3 important things about metrics founders should know

3 Important ThingsAbout Metrics

Jan König - @einkoenig

founders should know

Metricsfor Startups

things you

probably know

0

The AAA’s of Metrics

Actionable

0

Auditable Accessible

What Makes a Good Metric?0

A rate or a ratio rather than an absolute or cumulative value. New users per day is better than total users.Comparative to other time periods, sites, or segments. Increased conversion from last week is better than “2% conversion.”No more complicated than a golf handicap. Otherwise people won’t remember and discuss it.For “accounting” metrics you use to report the business to the board, investors, and the media, something which, when entered into your spreadsheet, makes your predictions more accurate.For “experimental” metrics you use to optimize the product, pricing, or market, choose something which, based on the answer, will significantly change your behaviour. Better yet, agree on what that change will be before you collect the data.

Source: http://leananalyticsbook.com/one-metric-that-matters/

3 things you

should know

about metrics

0

A metric tells a complete story using data, measures, information, and other metrics to answer a root question.

Martin Klubeck

“

”

1

Metrics

Root Question

Metric

Information Information

Measures Measures Measures

Data

Data

DataData DataData

Data

Source: Klubeck, “Metrics”, page 13

1

Examples

Data, Measures, and Information1

Page Hits on Dec 232500 (Data) Hits (Measures)

Page Hits per Day Last Week2500 (Data) Hits (Measures)2600 (Data) Hits (Measures)……2350 (Data) Hits (Measures)

2520 (Data) Hits (Measures) per Day (Information)

Information

Data

Data Data

DataData

Data

Measures

DataData

Data

Measures

Root Question1

“Answers are only useful when you know the question”

– Martin Klubeck

A wrong question means:wrong data, measures, and informationwrong metric interpretationwrong actionwrong product change

Finding the Right Question: 5 Whys1

Ask Why (What, How, What if?) until you can no longer answer with a deeper need.

Example

“I want to measure retention with a cohort analysis”

“Are the users coming back to use my product?”

“What could make them come back more often?”

“What product changes do address theusers’ needs and lead to an increasing usage?”

(possible) root question

“What do I have to change to make a betterand more desired product for my users?”

“Is my product at the moment solving their problems well enough to be important to them?”

Metrics are a tool, an indicator –they are not the answer and may havemultiple interpretations.

Martin Klubeck

“

”

2

Metrics as Indicators2

A Systematic Approach for Data-Driven Decision Making

“Data is just one perspective”Source: http://blog.intercom.io/the-problem-with-data-driven-decisions/

Never base decisions on core numbers!

Use metrics as indicators to find out wheresomething is wrong.

Then do further investigation.In-depth Analysis. Customer Development.

http://jan-koenig.com/blog/?p=82

Triangulation is a principle foundationfor a strong metric program.

Martin Klubeck

“”

3

Triangulation3

Product / Service HealthCustomer View

Delivery

Usage

Customer Satisfaction

Example: Triangulation of Effectiveness Metrics

using multiple measures, collection methods, and sources for a comprehensive picture

Triangulation in a Restaurant3

Restaurant’s Effectiveness Metrics

Delivery Usage Customer Satisfaction Possible Interpretation

Crazy! Time to look at other metrics to improve your business.

Source: Klubeck, “Metrics”, page 149f

Great food and a loyal, but very small customer base. Maybe a bad location.

“The only game in town.” Or a product customers need but don’t want.

OK, something is wrong here. You know that.

with Triangulation

Triangulation in a Restaurant3

Restaurant’s Effectiveness Metrics

Delivery Usage Customer Satisfaction Possible Interpretation

good

good

bad

bad

without Triangulation

focus on

?

So, how do I use these principles? What’s next?

Martin Klubeck’s Answer Key

Product / Service Health

Process Health

Organizational Health

Future Health

Return vs.Investment

State of theOrganization

Customer View

Business View

Worker View

Leadership View

CompanyMaturity

?

Martin Klubeck’s Answer Key

Process Health

Organizational Health

Future Health

Return vs.Investment

State of theOrganization

Business View

Worker View

Leadership View

Product / Service HealthCustomer View

?

Focus on Product Health

Product / Service HealthCustomer View

Delivery

Usage

Customer Satisfaction

?

Focus on Product Health

Product / Service HealthCustomer View

Delivery

Usage

Customer Satisfaction

?

Customer Journey

Activation, Retention, Revenue

Feedback?

Hey, I’m Jan!

I am a German student and I’m currently writingmy bachelor’s thesis about metrics for startups.

I would love to get some feedback about this approach(which is the “high-level part” of my thesis).

I will upload some other presentations about metricsdesign in startups within the next weeks.

Glad to hear from you!Jan

Twitter: @einkoenigMail: me@jan-koenig.com

Photo Credits

Slide 3Jan Krömer, http://www.flickr.com/photos/81336062@N00/285835148ZionNPS, http://www.flickr.com/photos/54168808@N03/5015792234comedy_nose, http://www.flickr.com/photos/23408922@N07/4873283906

Slide 6Neta Bartal, http://www.flickr.com/photos/53742192@N05/6646556769/

Slide 11Furryscaly, http://www.flickr.com/photos/98528214@N00/312210315

Slide 13loop_oh, http://www.flickr.com/photos/80384851@N00/7986197617