Tag Archives: analytics

ABC of metrics

I loved this passage in a talk given by Stijn Debrouwere who works at The Guardian:

The metrics you’ll need will depend on your business, but as a starting point I like Dave McClure’s list of five startup metrics for pirates:

  1. acquisition: finding new users
  2. activation: getting users to give your product a try
  3. retention: making sure those users stick around
  4. referral: have your loyal users invite others
  5. revenue: hopefully you get to make some money from all this

Acquisition, activation, retention, referral, revenue, or, as an acronym: aarrr! Those are usually the big five things you have to worry about.

As he says, the most important thing to remember is to be really specific about what you are trying to achieve. We are all drowning in data, so it’s refreshing to get back to basics once in a while.   

The Lean Startup’s powerful idea

Like the rest of the world I have been reading the Lean Startup, the new book from serial entrepreneur Eric Ries. There is a lot of good advice in the book, which focuses on developing products which solve real problems and doing it in the most efficient way.

But one idea really stood out for me: cohort analysis.

This is one if the most important tools of startup analytics. Although it sounds complex it’s based on a simple premise. Instead of looking at cumulative totals or gross numbers such as total revenue or total number of customers, one looks at the performance of each group of customers that comes into contact with the product independently.

This is a powerful idea. Often there is a lag in the behaviour you would like to see (such as signing up for a free trial) and this is very hard to detect in a mass of other numbers, which may all be going up. By concentrating on one group at a time, Ries argues, you can really tell if the key behaviours you need to see are really happening – and if you are getting better or worse over time.

If you are interested the key section starts on page 123 of the book, or you can find out more from his site. More on cohort analysis here.