Startups in the early stage start to think about data they collect and define their KPIs. They spend a lot of time on evaluating analytic tools and listing all possible metrics. They lose the track of the real goals and focus of a startup. Startup CEOs, investors, product and marketing people ask themselves a simple question “where to start when it comes to startup metrics and data”.
Only 3 data points
While focusing on the startup growth it is crucial to understand that there are 3 layers of data we are looking at:
- user behaviour
- true industry trends
Each single layer helps to get a better overview of the company’s state and next steps.
Choose only 1–2 data points for each layer that a critical to your business.
In the beginning you don’t need more data, you need more clarity and actionable indicators. It is crucial to focus on these data points and assign owners to each metric.
This will help you to keep track and make sure you grow your numbers. For example, your designer team can be in charge of the metrics connected to user behaviour. Progress data belongs to marketing and product team.
Starting your product development, direct all your activities in finding your “product-market fit”. After you have built your first prototype you start to collect initial data. (Please remember that there is no growth without a product.)This data should correlate with a list of the assumptions you have about your target audience and the problem you are solving.
List your observations about your users’ behaviour that you see from the numbers. Now answer a question “how does it correlate with everything we knew before about our audience”.
When we looked at the first layer of data at Inbot, we had in mind that we deal with the highly mobile field sales people. To break this broad group to segments, we looked at the apps our clients are connecting to their Inbot accounts. We saw a distinct difference between two user groups. Google Apps users were more likely to connect their LinkedIn account than Microsoft Exchange. Based on this data we tailored the message to two different groups and focused our efforts on the specific needs of each group.
Each team needs a feeling of a progress they achieve and core indicators that show this progress. At this layer, we look at the metrics that will identify our future product time line and road map.
There is a thin line between the first and the second layer. The second layer of data helps you to understand how you can grow your product and what you should focus on after you have identified in the “user behaviour” layer.
Take dating as a metaphor. User behaviour helps you to identify personal characteristics of a person you are dealing with. Progress metrics highlight whether you are moving in the right direction and with the right speed when it comes to commitment. The person you are dating might be right for you, but you might not see any progress and need to correct the course.
In this layer, you learn if your channels are delivering the clients you wantand how we can improve the grow. You can only grow if you deliver value to your customer. Figure out what’s the most valuable KPI and right down hypothesis to test. This KPI will show your progress, everything else is just distraction.
The main mistake in this stage is mix up actionable metrics and vanity metrics.
Downloads and signups are the most useless KPI in the world because they can be hacked without any long term impact. Don’t stop there, try to identify what metric is an actual indicator of your team’s progress.
Three weeks ago we launch Inbot group edition beta. We paid attention to how the teams share contacts, activities and automate reporting process. The one of the metrics we chose was the number of activities we deliver to the companies. This metric showed us how much value we provide the companies with.
Industry trends and company vision
Building a product is about executing the company vision based on the change of the industry trends. To identify which route the bigger trends go, we can look at our own numbers. In this layer find minimum metrics that you can turn into insight.
Talk to analyst and journalists, read industry reports and articles on your topics. Search for somethings that make you as an industry observer raise brows. Imagine you call your friend and you say “you won’t believe what I’ve just realized”. There are numbers and trends you can talk to journalist or analyst about, show your investors and use to inspire team members.
In the case of Inbot we see in the first three weeks of our beta program Inbot achieved 1mln activities and 0,6mln user contacts. We proved we can finally provide sales managers with the real-time sales data without manual reporting.
To summarise, in your first step you need to make sure:
- you are looking only 1–2 data points in each of the 3 layers mentioned above
- your metrics need to be comparable with the data on the company itself as well as with your product niche standards
- every metric should have an owner, whose activities and goals are supporting the metric that belongs to him/her
Please let me know what data points do you use to track your company progress and what specific “aha!” moments you experience while looking at your company’s data.