As I was reading the book titled “Lean Analytics: Use Data to Build a Better Startup Faster” by Alistair Croll & Benjamin Yoskovitz over the holiday period, the one concept that hit me profoundly was this notion of “One Metric That Matters” or “OMTM.”
Over the years, at Barrington Edge, we have had the opportunity to work with several successful startup founders and teams with whom we worked very closely for initial strategy design, product-market fit analysis, MVP creation and product development, capital raise, and formulation of growth and expansion strategy. As I was trying to relate the concept of OMTM with some of these organizations, it is making perfect sense.
Acquisition-focused: If the business is SaaS in nature, it could be the number of new sign-ups, leads, or users. Early-stage startups are more suitable to have these kinds of metrics.
Activation-focused: Percentage of new users who complete a key action or reach a specific milestone. A good example of this is the number of free users opting for a yearly plan. These metrices can be used during the launch of products and services.
Capital-focused: Are you raising money for startup activities and need to put your complete focus on this instead of multiple activities such as product development?
Revenue-focused: Total revenue, average revenue per user, or customer lifetime value (LTV). These types of metrics are more relevant to startups in the accelerating stage, and established businesses.
Retention-focused: Metrices under this category include churn rate, customer retention rate, or engagement metrics. These indicators are more relevant to startups who are going through the growth stage and entering a more mature stage in their operations.
The choice of the OMTM depends on your business model, current challenges, and growth stage. It is essential to periodically reassess and adjust the OMTM as your business evolves. By concentrating on a single, meaningful metric, you can better align your efforts and resources to drive the most impactful improvements in your business.
Author: Prazzal Talukdar