Implement Key Development Metrics

You’ve landed your first customers and gathered valuable insights through conversations with them. As your customer base grows, you can start collecting and leveraging quantitative data alongside your qualitative learnings. The right kind of numerical data — presented clearly — helps you track your progress and make better decisions.

 

Focus on the Metrics That Matter

A startup should focus on a small number of metrics critical to learning and validation. These indicators show whether new product features are moving the company in the right direction.

Traditional business metrics — like cumulative totals or broad funnel analytics — often fail to give the precision startups need.

According to the Lean Startup methodology, the most important analytics tool for a startup is cohort analysis. It’s similar to a funnel analysis but far more detailed: by tracking weekly changes in customer behavior, you can spot meaningful trends and tie them directly to specific product changes.

 

How to Use Metrics Effectively

In cohort analysis, you measure customer behavior across different stages of their journey. Examples include:

• Acquisition – How many discover your product and sign up?
• Activation – How many start actively using your product?
• Revenue – How many are willing to pay for your product?

Metrics reveal which parts of your process are failing and where you need to focus your efforts. Measuring is now a standard part of product and e-commerce optimization, with excellent tools available such as Google Analytics and Mixpanel.

 

Set a Baseline Using Your MVP

Once you’ve defined your key metrics, start by setting a baseline. Use your Minimum Viable Product (MVP) to collect data on your current state.

Your baseline might look modest compared to your business plan’s ideal targets — but it gives you an honest picture of where you stand and a foundation for measuring improvement.

 

Track the Impact of Product Changes

A culture of continuous learning and measurement should be built into your startup from day one. Every product change should be measured to determine whether it had the desired effect.

While cohort analysis tracks shifts in customer behavior over time, it’s not detailed enough for measuring individual product changes. That’s where A/B testing and ongoing customer interviews come in.

 

Measurement Leads to the “Pivot or Persevere” Decision

Metrics will guide you in determining whether you’re on track toward your desired outcome. Once all reasonable micro-improvements and optimizations have been made, you’ll reach a critical point: pivot or persevere.

• If metrics show you’re progressing toward your goals, keep going.
• If not, acknowledge that the current strategy isn’t working and make fundamental changes.