Numbers are always trustworthy if they're accurate. You just need to right context to interpret them in. These numbers are straight from Google Analytics, and you are correct that one was a direct link and the other was via TC. I say this in the article.
This is a real world scenario. Many people ask how much traffic we got from being on TechCrunch. This is just data, take it as you want. I do my best to explain the main caveats, including the one you pointed out. There are many.
There is one major flaw in this thinking. He says LTV should be at least 4x cost of customer acquisition (CAC) and that he would pay $60 for a warm lead. So let's assume he follows this and 4 x $60 is his LTV = $240. With 22 leads from TechCrunch the total potential value of those leads is 22 x $240, not 22 x $60
TC leads were potentially worth $5,520 if fully converted (not $1,320 - which is the cost he's willing to pay for equivalent leads)
Of course, very rarely do all conversions occur but I think when doing marketing it is important to know the fully converted value of each channel (in this case PR) so that you can figure out how much to spend. In general $5,000 of potential revenue (or TCV) is my minimum bar for a PR story, for example, so this story makes the cut just barely. I think the TC traffic they got was pretty abysmal, probably would be worth it to hire PR next time since they've got a B2B product that can afford $60 per warm lead
Conversion rates can change and constantly be improved on the product/sales side (public pricing, free trial, free + premium features for upsell, etc) but I've found that often growing the TCV (total converted value) of the channel is more worthwhile than trying to optimize in the early days when fixing conversion is harder than just finding attention opportunities. If you can find channels that consistently drive you leads worth 10-20x CAC and continue opening the channel more (getting more TC stories for example) you can figure out where its limit it.
This topic has been on my mind a lot, needs a whole blog post on DistributionHacks to dig into channel methodology and running multiple experiments to find the TCV of leads for each, stack rank, and implement system for scaling that as a business machine with predictable inputs and outputs --- but I haven't had time. Maybe this weekend.
Sorry about the confusion. When I say I will pay $60 for a warm lead, that's assuming a number of them will not convert. Our LTV is in the 1000s, but another part of the cost of acquisition is the time on the phone to close the deal.
It's more like this:
- We'll pay $300 bucks for 5 warm leads to hand off to sales.
- Sales will work the leads to close, spending another $200 of time. One of them will close.
- We'll get a customer with a LTV of greater than $2000, for $500. LTV >= 4x total CAC.
In valuing the leads from TechCrunch, it's a mistake to assume they'll all close (in which case their value is beyond $5520), we have to value what they actually are: potential. We have to discount the risk. That value, is about $60, so all 22 are worth $1320.
I like the optimism though. :)
And you're right it's not a great payoff overall. ~$3000 isn't a great ROI for the effort that went into the launch. There were other channels as well beyond HN and TC, but I wanted to keep the story focused on these two.
We've been testing more channels since and there's lot of data there as well and so, so much more to learn. Looking forward to your post!
I figured your LTV was probably much higher given what you're doing. That 4x CAC thing is really intended for consumer companies I think.
The reason this methodology matters is that when you have a marketer trying to figure out how to deploy a substantial amount of capital against business goals they've got to break it down by channel. And this common misconception is one of the most painful hurdles to get over with startup management teams who tend to be spending adverse even when the marketer finds a channel she wants to exploit the hell out of.
Marketing, as a function, deals in potential. If I can spend $1 to get you $10 of potential, and you (being sales or self-service conversion funnel) close 20% of that then we are a fucking awesome company :)
What front page do your customers read? Unless all you're doing is selling to Silicon Valley, neither TechCrunch nor Hacker News are necessarily going to be the answer.
I've gotten LiberWriter on the front page here a few times, and the number of new customers was astounding:
Absolutely zero.
The typical LW customer is not at all tech-savvy, which is pretty much the polar opposite of your average HN user. I get far more mileage out of hitting forums where writers actually congregate.
Not to complain, mind you, I posted to talk about aspects of LiberWriter that I found interesting that might be worthwhile for others, not to troll for business.
I agree. For Strangers for Dinner, I started by doing a Show HN. It was riding on the hype of being an introvert at that point (lucky me), so it had a lot of sign ups but it went no where.
Which is why for Fork the Cookbook (http://forkthecookbook.com), I've yet to do a Show HN. We even went so far to prevent anyone in the team from calling it Github for recipes, even when Fork the Cookbook IS Github for recipes.
We prefer to focus on our core target market, and work from there. Haven't been very successful yet though. Our forking rates were higher than expected (85% of the people who sign up have forked a recipe), and from that 85%, only a handful (about 5 or so) were from HN. Thoughts and ideas would be very welcome
I went with a TC article for the specific reason of getting an HN post out of it.
