Vanity Metrics vs. Actionable Metrics – Guest Post by Eric Ries. Vanity metrics: good for feeling awesome, bad for action. (photo source: UK Guardian) This is a guest post by serial entrepreneur Eric Ries. He was most recently co-founder and CTO of IMVU, which has more than 20 million registered users and generates $1,000,000+ in revenue per month. Eric is also a venture advisor to Kleiner Perkins. How do you get to $1,000,000 per month in sales? Here is just one business-changing example, taken from the outstanding “How IMVU Learned its way to $10M a year” on Venture Hacks… IMVU learned its way to product/market fit.
Enter Eric Ries… Vanity Metrics vs. The only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions. When you hear companies doing PR about the billions of messages sent using their product, or the total GDP of their economy, think vanity metrics. Now consider the case of an Actionable Metric. For example, here’s a pattern I’ve witnessed in companies large and small. 1. 2. 3. 4. 1. 2. 3. Lean Analytics. Lean Analytics is the latest addition to the Lean Series. The book has been a year in the making, and authors Ben Yoskovitz and Alistair Croll—themselves successful founders with several exits under their belts—spent much of that time speaking with founders, investors, and analysts to understand a really basic, but seldom-asked, question: What's normal? As it turns out, normal is a hard question.
Normal depends on what kind of business you're in, and what stage of that business you're at. If you're working on the Sticky Engine of Growth, you're focused on very different metrics from those that you care about in the Viral Engine of Growth. Similarly, a two-sided marketplace cares about different things from a traditional e-commerce product. Start with metrics in mind The best SaaS sites or applications usually have churn ranging from 1.5% to 3% a month. “In the early days of a SaaS business, churn really doesn’t matter that much. Not all SaaS companies are the same, of course. Many Mores. Eric Ries - The Lean Startup - Google Tech Talk. Lean Startup Essentials - STARTup Live Graz.
Lessons Learned. Www.businessmodelgeneration.com/downloads/value_proposition_canvas.pdf.