Kozminski Techblog

Perhaps the most important aspect e-commerce analytics is retention rate (retention of users). After all, if users used your service once and never again after in most cases the service is going to fail.

Let’s start with how to calculate the retention rate. There are several ways. The easiest is to divide the remaining number of members to the number of all users who joined your service. For example, 100 unique users visited your website per day. Of these one hundred people, ten returned to the website. So, the retention rate is 0.1, or 10%.

Typically, this indicator is calculated for the first day, seventh, fourteenth, twenty-eighth, etc. For example, on day 0 hundred people visited the website and only 10 came back in the end of the month. Retention on day 28 is 10%. This is called the classic retention. Of course, the more days have passed from the day 0, the lower the retention rate.

Below are the common tips to improve retention:

Events. Promotions, bonuses, sales, tournaments, etc. Users should be aware that the frequent visits of the website will give him some prospects or benefits.

Gifts for the return. Game currency, options, etc.

Tasks. Daily missions, quests, puzzles, etc.

Characters and plot. People become attached to specific characters and watch the development of the plot/story.

Progress. Number of victories, medals, crystal, experience points, awards, status, results.

New faces. The more the user on the website, the more it opens up new opportunities, levels, mechanic, worlds, etc.

Remember that to attract a user is much easier than to retain him and to retain him is much cheaper than to attract a new one. This rule is working in any e-commerce and the money spent on retention of the customers have to be taken into account while calculating the LTV. Of course the high retention rate does not come for free, however to retain a user is much cheaper than to attract a new one.

RETENTION RATE IN OFFLINE WORLD

In the article I have mentioned the tips how to engage the users to increase the retention rate so that users could come back more often to the service/website. As I have already mentioned in most cases the retention rate increase comes at expenses which are quite necessary if you want the customers to com back.

To remember the essence of retention rate, please try to solve the following:

Let’s assume that some Cool Polish University spent PLN 4000 on attraction of new students to some Cool Master Degree Program. The program is funded by EU (meaning it is free and student are not paying for the program). The only payment that students have to pay is exam fail-fee which is PLN 610, which is the only income to the University from the admitted student.

Let’s imagine that in the beginning of third semester the students of this program started to complain that they want to have seminars on Google AdWords and Google Analytics otherwise they are going to leave the program and the University decides to organize such seminars. The seminar on Google AdWords and Google Analytics costs PLN 2100 and for the Cool Polish University it is a “retention event” (meaning that people are going to leave the program if they will not have these seminars). For the Cool Polish University these PLN 2010 are additional “retention costs” which are not foreseen by the EU funding.

Now the question: How many students have to fail the exams in 3^rd semester to have Google AdWords and Google Analytics seminar in the beginning of 4^th semester?

Thank you.

Names, places and incidents either are products of the author’s imagination or are used fictitiously.

Those who have a child know that feeding it can turn into a real war. Those who does not, could probably hear this drama in a restaurants or friends’ houses etc.  In Argentina they decided to do something about it and came up with a weapon for these eating tragedies. They combined the reluctance to meals with unconditional love for games and what they received was this:

Yumit, an interactive plate designed  by Wunderman, that convinces kids to consume by converting what they eat into virtual energy that can be used for upgrades and extras on mobile games. Meals are weighed in real time, with an inbuilt sensor detecting how much food the child is eating. The more the kid will eat, the more ‘virtual energy’ it will receive, and then can use this energy in games. The plate has a LED display that keeps children informed of how many fun games they’ve unlocked, which turns the boring routine of eating into fun experience. The sets will be available in different colours. What is also important, you can wash it in a dishwasher.

The invention could be pretty powerful if it was integrated into popular games but in this moment there are not many games that the child could play using extra points from eating.

I am wondering if the children will really enjoy eating spinach which they hate, to get some points. Maybe producers are not aware that kids are really intelligent and they will understand pretty fast that they just have to remove food from the plate which does not really mean they will put it in their mouth… Parents control will be still inevitable, and arguments about the virtual points can become a new reality.

The Yumit plate is not on sales yet but you can make a pre-order on their website http://www.yumit.io/ if you really believe that this can work with your kid.

Sources:

http://www.yumit.io/

http://www.springwise.com/smartplate-lets-kids-earn-virtual-currency-eating/

http://www.wired.com/2015/09/an-interactive-plate-that-turns-your-kids-meal-into-a-game/

Hello everyone. Couple weeks ago when I started to create content for this blog, I decided to write about the topics, that I really care about or which affect my daily life so irresistibly, that I have to share it with readers. I have been reaching the boiling point for a while and now I am ready to “spill over” my concerns 🙂

I am truly Apple guy: I have a Macbook, iPad, iPhone and iPhone, and I used to believe nothing could possibly change my positive attitude toward those devices. I was hooked on by its quickness, responsiveness, user interface and much more. But recently I got a feeling I would not have tolerated couple years ago – I got pissed off with IOS.

