If you have worked in a startup before, you will be very familiar with words like 'traction', 'KPI', 'OKR' and of course the reason for this blog post 'Business Metrics'. If you haven't worked for a startup or heard of these words before, then allow me to part on you some knowledge I have gained! :)
The reason these words are used so often in Repositive is because as a startup, we need to grow fast. It is burned into my mind that most older and more established companies look to achieve milestones in 6 months to 1 year. However, we are trying to achieve similar growth in as little as 3 months. Very fast and rapid growth, the sort of growth you hear about in the news and that makes investors very excited. Like any other startup - it's grow fast, or die trying! So these goals and metrics are used to demonstrate growth and also evaluate the success of activities which impact growth.
Why have goals?
It is very simple really. If you want to evaluate the impact of anything, you 1) need to have a goal, 2) an idea how to achieve it, 3) a plan for measuring it, 4) measurements of outcomes and evaluations".
It's a very scientific approach in my opinion. Without drawing a line in the sand somewhere, or creating a goal first, it is very difficult to see what impact you are having. This may seem very obvious to everyone and anyone who has a KPI and maintains metrics of some sort. But as a startup, you don't have these metrics at the start. Repositive is attempting something never before tried, so how can you create a goal when you have no idea what is realistic? This is one of the first challenges I faced when starting to create and track business metrics. What to track, why and how?
My main goal at present is simply user growth. Repositive is a freemium model and community-driven. Without a community input, Repositive cannot realise its mission of open data sharing and more efficient discovery of data. Being free means that anyone can contribute to a resource which can benefit the whole community.
At first I simply tracked new users. I kept a record weekly and I tracked the progression of new users and basked in glory when the numbers increased with each month. After I had 6 months worth of data, I began making projections or forecasts of what numbers we may achieve in 6 months to 1 year. However, this was still not a goal. I struggled to create one at first and understand what is realistic. It felt like a big deal at the time. With support from management and mentors at SeedCamp, I began to understand that the number was almost arbitrary. There was no way anyone could really know. I was worried that going to high would reflect badly on me when I did not achieve it. However, I soon began to realise that it was not the point of the goal. Reaching the goal would be awesome, but the most valuable thing to understand is why you did or did not reach that goal. A failure is not a failure if you learn. After this realisation, I began feeling comfortable giving myself almost crazy metrics, the best possible case scenario, or as our Chairman Steve Gledden explains it: BHAG (Big Hairy Audacious Goal).
How to track the untrackable?
User growth is easy. As long as you know when someone signs up, you can measure growth. You can create projections, set weekly growth rates and measure progress. But what about retention? Users are great, but every software company wants and needs users who come back again, and again, and again. This is retention. How do you measure a retained user? Is it someone who comes back monthly? Weekly? Do they just search? Do they create content? Do they access content? As you can see it becomes quite tricky. However, much like user growth, the first thing to do is to draw a line in the sand. You just say this is the definition of a retained user, and we are aiming for 20%.
What about visibility and reputation? Well, reputation has the NPS score. In short, how likely are your users to refer your services to someone else? This can be biased but it's often known as the most used metric for this purposes. You can also ask for feedback with surveys, you can see how people reference you online, offline. The hardest I find to track though is visibility. You can track how many views your site gets or how many retweets you get, the impressions you take from the global pie... But how can you tell if that was because of X or Y campaign? The best way I have found so far is giving unique links to a lot of campaigns and activities. Giving unique links helps me separate traffic from source and then see what these people do. How engaged are they? Did they signup and start using our platform? Did they spend long on our websites? Using Google Analytics I can see their journey.
How can you use Business Metrics?
I would say to get the most of business metrics, you first need to collect them in both convergent and divergent forms. Let me explain. Your business metric is user growth, you have a 2.6% growth rate week 1 and then 5.2% the following week. This metric is converged. Its the total, but to really make the most of this metric you need to diverage and split the data up. You can track growth rate in each channel and then if you are giving unique links you can see which channel or campaigns within them are bringing more users than others. If you are tracking web visits you can see which aquisition sources are highest, what campaigns did these relate to?
Perhaps you have more retained users. Where did they come from? From a particular source or channel? Are they a particular demographic? Is there an connection? What new features are impacting this?
Have you exhausted a channel? Does one show more promise? This is closely related to my previous blog post on traction.
Why keep this total metric? If there is such value in in the details? Well, it takes a long time to communicate every metric in detail, but overarching metrics are easy to see and understand. This is the metric you tell your team weekly. This the one the investors are interested in... "what's your weekly growth rate?"
The important take home I would like to leave is that metrics change. You start tracking user growth monthly, then you change to weekly. You set a goal of 2,000 users in 3 months at 4.5% week on week growth, then a longer goal of 20,000 in 18 months at 4.2% week. First, you define retention as someone who comes monthly, then you change so it does not count the first visit, then you change and its no longer just visiting that defines retention but activity and engagement does.
Metrics are meant to evolve. You get better at it. Things become more defined. It's OK for them to change and you change with them. In fact, I would say, if your metrics are not changing you aren't doing them properly or taking insight from them!
What metrics I collect and how
- Weekly User Growth - SalesForce
- User Forecasting - Signup Survey / SalesForce
- Retention - GoSquared
- NPS Score - Feedback Survey
- Surveys for Business Intel - Typeform
- Referrals - Signup Survey
- User Aquisition Sources - SignUp Survey
- Web Traffic - Google Analytics
- Cost per Aquisition for User - Online PPC tools like Twitter, Google AdWords + known costs for other channels
I am not expert in Excel spreadsheets or Salesforce dashboards. So far, a lot of what I do is manual. However with a supportive team, and lucky for me a senior Salesforce administrator as a husband, I will be able to automate these metrics. I will use the power of software to give me live data on my metrics and use the SalesForce dashboard to show it in a meaningful and easily digestible way.
Traction: Are four bullseye's better than one?