This led to waiting an extra week or two to launch, was generally a hassle, etc. And our article hit in the afternoon on the west coast, vs. at a reasonable hour on the east coast.
In the future I'd probably just post directly to HN. Getting to pick the time of the HN post is probably worth more than the incremental value of TC. TC might be worthwhile for funding announcements, but I'd never use it for a product announcement.
Given that the two links pointed to completely different pages it's hard to draw any conclusion. It's well known that landing page has a significant impact on conversion, so even if the same audience from TC was split across both links (front page vs blog article) the conversion would likely be significantly different.
It also varies highly depending on the time of day and business of both. Hit either on a busy news day and you'll get wiped out. The time of day also has a huge impact on whether the audience is primarily European / East Cost (US) / West Coast (US) which depending on the nature of your startup can make a huge difference.
While the article makes interesting reading I wouldn't recommend trying to apply the findings to your own startup.
Its not surprising to see that TC visitors are more engaged - after all, for you to get to the company from TC you need to click on the article, 'parse' the text and only then click on the right link. many times, simply reading about the company is enough for you to decide not to visit.
Therefore in your calculations, I think you are undervaluing the $ value of TC awareness, since many people that dont visit your site DO read/glimpse over the article/title and are aware of your existance.
I suspect I might be old fashioned but I'd take actual leads and conversions over paying 20 cents each for random hits any day. By such a measure, it seems TC won hands down. But as several other people are saying, both would be better ;-)
None of them will bring substantial traffic, users or virality (but HN brings you slightly more, if you are doing good ~20-30K visits while TC hits you ~5-10K).
If you are raising money or raised already and prepare the next round being on TC is a must. Not only once, better several times. Consider also Mashable, maybe not the same brand but you will get much more traffic and virality than with TC.
Regarding hiring devs HN is of course better.
To get on HN on the front page is much easier than with TC.
Depends on who you are trying to reach. If you want to reach developers and the "entrepreneurial market" then Hacker News drives more traffic (and if the product / audience fit is good will convert better too). If you want to reach business buyers and investors, then Techcrunch converts better (and drives better engaging traffic). So... who is your customer / user?
What you post on HN matters a great deal: when we had a general start-up related article hit the front page we got traffic but few leads (like in OP's example).
But when we launched an interesting feature and hit the front page -- with the story's title obviously aimed at our target market of app publishers -- we got massive amount of leads as well.
I've experienced the same thing, off of 1,300 visits for an off topic article we got about 7 leads. When we posted something clearly targeting our market our conversion rate jumped to around 10%
If you don't list your pricing most TC "leads" are just going to be people interested in what your pricing model is for a variety of reasons, not actual leads. One qualified lead in your segment probably represents much higher CLV than all those TC and HN leads combined. If you're actually looking to generate sales look elsewhere.
This article misses an important benifit of getting large amounts of traffic: Google starts to recognize you through author rank and links as a qualified source of information.
Ever since my articles have been on HN, search traffic has steadily grown. This could be because of something else, but the common connection is large amounts of traffic from you guys.
It really depends on your goals.
You can't compare conversion rates of a link to the homepage with a link to a blog post. Bounce rate on blog posts is always higher and the ppv is usually never over 1.5.
However when comparing HN to TC you should not just look at the raw numbers but also at what comes with it.
On HN if you're selling something on target, you'll get lots of advice and and feedback, Something you're unluckly to get on TC.
TC gives you credibility, it's a logo to put on your website's "Featured on" box and it helps you selling your product and doing fundraising.
It all depends on the market you are selling to. Nothing else. I have launched things on HN and it all boils down to if the market wants it. For example, my last project (marketing bits) has had a very high HN acceptance and adoption. Would it enjoy such success in TC? I don't think so because it is not the target market.
They both suck. No targeting, all fluffy early adopters, causing a high churn rate and lack of potential user insight. I have a solution, the site is live, with 5,000+ users, 2,500+ companies, but I need another PHP developer to make it more scalable.
@Author: More important question you should ask is How to get in the front page of HN? I never completely got the mystery behind it, can anyone jump in and explain?
Neither. Build up a mailing list of prospects while you build and keep them updated on your progress. On launch day, spread the news among the mailing list.
Your TechCrunch post[1] led directly to your homepage.
With that in mind, we can't trust these numbers at all.
[0]: http://news.ycombinator.com/item?id=4779410
[1]: http://techcrunch.com/2012/11/13/learndot-launches-its-learn...