At the start of a product’s life there is just one metric that counts and only you can define it. In this episode of Raw Product Italk about how you need to avoid distracting metrics and go straight to the heart of the matter.
So far in the “Raw Product” series we talked about how we launched TeamChecklist on the Slack app directory and how we build our product in weekly sprints. This time round we turn our attention to metrics — specifically the most important metric early on for our SaaS product.
There is a wealth of information on how to measure the performance of a SaaS business. Metrics like monthly recurring revenue, cost of acquisition, lifetime value, churn rates need to become part of a SaaS business owners vocabulary. These metrics are useful in capturing and condensing the state of your business and providing indications about what you should be fixing. However, when you are just starting these metrics can feel a bit pointless. That’s ok.
After all what is the point of measuring monthly recurring revenue if it is in the single digits? If it won’t even buy me dinner? Cost of acquisition and lifetime value? I haven’t even worked out how I am going to get to a hundred clients!
If you are growing slowly and organically, as we are, in the very first months some of the standard SaaS metrics are ultimately pointless. You only have a few users, the product is in constant flux and pricing is still very much an experiment.
If you are adding many users quickly with a big marketing budget and a carefully orchestrated growth campaign the numbers may be more interesting to follow. However, you are still in a state of constant flux as you still need to better understand your product and how changes to one aspect will affect others.
So what does this mean? Should you stop measuring?
Of course not. We love to measure things!
You need to measure the right things for each stage of the process.
What we are measuring in these early stages is the utility of the product for our customers.
We are trying to figure out just how much they love the product.
Nobody can tell you exactly what is the right measurement of that for your product. It is not a generic SaaS metric. You are going to need to find it out and you have to be brutal in choosing it.
Sometimes we choose the metrics that we know will please us:
Look at all those page views!
We had a thousand new sign-ups yesterday!
Our product is super sticky — they are spending so much time in the app!
However, it is not always page views, or sign-ups or generic engagement that matters.
Are users busy and active on your application because they getting value out of it or are they just clicking around trying to figure stuff out? Are you getting lots of sign-ups because your marketing is good or your app?
Ask yourselves — what jobs is my tool supposed to help people fulfil? How do I know if that job is done? That’s what you should be measuring.
In the case of TeamChecklist the job is that of helping people capture their key processes in checklists and easily organise with their teams in Slack to get the tasks done. What we are measuring is a function of how many checklists people are creating, how many tasks those checklists have, how many tasks are actually completed and how many people interact with those checklists. We are building a model and refining the weights we apply to different actions but we are only measuring these real actions.
Page views, signups, MRRs are there but they are not the most important metric right now. Whether your product is an actually useful tool is the most important metric at the start. The rest will follow.
What is the key metric of utility for your tool? Are you measuring that?
GreenShoot Labs builds products that use automation, data and conversational interfaces to make teams happier and more productive.
Our first product is live on the Slack App Directory — TeamChecklist makes working through common, repeatable processes and tasks better for your team with automated notifications and reporting.