Choosing metrics that matterAnalytics help you to understand your business, product, and customers in an objective, numerical way. But which data should you actually be tracking? In the beginning, while you’re still seeking validation and perfecting your product, you should focus on acquisition, engagement, and monetisation three key steps in your customer journey that will provide you with powerful metrics to speed up your early growth. If your business were Spotify, this is what each step could look like: 1. Acquisition: How many new users are signing up? 2. Engagement: How many users are listening to music? 3. Monetisation: How many users are upgrading to a paid premium account? Once you know what you’re measuring, you can start to add time frames to each metric to create a simple tracking plan based on the three stages of your customer journey. For instance, how many sign-ups did you have this week versus last?
Finding product-market fitYou may have built a product, but are you sure that the market wants to buy it? Analytics can help. Retention cohorts are the magic metric that will shatter any illusions and help you to understand your product-market fit early enough to go back to the drawing board if there’s a problem. A retention cohort shows whether the same group of users comes back week after week to engage with your product and derive value from it.
Spotify, for example, might track the percentage of users listening to at least one song each week.If the cohort sticks around, things are looking good but as the weeks go by, a product with no market fit will trend towards zero percent of the cohort returning. You can visualise all of this in a cohorted retention chart – an easy way to see, at a glance, whether you’ve hit the sweet spot, or whether there’s a hole in your funnel that you urgently need to fix.
Building your data toolkitOnce you’ve thought about which data to use, there are a variety of tools you can deploy to make the most of it. These range from basic analytics and diagnosis tools, to email, marketing, data governance, and attribution tools. For early-stage startups, it’s better not to build your own tools in house. There are so many data and analytics tools out in the market right now that there’s bound to be something that fits your company’s exact needs and saves precious time for your engineers
Test-driving tools is a good ideaMost offer a free trial period, which gives you the chance to try them in a real-world environment, rather than drowning in research and marketing collateral. Switching between tools used to be a difficult ordeal, but with the right analytics infrastructure in place, it’s much easier. As you assess your options, it’s also worth remembering that the true cost of each tool goes way beyond the price that’s advertised – for example, you need to think about how much maintenance it will require over time. When starting out, Google Analytics is a powerful tool for basic, top-of-the-funnel analytics. Then when things get a bit more advanced, Mixpanel and Amplitude are great choices. it’s important to set up live chat software such as Drift and Intercom – these are great for learning from your customers in those crucial early stages. This will help stop you from buying expensive tools too early or continuing to use basic tools once you’ve outgrown them. Turning insights into action What good is all this data if you’re not actioning it? To have any value, your metrics need to be regularly shared with team members who can use them to identify and solve any issues. A real-time dashboard is a powerful way to motivate and focus your teammates around a key metric objective. This type of dashboard updates automatically and can be easily shared via URL links, making it easy to access and action. It can also be valuable to send a regular, high-level email to your investors, highlighting week-over-week or month-over-month changes to your core metrics. This keeps the company accountable, showcases your successes, and helps investors to see the projects and initiatives that need their support.
Doubling down on dataToday’s consumers expect every company – even early-stage startups – to provide them with high-quality customer experience. As a result, data analytics are no longer a nice-to-have, but essential to success from day one. The good news is that, with the current wealth of tools available on the market, even the smallest companies can use their first-party customer data powerfully and responsibly. Putting in the groundwork now and preparing a solid analytics infrastructure will mean that you’re able to deliver better products, services, and experiences to your customers, whilst also respecting user privacy and preferences.
Sign up to our newsletter to get the latest from Business Advice.