3 Most Important Measures for Product Startups
“Measure what is measurable, and make measurable what is not so.”
- Galileo Galilei
The entire concept of starting up is to build something amazing and release it to the world as quickly as possible. And then figure out whether you can build a business out of the amazing idea.
Building a business is much more than relying on gut feel or amazing ideas, its about being able to measure and move in the right direction.
Marketing for startups over the last 7 years, I have struggled to figure out what would be the right measure to track the progress. But have learnt that building measurability into products is as important as the value of the measure itself.
Before you start measuring
Write down the end goal and forget it
You definitely need to have an achievable and optimistic end goal in mind to setup up your growth trajectory. It can be 100 signups per day, 25 payments in a month, $1500 in revenues per quarter. But leave this measure out on the paper and don’t let it distract you while executing your ideas.
Setup analytics using the right tools
Most marketers would be familiar with terms like A/B testing and funnel optimization. Your product or app needs to be ready for these basics. Most startups will start thinking about them very late in the game, when it becomes a logistical nightmare to execute these functions. Ensure you have the ability to execute and measure a/b tests in your product from the get go.
Now, let me share what I feel are the 3 things a product based startup should measure and improve on to succeed.
The Most Important Measures
1. Acquisition Rate
How to calculate it?
# of visitors who visited your website or app store page / # of people who signed up or downloaded
Calculate it for 1 Day, 1 Week and 1 Month. Remember to measure this for every source — search, direct, press coverage, reviews, social, referral, paid, email newsletter, email signature and more.
What does this measure tell you?
This number tells you how effective is your communication to the world and how useful people think your product can be.
Why is it important?
You can drive millions of potential customer to the website or app store. Just get featured on TechCrunch, The Next Web, The Verge or any insanely followed media house. But if you cannot make them at least signup for your product or download your app, all that effort is pure dust.
How to improve it?
Segment your audience based on demographics, source and state of mind. Build your communication in a way that all these audience feel engaged and want to try your product. Constantly test every aspect of the communication like headline / tagline, body copy, video, imagery, positioning and flow.
If you are yet to launch or go all out with your communication, test it with the right audience before hand. Start a private beta program to see what makes people get instantly attracted to the concept. Build a database of people whose feedback you trust and test different versions of your communication with them.
2. Retention Rate
How to calculate it?
% of the people who are still using the product with # of people who signed up or downloaded
Calculate it for Day 1, Day 7 and Day 30. Most analytics tool will show this as “Cohort Analysis”
What does this measure tell you?
It shows how useful your product is for the customer and how much time it takes for them to start falling in love with your product.
Why is it important?
Getting users to try your product only tells you the power of your communication. But retention rate will show you the potential of how much business can you make from your product. A very low retention rate will not only increase your costs but make it very difficult to get investments.
How to improve it?
Build engaging hooks inside your product and make sure to test different copy for all the important screens in your product. Analysing the success of this measure will require you to track events and actions inside the product.
Make sure you share happy / encouraging messages with the user at major stages of their lifecycle. In-app messages / notification and regular newsletters help in building a long lasting relationship with the users.
3. Feedback Rate or Share Rate
How to calculate it?
# of people who share their positive feedback or love for the product (via email, call or on social) / # of people who are actively using your product
Calculate it for 1 Week and 1 Month. Ensure you keep track of negative feedback separately and use it to improve your product.
What does this measure tell you?
This will tell you how viral your product is and will ‘word-of-mouth’ become your best source of acquisition or not.
Why is it important?
If your active users won’t talk about why they like your product, no one will. Your acquisition cost will shoot up, as other that paid advertising nothing else will drive people to your product.
How to improve it?
Understand your users and their emotions. You need to be able to move them at an emotional level for them to fall in love with your product. This will not happen if all your product can do is finish a task. Do survey, record videos, watch them use it in front of you and make sure you find that emotional connect with your users.
These are the measure I think every startup needs to control, master and grow. Let me know if you agree or have another opinion, would help me improve my growth hacking skills.
