Top 5 Startup Metrics: What Founders Should Be Tracking
In my latest post for @thinkApps, I discuss the top five startup metrics that founders and product managers should measure and analyze.
When developing a new web or mobile app, you generally start off with some preconceived notions about features, as well as user needs and behavior.
But let’s face it, you don’t really know how users will react.
That’s why you begin with a hypothesis and try to either prove or disprove it, in order to minimize the risks associated with launching a new product.
One way to minimize these risks while also gaining a bit of traction is working towards a minimum viable product (MVP). You focus on building out just the core features and then release them out in the wild as your first version.
But once you launch, how do you really know whether the market has taken a liking to your product or not? This is where analytics come in.
Benefits of Analytics
Analytics allow you to collect and analyze large chunks of data from your users, which provide you with insights into what they really think of your app.
The weeks of labor and sweat that go into building your features get validated (or not) through metrics.
It’s a way of grading the performance of your app’s features, along with how well your customer acquisition strategies are faring. By gauging qualitative and quantitative data, you can constantly improve your app experience for users.
In this post, we’ll examine the Top 5 Startup Metrics. We’ll also discuss many of the analytical tools out there that startup founders and product managers might want to use.
Focus on Lean Analytics
Before we dive into the top five metrics, we wanted to emphasize that, as a startup founder or early employee, your time is precious, and statistics don’t always present a complete picture.
Therefore, you need to focus your resources on tracking the metrics that truly reflect the performance and progress of your app.
Determining which of those metrics you should track is quite simple: they need to be comparative. That is, you don’t want to simply monitor absolute numbers, but instead track conversions from one period to another.
The authors point to one type of vanity metric: total sign-ups. It sounds really good, makes you feel good, and the values do increase over time. But, they don’t tell you how active the users are.
Looking at total active users is a slightly better metric but is still based on absolute numbers as opposed to ratios.
We can therefore deduce that percentage of active users is a great type of metric to track, as it allows for a time-over-time comparison of how your app is doing. This is what Lean Analytics calls actionable metrics.
There is a caveat, however, that comes with comparative metrics, which is the need to establish causality. That is, did some action on your part cause this shift in the ratio? We hope to explore this topic further in a future post.
For now, with actionable metrics in mind, let’s explore our first of the top five startup metrics: cohort analysis.
Read the rest of my column, exclusively at ThinkApps.