As far as I remember myself as an Apple fan, it used to be as follows: Android is an open system, that gives a user limitless options for customisations, but the user has to endure slow system and lots of bags in return. Whereas an IOS, as a counterpart, is a closed system, that restricts plenty of functions Android offers, but it gives a great opportunity to have a smooth, fast and intuitively comprehensive experience with its devices. People liked it or hated it, but Apple had its own philosophy in IOS development.

It lasted all the way till IOS6. Or for being precise till Scott Forstall, vice-president, responsible for IOS development, got fired. IOS5 appeared the system created under his supervision and then it started gradually plummet. To Apple’s credit, I must say IOS6 did not bring any killing feature, but at least it did not kill the user experience. Lets be honest – it’s hard to break what works perfect.

The consecutive system IOS7  was going to be a huge challenge since company decided to create it from the scratch. Flat design, new options, features and so called breakthroughes were summoned to accept the challenge sent by Samsung. At that time (2013) Apple funs could not mock Samsung as the did before: “IOS is not perfect anymore, but look at Samsung – it’s even more hilarious ” – now it’s note than extraneous. As a response to critics Apple released the worst (in terms of responsiveness, lags, battery life) system they had ever created. And they will “surpass” this system with IOS8 and 9.

My personal experience suffered ever since. If someone thinks that the fact that I have Iphone4S is enough to exonerate Apple – I am totally in disagree.

Everything lags:

1. Spotlight
2. Multitasking
3. Overal performance is rolling to the void
4. Camera switches off on permanent basis

It was on IOS8. Please, do not install 9 on your 4S – it will inevitably kill it. I know, believe me 🙂

As an endorsement of my words: I saw a video with a guy benchmarking iPhone 6s+ on IOS9 and iPhone 4s on IOS5 and the latter doing pretty ok. It is like a hard stroke in apple fans’ faces…

Another annoying matter is localisation services. I really do not know what curbs Tim Cook and a team to develop this way?!?! Why Google and ALL its services are localised: Google Now, Google Maps, Assistants etc?? Why the next Apple’s “killing feature” will be non usable outside US? I believe it add another drop in the jar of Apple adherents and one day it will spill over and people will but Samsung and they will realise that everything that must work actually works. If Mr. Cook reads us – take care of this business. IOS is a golden cow for Your company!

As a concussion, I reckon it’s a huge topic to discuss, but I believe U have expressed the main points of my concern. Nowadays I really consider options how can I drop photos on my Mac from Android smartphone and it upsets me. But on the flop side, it’s a beginning of something new.

You probably know Popcorn time, if not, it is or should I say it used to be the illegal alternative to Netflix. Free to use, this platform was offering the possibility to watch a large amount of movies, but also series in HD quality. The interface was really well made, subtitles were available directly on the screen, the user was able also to choose different quality, and generally the concept was brilliant even if it was illegal.

After that the web version was closed, it’s the company itself that is closing because of an additional conflict between de developers.

However, that would be disappointing if the whole project disappear completely. It is already confirm that new project will succeed, it names: Butter. This new offer will be legal in order to not repeat the same mistakes as in the passed.

The question is what was the reason of the troubles? Earlier last week, few Popcorn Time developers simply left the project. The reason is the idea of paid anonymizing VPN implementation; some of them thought that this new option would lead to legal trouble. Two version were available, the .io version considered as the safest one and Time4popcorn that was frequently accused to be a source of virus for the users.

It’s because of this second version that one of the main quality of Popcorn time have been destroyed, the safety issue.

So what is Butter?

It’s like Popcorn Time but without the elements that made people wary. This new application is created so that everybody can somehow contribute to desktop and mobile applications design. Butter allows to stream movies and shows directly from Bittorent. This new version will replace the “Old” Popcorn Time, however the content available will be lower due to filter of illegal content.

More: here and here

Technology is moving at a breakneck pace, constantly evolving and developing.  We, guys, can see it easily by comparing our lives today with even a couple years ago. So do the businesses. Social, mobile, analytics, cloud, and increasingly the Internet of Things have become driving forces behind the rapid evolution of digital businesses. In this blog I will focus on the technology trends which are waiting for us in next year. We will be able to see the shift from today to tomorrow. I was inspired by Gartner forecasts, the world’s leading information technology research and advisory company. Let’s have a look in a nutshell :

• Trend 1 – The Device Mesh
  Under the device mesh ( aka network device) are meant multiple device terminals that allow people to access information and applications or interact with each other, within commercial and government organizations. These devices include smartphones, portable electronic gadgets, consumer and household electronic devices, vehicles and all kinds of sensors.

