2013 Lean Startup attendees | Photo: The Lean Startup Conference/Jakub Mosur and Erin Lubin
In a feature story this week, we laid out the mission-critical problem a startup was facing, and then interviewed Eric Ries to learn how he’d dealt with similar problems in his own startups in the past.
One of the things he discussed was that, at his last company, he’d gotten stuck by trying to track vanity metrics. Vanity metrics are measurements that are appealing to look at—and that shout for attention—but don’t tell you anything meaningful about your value to customers. For example, it’s fun to watch your number of Twitter followers increase or focus on how much total revenue you’ve taken. But Twitter followers aren’t necessarily customers, and gross revenue without contextual information doesn’t tell you whether you’re looking at sustained growth you’ve created or scattershot injections of cash.
So what does matter? Actionable metrics—those you can make meaningful decisions around—measure specific customer behaviors and patterns. For example, average revenue per customer tells you a lot about your value to customers. Even better, it lets you test features and other aspects of your product to determine whether what you do you can increase the number.
For the startup Eric was working on, he said they could have unstuck themselves by focusing on “a very simple conversion-rate metric and a very simple retention metric. For example: What percentage of people who try to use the product succeed [conversion]? And what percentage of those people came back two days later [retention]? That would have been enough to show us that our improvements were not making the situation better.”
All startups need actionable metrics that help you gauge whether you’re moving in the right direction, especially when you have very few users or aren’t bringing in revenue. So we want to know: What actionable metrics do you use?
In the comments, tell us a little bit about your product, and what you measure to determine your value to customers. If you’ve fallen sway to vanity metrics and realized they weren’t helping you out, we’d like to know how you figured that out.
As per our participation policy, we moderate comments. So it may take us a few minutes, or an hour, to publish your advice, and we appreciate your patience.
Join us for a free webcast, What Should You Really Measure?, on October 2, 2014, with Eric and Alistair Croll, author of Lean Analytics and a workshop leader at this year’s Lean Startup Conference.
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