Good Metrics by Lean Analytics22071 2019-11-17 22:00
Every aspiring entrepreneur should always be aware of the deadly pitfall of building something that nobody wants. That is why the right kind of analytics becomes so necessary. The book Lean Analytics introduces good metrics for start-up founders to navigate through the unknown and assess their success.
Data is vital to business. Entrepreneurs need data to convince others that their ideas will work. Sometimes, entrepreneurs tend to overestimate their success but data will not lie. Data helps founders to stay grounded in reality. However, personal judgement of what data to pursue is also important. Don’t be just a slave to numbers.
In order to stay data-informed, you need to find some metrics which can provide meaningful data. Good metrics have three characteristics:
- Comparable: a good metric can be compared to different time periods, groups of consumers and so on
- Understandable: a good metric is simple and easy to comprehend
- Ratios: ratios are effective and comparable
The Lean Analytics framework suggests a start-up will go through five stages:
- Empathy — identify a need that people have / identity your niche market
- Stickiness — figure out how to satisfy the need with a product
- Virality — add features that attracts people
- Revenue — the business starts to grow and generate revenue
- Scale — expand or break into new markets
To achieve success, founders must focus on one metric that’s most critical. Knowing what is the most important metric prevents you from getting lost in the data world.
There is no best metric in general. In different industries, the best metric differs. For E-commerce companies, the most important metric is revenue per customer. However, for media sites, the best metric is the click-through rates.