How to Steal the Right Growth Metrics for Your Startup
This post is excerpted from our first book, The Ultimate Guide to Startup Data Distribution. You can download the book for free and learn more about how other top companies are building and operating high-impact data distribution systems to keep everyone that matters engaged in the their business. Check out the other parts if you haven’t already:
- Part 1. The Ultimate Guide to Startup Data Distribution
- Part 2. Your Company’s Most Valuable Metric
- Part 3. How to Find You Company’s Storytelling Framework
- Part 4. ‘Steal’ the Right Growth Metrics for Your Company
You can also find more on the topic of Startup Data Distribution here:
- The 3 Key Pillars of Startup Data Distribution – OpenView Labs
- How to Tell Your Company’s Story – Medium
While your MVM is intended to give you and your stakeholders a holistic look at your company it cannot exist in a vacuum. Each week, month and quarter, your MVM will trend differently and having a strong set of supporting metrics can tell you why, as well as how you can continue the trajectory or make the necessary adjustments to get back on track. Every supporting metric in your business should:
If these three criteria are met, you ensure that you aren’t spending time tracking and disseminating superfluous information about your company, saving your investors time in trying to cut through to what’s important and helping your team focus their efforts properly.
Once you have a good understanding of your MVM and are committed to the idea of building out a hierarchical data gathering system, your next step is to actually select the full set of metrics that make sense for your company. This is where things can get complicated, as there are hundreds of metrics to choose from as well as different time frames to consider and different ways of calculating certain metrics. Additionally, the amount of data produced in a growing technology company can be overwhelming for teams and founders.
Luckily, many thorough frameworks – crafted through years of experience by top investors and founders – already exist and can give you a great baseline to work from, no matter your business model or stage.
Remember, as Pablo Picasso whose paintings even most VCs can’t afford is credited with saying, “great artists steal.”
To help get you started, we’ve pulled together 5 different frameworks that you can implement
Tomasz Tunguz – Your Startup’s 10 Most Important Metrics
- VC at Redpoint Ventures
- Twitter: @ttunguz
- tomtunguz.com
- Investor in companies like Expensify, Nextdoor, and DraftKings
Analytics tools today make it possible to track thousands of metrics. The key to data distribution success is in finding the signal in the noise. Tunguz recommends 10 core metrics that he finds most effective in board meeting and centers the framework around how effectively you are distributing your product, engaging your users, and generating revenue.
3 Key Metrics to Start Tracking Today
- New Users Added Last Month by Channel / Trailing 6 Month Growth Rate
- % of Users Using Top 3 Key Features in a Given Month
- Burn Rate
Dave McClure’s AARRR Pirate Metrics for Startups
- VC at 500Startups
- Twitter: @DaveMcClure
- 500.co
- Investor in companies like ToutApp, Sunrise, and Simple
500Startups focuses heavily on helping companies “distribute” their product more effectively and the AARRR framework is the basis for that model. The framework looks at what metrics you should be tracking at each customer lifecycle stage – Acquisition, Activation, Retention, Referral, and Revenue.
3 Key Metrics to Start Tracking Today
- Acquisition Channel with highest conversion to activation
- K-Factor, aka Virality Score – how often are customers referring other customers?
- Monthly Active User Growth Rate
Angela Tran Kingyens’ Marketplace KPIs
- VC at Version One Ventures
- Twitter: @ATKingyens
- versionone.vc
- Investor in companies like Frank & Oak, Handup and Unbounce
Every marketplace company is different but most tend to share similar characteristics – namely that they bring together a seller on the supply side and a buyer on the demand side. Because of that, marketplaces looking to raise money should be well equipped to answer questions about certain metrics that will be brought up during due diligence.
3 Key Metrics to Start Tracking Today
- Gross Merchandise Volume
- Gross Merchandise Volume Retention
- Net Promoter Score – How likely are customers to refer you?
Mark Hayes’ 32 KPIs for Ecommerce
- Director of Communications at Shopify
- Twitter: @Allsop8184
- markhayes.ca
- Author of The Ultimate Guide to Dropshipping
No matter how many or how few metrics you track it is crucial that your performance should inform business decisions and the KPIs you measure should drive actions. For an Ecommerce business, the right metrics center around setting and reaching sales, marketing, and customer success goals.
3 Key Metrics to Start Tracking Today
- Average Order Size
- Unique Visitors vs. Returning Visitors
- Average Customer Service Resolution Time
David Skok – SaaS Metrics 2.0
- VC at Matrix Partners
- Twitter: @BostonVC
- forentrepreneurs.com
- Investor in companies like TribeHR, Hubspot, and GrabCAD
As we mentioned throughout this series, David Skok is one of the foremost experts on optimizing the various funnels of a SaaS business. In SaaS Metrics 2.0, he dives deep on the best metrics to track to ensure that you know what is working, what needs to be improved, and how you can pull various levers in your business to become financially viable
3 Key Metrics to Start Tracking Today
- Lifetime Value : Customer Acquisition Cost
- Net New MRR
- Net MRR Churn
