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Crafting a Winning Metrics Strategy for Startups

Last updated on Wed Dec 11 2024


In this article, we have three product managers explain how to ask the right questions, set the right objectives, and avoid common mistakes when defining a metrics strategy. These women in product shared approaches you can use in crafting a metrics strategy for your startup.

How To Define a Metrics Strategy for a Startup

In defining a metrics strategy for a startup, you will be dealing with three main challenges. They are:

  • Time: It is a challenge because, for most startups, any member of the team can be required to do a lot of different things at any point in time, except if your startup is incredibly funded. Hence, there is usually a lot of pressure to hurry up with obligations. Therefore, if you are going to be incorporating metrics into your process, it will take time and reflection

  • Resources: They are also a challenge because in your startup, whether you have great software to help you track your metrics or not, you may still need engineering time to add tracking to your application or their help pulling data.

  • Clarity: Then clarity, because understanding the important thing to measure in the product and how it will relate to the company’s overall goal can be difficult. Also, at times, it could be that you are not clear on how to map the metrics to your product features and link them to outcomes.

While all these challenges can be extra tricky, it will help to be prepared to review frequently and be flexible in your approach. As you define your strategy, make sure to keep these constraints in mind as you will have to make conscious trade-offs between them.

Questions and Answers By Products

Below are some of the questions that were asked and answered by the Product managers:

1. Question: What Questions Should I Be Asking To Define Our Metrics Strategy?

Answer: You must understand how your executive team and product leadership define success, to ensure that you can identify the product metrics that will resonate with them.

You can consider these key questions:

  • What are the three key indicators of business success for the next two quarters?

Always begin with shorter timeframes because business plans can change rapidly.

  • How does the product factor into these metrics?

First of all, you need to understand the context in which you are working and know what you can influence. For example, if the goal is a 25% revenue increase in the next six months, then you will need to consider customer acquisition strategies. If the big feature you are working on is tied to securing some or all of the new customers, then it is also tied to company goals.

  • Can product-specific metrics align with company-wide key metrics?

Report relevant product metrics as inputs to revenue goals when they contribute meaningfully.

Product-specific metrics are things like the uptime of your application or how responsive you are to feature requests or bug reports from customers. If the executive team would consider the product-specific metrics a contributing factor, then report them as inputs to the revenue goal. But if they do not, then keep tracking.

  • Should engineering work be prioritized based on these metrics?

Having this information will help you weigh correctly if you should focus mainly on driving completion of the features that will bring revenue or whether to also include technical projects and small improvements.

2. Question: What Should Go Into the Metrics Strategy Plan?

Metrics strategy plan

Answer: If you need to document your plans and write clearly what the metrics strategy plan will entail, then you should create a document or slide deck with these components:

  • Goals: Using a sentence or two, depending, explain why you are collecting this data and how you intend to use it.

  • Metrics: Create a table that will contain the name, definition, purpose, and calculation method for each metric you intend to use.

  • Key People: List out all the people that will be involved in one thing or another whether pulling, analyzing, using the data, or anything at all.

  • Sharing: Make an outline of how often this data will be updated, where it can be found, and who will be able to access it.

3. Question: What Tips Can You Share To Avoid Common Pitfalls?

Answer: You should understand first that each startup is unique. However, some practices can be used consistently across every startup to ensure that you have a lasting metrics strategy. These practices are:

  • Keep it simple: Usually, most startups do not have the resources to spend hours pulling and analyzing data, so as much as possible, stick to metrics that are easy to gather and maintain.

  • Set clear expectations: Define what reporting will look like and how often it’s needed. Do not go over your limit- you do not want the task of creating these reports to take over your life.

  • Secure executive buy-in: Make sure the executive team agrees on the metrics you are measuring and what you are not. Be sure to carry them along at all times.

  • Have a clear perspective: Enter meetings prepared with insights on what’s important. Know what you are doing if not, instead of the input and directions you seek, you will have someone else rewriting your whole plan for you!

Use Your Mission To Define Success

Let your company’s mission guide the "why" of your metrics strategy. Then use that guidance to inform “what” you are trying to achieve. When you have a clear understanding of the “why”, it will help you to simplify the task of defining the success of your metrics strategy.

For instance, “We want to increase feature adoption to X% because users who adopt it are Y times more likely to achieve Z benefits.”

This statement turns your key actions into a key performance indicator (KPI) that is specific, measurable, attainable, realistic, and timely (SMART).

Instrument for a Clear View

It is very critical to measure and monitor your product’s KPIs, as it will help you define exactly what will be measured and how it will be tested. It will also help you to establish a clear language around these KPIs that your teams will use cross-functionally.

Evaluate Performance

Establish a rubric or a common language for what success means, with definitions for your key actions. This rubric should provide the most accurate representation of success. Do not define success based on usage trends that have already surfaced, rather, evaluate your information upfront and use that data.

Avoid These Pitfalls

Make an effort to avoid these pitfalls as you define your metrics:

  • Shortsighted metrics: Avoid success indicators based solely on short-term adoption if they don’t reflect long-term retention. Be farsighted instead.

  • Vanity metrics: These are metrics that look impressive but don’t indicate actual user success. Avoid them at all costs- that is not what you are looking to achieve.

  • Stale metrics: As your product evolves, be ready to adjust goals and metrics accordingly. Do not be dependent on only one metric- let your metrics evolve with your product and goals.

Conclusion

Defining a metrics strategy may seem challenging, but it’s a valuable exercise and a perfect opportunity to align your team and product with the goals that are important to the business. Keep in mind, this is an iterative process and your Metrics Strategy will continue to grow and evolve just as your product does.

A thing of note to always remember: A metrics strategy is only useful if it measures what truly matters!

Good luck!