What are the top CHALLENGES startups experience related to metrics?
What are the top challenges you've seen startups experience related to metrics in the first year?
Not tracking any metrics :)
Don't forget that metrics are a way to help you get a bird's-eye view of what's happening in your business -- and help assess product market fit.
Tracking vanity metrics only
If tracking metrics, focusing on positive metrics (such as sales) -- and not tracking (what I call) negative metrics, that captures quality/efficiency -- and shows you where you need to improve.
Some examples of negative metrics:
on-boarding time from app download to first action
time from purchase to delivery of physical good
time between purchases
Not tracking metrics VCs are interested in.
Top-line growth -- though I would recommend profit
Payback period: time to LTC > CAC
(If offering metrics as part of your service) Not tracking metrics your customers are interested in, or their customers (in B2B space) are interested in
Are you tracking how you're helping your customers solve their pain points? And their customers' pain points?
What metrics do your customers (and their customers) care about?
Not knowing what the One Metric That Matters (OMTM) for your business is.
Not tracking metrics around customer journeys [Phil Libin's talk] -- to see what can be improved and what can be scaled.
Note that if you have a 2-sided marketplace, you have two sets of customers: buyers and sellers. I recommend tracking the journeys of each.
If your product is HaaS, I recommend tracking your hardware journey, from idea to prototype to manufacturing to delivery.
Focusing on leading metrics before lagging metrics; e.g. developing predictive models before understanding what happened historically [more on this here].
Which metrics are most commonly misunderstood and utilized incorrectly?
Focusing on growth vs profit
Forgetting that a metric is a 1-number summary of what's happening
Goodhart’s Law: when metric becomes the target
Metrics given without needed context, especially if it depends on another metric(s)
Confusing correlation with causation
Tips for designing and evaluating metrics here
When using metrics in the "build-measure-learn" context, make sure that the metric in the "measure" step is something that can be experimented with -- and have direct impact on
Example of metric that you may have less control over: average number of items purchased by a customer last year, because it reflects customer preferences, product availability, product pricing, etc.
Start tracking metrics with whatever tool(s) you're most comfortable with -- Excel is OK
Understand what's happening first and automate later
Are your metrics reflecting your business? Are they helping you refine your product market fit? If not, I'd like to help.
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