The Only 3 Metrics that Matter at Pre-Revenue Startups
Pre-revenue startups get distracted. Only 3 metrics matter at this stage.
Reaching Product Market Fit is like crossing a desert.
Very few will survive.
Mirages of PMF happen all the time.
It takes months, sometimes years, before charging your users.
You need to know if you’re heading in the right direction.
You need a compass.
An indicator that you’re heading in the right direction.
Enters the 3 essential product metrics.
If you have a digital product, and are pre-revenue then only 3 product metrics matter:
1. Active users
2. User Retention
3. Core feature engagement
1. Active users
If you only pick one metric, pick active users.
It gives you the number of unique users that get your product value.
Pick daily, weekly or monthly active users based on the ideal frequency of usage of your product.
Active users tell you if you’re building a sticky product.
It’s a great proxy to monetization.
It’s a metric that you can move after a day or a week.
It’s motivating.
Define as “active” the people the users that get the unique value out of your product.
Ex: for Airbnb it’s booking a night, not opening the app.
2. User Retention
Retention shows the percentage of users that comes back over time.
A retention curve that flattens is a sign that a consistent amount of people come back over time.
Retention is harder to move than the number of active users.
But when it improves then it’s a great indicator.
It means you’re part of your users’ lives.
There is a good chance that these users value your product.
And will consider paying for it.
3. Core feature engagement
If you’re a consumer product, then use the number of interactions on a key feature. Ex: number of snaps sent.
This is because engagement pulls everything else up.
If engagement skyrockets it’s very unlikely that your business isn’t going better.
This may sound simplistic, but it works.
