I’m not going to spend any time on Google Analytics.
How healthy is this business?
It’d be great to track metrics like these: 1 MRR, Churn, LTV, acquisition cost 2 Virality, DAU, MAU 3 Average order value, repurchase rate 4 Funnels and conversions
But you don’t have any data yet
Your data is in a constant rate of decay
Your data is messy
Use metrics that measure your biggest problem. Ignore the rest.
When picking metrics, always ask yourself: What’s my biggest constraint right now and which metric will tell me if I’m making progress?
You need to do the right things in the right order.
Gateway #1: Is your idea any good?
Your main constraint: Getting anyone to care about your idea.
Your main metric: Get someone to pay or use your product regularly.
Bad metrics for this gateway: 1 Asking people if they’ll pay 2 AdWords clicks 3 Beta or waiting list signups 4 Traffic
Gateway #2: Is your product good enough?
Your main constraint: Having a product that’s good enough to build a business on.
Your main metric: Ask 500 users the Product/Market Fit Question
What is the P/M Fit Question?
Your goal for the P/M Fit Question: At least 40% of users should say “Very disappointed.” *Sean Ellis and Hiten Shah get credit for this one.
How do you get to the first 500 users/customers? Hustle.
The P/M Fit Question isn’t perfect, verify with a retention metric.
Gateway #3: Can you grow?
Your main constraint: Acquiring customers consistently from at least one channel.
You have plenty of options to choose from: 1 Inbound (Google, Content, Social) 2 Paid (PPC, Affiliates) 3 Virality (Invites, Referrals)
Pick just one to start Work on your channel for at least 3 months. Assume it’ll work and get the resources needed to execute.
Your main metrics: Your main business metric and acquisition funnel.
Main business metrics: 1 SaaS: Monthly Recurring Revenue 2 Ecommerce: Monthly Revenue 3 Consumer Tech: Monthly Active Users
Why not cost per acquisition or lifetime value? You have no idea how much it costs to acquire customers or how much they’ll spend (yet).
Gateway #4: Do you have a stable model?
Your main constraint: In order to keep scaling, you need a stable model for your business.
Your main metrics: Depends entirely on what business model you have.
The SaaS Model
The Consumer Tech Model
Find someone in your industry that knows the key benchmarks.
Finally, get serious with data.
If you have a sales team, pile data into your CRM.
If consumer tech, do everything in-house.
Google Analytics plus an internal database will take you far.
Start with constraints, hack together what you need to measure them.
How to get data you really need: 1 One team owns data quality. 2 Hire a data engineer. 3 Clean up and integrate your data. 4 Use customer analytics. 5 Build a Growth Team.