By Fernando Berrocal

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As the founder of a startup, you’re probably knowledgeable about a variety of activities. Measuring your business outcomes is one of the most important things to accomplish. You could, however, pause and consider the following question: 

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Why measure results? 

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Measuring results often provides insight into a company’s overall health. Of course, your investor is interested in how things are progressing. However, you and your startup team are interested in learning this as well. You need to know how to enhance your product if you want to grow your organization consistently. You must comprehend your customer's identity and goals to accomplish this task.

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You cannot accomplish this business aim by using business measurements that can only go up and to the right. These measurements fall under the category of vanity metrics. An obvious vanity metric can be easily identified. Is your graph simply moving right and up? Then it is a vanity metric. Consider your page's overall number of views since inception or the number of likes on your social media postings. They are there to boost your confidence or that of your investor. Instead, you need measurements that reveal issues that must be resolved if you want to improve on and develop.

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Why Are Business Metrics Good?

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Your metric must, first and foremost, be comparable to other metrics. Making judgments based on data is impossible if you can't compare them with metrics from previous users or different industries. For instance, vanity metrics cannot be compared at all. They frequently consist of a total that says nothing. A metric should, furthermore, encourage behavior modification. It must assist you in achieving your main business objectives. It must enable you to enhance your business solution. It must therefore assist you in changing how you manage your organization.

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How Can Business Analytics Help You Understand Your Consumer Better? 

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Understanding where the suffering is and digging deeper is the main answer. Choose a measure that helps you understand the actions of your customers. Are they carrying out your expectations of them? Do they continue to use your organization's solution? To visualize the suffering, you should enlarge the numbers. Even while your user base may be expanding, what happens when you analyze your people based on their weekly activity?

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You must comprehend the motivations underlying this conduct to alleviate the suffering. If customers enter your product but then leave without doing anything else, for instance, you won't be able to address this if you don't know why this occurs. So, approach them and try to have a casual conversation. You can iterate on this only once you understand why. The data before and after the iteration will be compared in the following phase to demonstrate that this iteration performs better.

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Pay Attention to One Metric at a Time 

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Business metrics for startups are just as important as a focus for them. It's critical to concentrate on one (or, in the worst case, a few) at a time to expand and strengthen your business solution. Once you have made progress on that statistic, you may move on to the next one. 

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Metrics such as lifetime value (LTV) and customer acquisition cost (CAC) are highly valued in growth teams. You should be aware that these don't apply at all to early-stage organizations. Why not then?  Because your LTV is useless if your solution is not yet sufficiently optimized for your consumer. Why calculate that for your consumers when you do not even know whether your startup will survive over the next six upcoming months? In the early stages of a business, the CAC is equally useless. It doesn't matter how much you pay a consumer to use your service if you don't know what makes them satisfied. Marketing to draw people into your business is like throwing money away if they leave or do not want to pay for it. What therefore can we concentrate on instead?

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What Sort of Metrics?

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The "pirate metric" concept is one of the most useful frameworks for startup analytics. This concept’s unusual name comes from the acronym AARRR:

• Acquisition
• Activation
• Retention
• Referral
• Revenue. 

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Foundation of a Customer Journey

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1. You need to know how to communicate with your startup customers and introduce them to your business solution.
2. You want them to interact as much as possible with your solution once they do.
3. If they enjoy it, you want them to come back to do it again, and if they are pleased, you want them to spread the word.
4. It would be wonderful if they would pay for it because they enjoyed it so much.

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For each business model or solution, a distinct metric should be used to evaluate it. It must be a behavior that demonstrates how you want people to behave in each phase of the business framework.

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• Acquisition: For Acquisition, this can entail downloading a mobile app, accepting a phone call, or scanning a QR code to access a website.

• Activation: The primary activity that users must take to interact with your solution should be reflected in the activation indicators (for the very first time). For instance, it may be uploading a photo or creating a blog entry.

• Retention: The retention metrics might need to demonstrate if users are coming back to repeat the main action. Start looking at your user to see whether she comes back to do the fundamental action once more. Depending on your business model, this can happen every week or every day.

• Referral: The referral metrics ought to reflect the behaviors of those who spread the word to other people. Different business strategies rely more or less on referrals. But sharing and virality are the main focus of the measures.

• Profitability: This is a rather simple statistic. You want to know if customers are spending money or if they assign a monetary value to your central idea.

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Consider these particular KPIs, such as paying customers, main conversion rates, or click-through rates if you rely on advertising.

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Maintaining Customer Satisfaction

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Prioritize consumers who are pleased with your goods first. Customers who are satisfied repurchase and are prepared to pay and spread the word about your solution. Retention is the key to user satisfaction, so to speak. To observe the difference, go deeper, comprehend why individuals are acting in a certain way or not, then iterate and take new measurements. Of course, you need some test subjects, to begin with, but the price is immaterial at this point. The objective is to enroll participants in the retention test, iterate, and enroll fresh participants in the second test.

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Think carefully about what retention implies for your solution. When a consumer continues to engage in your primary activity, it shows she enjoys your product. It is the simplest technique to gauge client satisfaction. To quantify this, you must have a solid understanding of your main activity. Don't oversimplify it. Investigate more if your metric is silent. You may often better understand returning users using cohort analysis. Users are tracked throughout time and grouped according to when they first signed up, making it simpler to see how frequently they return.

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Once you have improved on retention enough, you can move towards other metrics. Activating users, for instance, or revenue depending on the kind of business model you have. The acquisition is the last metric to improve upon. Only when your customers are happy, pay, and come back does it make sense to look at optimizing. When every dollar you spend converts to more than that dollar in revenue, you are ready for scale.

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Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.