So, you’ve launched your MVP… congratulations! That’s a huge achievement, but don’t kid yourself – your v1 product is almost certainly not ready to scale into a real business. MVPs are, by definition, the minimal feature set you need to start learning with real users, and the speed at which you’re able to learn and act on those learnings will mean all the difference between success and failure.
Success metrics are your tool to focus on what really matters
You’re probably already collecting qualitative and quantitative data about your website or app. With all of the great tools out there such as Google Analytics, KISSmetrics, Mixpanel, and Flurry, collecting data is easy. What’s not easy is being data-driven – leveraging this data consistently to prioritize, plan, and assess your activities.
My number one tip is to start simple, by developing high level success metrics that, based on your best assumptions, are the key drivers of your business. Document these and make them a part of your team and investor meetings, and focus maniacally on optimizing them one at a time.
Lastly, beware of “vanity metrics” such as gross users, page views, or total downloads – numbers that are “since the beginning of time” are not actionable, so be sure to use cohorts and time intervals as the context of your measures.
Start with 3-5 metrics for customer and business success
Many products are naturally conducive towards breaking out success metrics into customer success and business success categories. Customer success metrics are measures that tell you, directly, whether users are getting value from your product, while business success metrics focus on your own business outcomes.
Example customer success metrics:
- % Users Who Complete a Key Workflow – Without doing this, your users will fail. For example, for an email marketing tool, this would be sending your first email campaign. In Dave McClure’s Pirate Metrics, this is the Activation part of your funnel.
- % Retention – Do users come back as often as they need to get reasonable value from your product? Set a goal based on your assumption of how often a satisfied customer will use your product.
- NPS (Net Promoter Score) – gives you a way to quantify customer satisfaction as you iterate your offering. Measure it consistently and don’t game it. Set a goal for this to be very positive (+50). You need to wow early adopters.
Example business success metrics:
Set goals for these based on what would create a sustainable business.
- % Visit to Sign Up – How much website traffic do you need to get a new user?
- % Conversion to Paying Customers – Are users willing to buy at the price offered?
- CAC (Customer Acquisition Cost) – How much does it cost to land a customer? This may encompass the above 2 plus the cost of leads / traffic and sales.
- LTV (Life Time Value) – How much is a customer worth over time?
- % Attrition – For SaaS businesses, what’s your cancellation rate?
- % Referral / Viral Growth – What % of new users originated via referral? Referral includes viral features in your product or direct referrals / referral programs.
Create a dashboard and use it prominently
Download our Example Startup Metrics Dashboard (PDF)
The purpose of choosing success metrics is to use them to focus your business activities, so youR#8217;ll want to create a convenient way for anyone on your team to view them. The simplest way to start is to track week over week data in Google Sheets or Excel. Many analytics tools also have automated reports for many of these metrics. Try to create a format to display your success metrics in an accessible way, and use it to discuss trends with your team weekly and to adjust priorities.
Avoid “analysis paralysis” with OMTM
In the book Lean Analytics, co-authors Alistair Croll and Ben Yoskovitz advocate choosing One Metric That Matters – a single metric that your team will focus on above all others for a time. This is a great tactical approach to iterate towards business success by channeling your team’s energy to attack your opportunity one step at a time.
Startup metrics is a very broad topic – here are even more great resources for further reading:
- 3 Rules to Actionable Metrics in a Lean Startup (Ash Maurya)
- How to Use a Single Metric to Run Your Startup (Ben Yoskovitz)
- Vanity Metrics vs. Actionable Metrics (Eric Ries)
About the AuthorMore Content by Aaron Severs