Startup metrics: What to look at when you are just starting up?


For a young startup, generally there is not much data available to understand what is going on & how to proceed. Then how do you find out what is working & what is not ? Here are 3 startup metrics you can begin with. They give a good sense of user behavior & tell you where to look for growth.

Conversion Rate

It is the number of people who signup out of the visitors to your site. Initially, you can start out by looking at total signups out of total visitors. As you grow, you can break it out by traffic channel (directed by mail, social networks, seo, adwords,etc) to understand which is the most responsive. For each channel, you can measure how many people get in and how many sign up. If your overall process takes several steps you can measure conversion at each step. It is a good idea to pick the most responsive source of traffic and maximize it.

Retention Rate

Next startup metric to look at is retention rate. It tells you how many users continue to use your product, out of the total users who signed. Initially, you can look at retention rate every month for all users together.

As you grow, you can go a level deeper and group your users. Usually, grouping can be based on common characteristics like location, age, gender, etc or experiences like people who place orders on weekends, during nights, etc. You can look at retention across different groups of users over time. It is also known as Cohort Analysis.

Paying customers

This is the most important startup metric but also the easiest to measure. It is the number of people who pay for your service. You can look at it weekly or monthly. You can initially cast a wide net and start by looking at total number of paying customers. As you grow, you can break it out by type of customers based on location, industry, designation, etc. This will give you an idea about the kind of users who are willing to pay for your service. You can then use this to target similar people.

Can you think of more ways to do this? Share your experience with us as comments.

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