Measuring Key Metrics
If you're a startup, and you've been reading all the great blogs out there, or attending all the great conferences available to you, then you've likely heard about the key metrics you need to measure to determine success.
But somewhere in all of this, we can get caught looking at the wrong signs. I do this just as much as you do. I caught myself, the other day, asking about a company's subscription rates and their attrition. I followed up with questions about repeat business.
Sound familiar? All the metrics that tell me how growth is going and when combined with pricing, let me know their overall value.
But I missed something. I'm sure I would have gotten to it eventually. But when you're trying to evaluate a business, you start with (normally) what's most important. So even my questions were sending them in a direction that was helpful, but maybe not the best one.
To highlight my point, let me briefly point to a story that's going on even as I type.
A little about Netflix
Netflix has had some incredible days on the stock market over the past month. You can read all about the swing online and you'll notice that there's tons of debate on how valuable they really are.
Earlier in the year, they finally passed HBO in terms of subscribers. They're growing internationally. Some predict their international business will even become profitable quite soon.
But here's what I want to point out. Like every other hosted solution with subscribers out there, they measure new subscriptions. They measure attrition. They measure return customers.
But they monitor one more measure – maybe the most important.
They measure how many hours are watched.
If you build a piece of software that does something, then logic suggests you should make sure that you're seeing growth there – in the doing of the thing you built your software to do.
That's what I had run right past. In asking about other metrics, I missed the most important one. Are people enjoying their experience using you for what you hope they're using you for?
The user's objective is everything.
Are you helping or hurting? Are you winning or losing? Everything else is “just” an issue of scaling or marketing.
So whatever you're building, make sure you build in the ability to capture “use” metrics (at every junction), so that you can learn what you really need to know.
Monitoring User Behavior
If you're building a product and are looking for some ways to track internal metrics, I know a couple products that have rich APIs that you can tap into, and send data to, so that you can monitor user behavior.
Recovering from Mistakes
Regardless of the recent volatility Netflix has had, they're back up at a value that could easily help you forget the last few years recovering from their 2011 blunder.
That's good news for us – because it means not every mistake we make will be fatal (though many may be), and if we focus on the core fundamentals, we can all recover.
Maybe you've not instrumented your product in a way that tells you about user behavior. If that's the case, get started right away!
Good luck! Let me know how it goes.