Defining Growth Metrics

June 12th, 2017

If a tree falls in the forest and no one is around to hear it, does it make a sound?

Growth requires metrics. Historically, growth had per-project, tactical metrics often centered around the business (signups, conversion rates, first event rates). Having a North Star metric will help us track our overall progress across projects.

A product metric should be:

  1. Simple: straightforward to repeatedly measure and understand
  2. Relevant: linked to user value and eventually consistent to business value

I’ve seen the consequences of setting a metric that missing on these requirements. Overly complex metrics (where the reasons behind the metric are shrouded in hand-wavy “data science”) engender debate and revision, when you’d rather be focusing on driving, not defining, the metric. A simple metric lets you have faster turnaround time for measurement; if you need to wait a month to know if your experiment has succeeded, you probably moved on.

Secondly, it’s tempting to just focus on “user value” for metrics. Your metric doesn’t need to be directly correlated with revenue, but it should be eventually consistent with it. For SaaS, a strong but consistent portion of your definition of “active users” should pay you. And more importantly, inactive users should be considered potential for churn.