• Trend 2 – Advanced Machine Learning
  Deep neural computer networks will go beyond the classical computer systems and will be used to build systems that can learn and perceive the world independently and autonomously. The growth and complexity of data sources, data classification will make manual analysis uneconomical and unrealistic. Through neutron networks these tasks can be automated.
• Trend 3 – Autonomous Agents and Things
  Machine learning will lead to a rise in the popularity of intelligent machines – robots, autonomous vehicles, virtual personal assistants and smart advisers who will work independently or semi-autonomous. Predecessors of these machines today can be considered as such as Google Now, Microsoft Cortana and Apple Siri. Their development will play a leading role in the industry, although the development of physical machines – electro-mechanical robots and others…also will continue.”Over the next five years we will evolve to a post-app world with intelligent agents delivering dynamic and contextual actions and interfaces,” said Mr. Cearley. “IT leaders should explore how they can use autonomous things and agents to augment human activity and free people for work that only people can do. However, they must recognize that smart agents and things are a long-term phenomenon that will continually evolve and expand their uses for the next 20 years.”
• Trend 4 -Internet of Things Architecture and Platforms
  It’s not the first year when researchers indicate the Internet of Things, as one of the most important trends. However, they are now more clearly formulated, what exactly will happen. It is expected that 2016 will be the year of development of platforms for new technology. However, due to lack of organisation vendor standardisation of such platforms will flow quite difficult until 2018.
• Trend 5 – Adaptive Security Architecture
  Network devices and intelligent machines will require significant computing resources, resulting in a proliferation of high-neuromorphic architectures based on field programmable gate array (FPGA) and graphics accelerators. The new architecture will help achieve the computing speed, measured in teraflops.

In my next post I will give you the list of next 5 upcoming trends for 2016.

Stay tuned! 
Inspirations & Sources: 

• http://www.forbes.com/sites/peterhigh/2015/10/06/gartner-top-10-strategic-technology-trends-for-2016/
• http://www.gartner.com/technology/home.jsp
• http://www.itbusinessedge.com/slideshows/top-10-strategic-technology-trends-for-2016-12.html

What is LTV?

LTV (Lifetime Value) or CLTV (Customer Lifetime Value) – is the total profit received from a client during all the time while he/she is using the service.

Simplified example of LTV calculation:

Assumptions:

• Cool Master Degree Program is free;
• The only cost of Cool Polish University is marketing to attract new students;
• The only profit from students – their fails on exams;
• Fail fee is PLN 610.

Some Cool Master Degree Program of some Cool Polish University lasts 2 years. The program is free, however if you do not pass an exam, you will have to pay PLN 610. So, if during these 2 years of free studies you will not pass 2 exams, you will have to pay PLN 1220. PLN 1220 is your LTV for Cool Polish University i.e. total profit received by Cool Polish University from you during all the time of your free Cool Master Degree Program.

Why is it important to know the LTV and CAC (Customer Acquisition Cost)?

LTV – is one of the most important metrics in the business (especially e-commerce) even if your business is registered as non-profit organisation. The majority of companies die because of the fact that the cost of attracting of a new customer (CAC) “outweighs” the lifetime value of the customer (LTV). Most such situations happen due to the fact that entrepreneurs are focusing on the transaction and often forget about the experience that the customer receives after conversion achieved (retention rate).

Simplified example of CAC and LTV calculation:

Assumptions: the same as in first case.

The marketing department of some Cool Polish University spends certain funds on marketing to attract new students. Let’s assume that marketing department spends PLN 200 on average to attract new student. This is our CAC. Let’s assume that 20 students were admitted to Cool Master Degree Program. So, the total budget spent to attract new student is PLN 4000 – total CAC. The question is how many students have to fail the exam during the 2 years’ master program to cover these costs? It’s simple. 4000/610. So, approximately 6 fails will cover costs for marketing of Cool Polish University. Of course the example above is extremely simplified. But the main idea here is to understand that LTV has to be higher than the CAC. Otherwise the business model is going to fail like these students on exams 🙂

Why LTV is so important?

LTV can help you:

• Identify the ROI (focus exactly on the channels that will bring you the best customers).
• Improve customer retention strategy.
• Increase effectiveness of communication with the customers.
• Improve behavioral triggers (understand why your customers pay you).
• Improve productivity of customer support.
• Focus your time on the special attention to the most valuable customers.

In my next post I will give you several approaches to calculate LTV and they will be more complicated.

Thank you.

Names, places and incidents either are products of the author’s imagination or are used fictitiously.