principle of authority in consumer behavior?
We trust experts and authoritative figures
How did Kaya Skin Clinic increase sales using the principle of authority?
By adding the word ‘expert’ to their call to action
What principle explains why we buy more when recommended by likable people?
The principle of liking
How did Airbnb improve their referral program?
By including a photo of the person sending the referral
What is the principle of scarcity?
We are motivated to act when we fear missing out
How does Booking.com use the principle of scarcity?
By showing missed deals and how many people are booking
What should growth teams continue to work on to avoid growth stalls?
Acquisition, activation, retention, and monetization
