Do you use data to help your products grow?
Thomas Varekamp
11 replies
In my experience, most founders only use data for reporting purposes, such as ARR, MRR, Churn, etc.
How many of you use insights to make better product & marketing decisions instead of just reporting?
For example:
- Understanding what drives valuable prospects to your website so you can focus your efforts on those channels.
- Using customer segmentation to identify the most profitable customers, and making marketing + product decisions to attract them.
- Understanding why customers churn and actively putting effort into retraining them.
There are a lot of other metrics that can be very valuable:
1. Cash runway
2. Revenue churn
3. Customer Lifetime Value
4. Average revenue per user
5. Percentage of users who successfully recruit new users
6. Time it takes from customer acquisition to paid customer
Especially since time is limited for most founders, it makes sense to only focus on activities that lead to the highest chance of success.
Do you use data to boost product growth? Very curious about your experiences!
Replies
Ivan Ralic@ralic
Collabwriting
Yeah, for sure, but in early stages you can't really track everything.
I'm kinda data nerd, and I always try to bring some structure to data and make data easily collectable. (Collect everything, we'll use it later)
But in early stages, founders have so many responsibilities, and focusing on only one or two KPIs can be very beneficial.
So I don't believe founders have a problem with tracking all the data, but that most of it is not too important for them in a particular moment.
A rule of thumb would be, one KPI per team member. Everyone has their responsibility and that's that single data point they need to obsessed with.
Share
@ralic
"A rule of thumb would be, one KPI per team member."
💯💯 - Keep everyone focused and responsible while making meetings more productive when you can simply ask "what did you do this week to improve metric X". The moment you start giving people too many things to be responsible for, inevitably they will use their successes to hide their shortcomings. "this week we increased our social following by 50%! ... ʷʰᶦˡᵉ ᵒᵘʳ ᶜʰᵘʳⁿ ᶦⁿᶜʳᵉᵃˢᵉᵈ ᵗᵉⁿᶠᵒˡᵈ "
Collabwriting
@thomasvarekamp for sure North Star Metric aligns the whole team all together.
Every data should be tracked! Each marketing platform has
analytics. Those tell so many things about your strategies/ campaigns. Without analyzing data, you can’t understand your audience’s interest or your product’s strengths/weaknesses. Sometimes IG post likes can tell something important.
@thomasvarekamp No, not now. But after a while I will need it. Do you have any suggestion about that?
@dilan_aydin Definitely. Do you use a centralised dashboard for all your data needs?
@dilan_aydin
Good question. It all starts with the business objectives, which forms the foundation of your dashboard.
Here is a little path you can follow to come up with the right metrics to include:
1. Start with the business objective.
-> What is the goal of the business?
2. Determine decisions that influence the business objective.
-> What decision do I make daily / weekly in order to move the business towards the goal?
3. Come up with questions that when answered, will help to improve the decisions.
-> What questions do I have about the decisions that I make that will improve this decision?
4. Define metrics that answer these questions.
-> How do I convert more customers? Conversion rates
-> Where does all the traffic come from? Web traffic over time
5. Find the data to create these metrics
-> What data do I need to encapsulate the metrics?
-> Look into different systems to collect the data you need to answer the questions. Example: Payment provider, CRM system, Web analytics, etc.
6. Put metrics into pretty dashboard
-> Merge and aggregate all the data in a dashboard, so you have real-time answers for decisions you need to make.
I wrote a blog on what metrics you should track and what questions they can answer in order to optimize your marketing activities: https://www.thomasvarekamp.com/p.... I'm curious if you found this helpful.
In a future blog I will cover the advantages of dashboards maybe include a case study of a dashboard in a fictitious SaaS business. If you want I can send it to you when I'm done!
Hopefully this was useful for you :)
So that is definitely true - there is a ton of people out there building based not on data, but, to put it bluntly, based on ego. "hey I know best how this should be done, I don't need some numbers to tell me I'm wrong" - you often see that in a lot of legacy industries - e.g. recruitment where people may have been doing the same job the same way there for 20-30 years.
I will largely mirror what @ralic said. Collect everything, figure it out later, but don't focus on things that make no immediate impact on your business.
e.g. important things;
Churn -- you worked hard to get those users, don't lose them, if you lose them, make sure to chase them down and understand exactly why they left so you can avoid losing more.
Runway -- if you have a runway of a month left, stop wasting your time planning for 2 years from now, focus on the immediate.
CAC/LTV - if it costs you $50 to acquire a user to sell a one-off widget for $20, stop bleeding money in that acquisition channel.
Largely Irrelevant things;
Time on page - unless you operate a social network, makes no difference if a user spends an hour on your website or 30 seconds as long as they complete the transaction.
Likes and Shares - majority of them will never translate into any real money so stop pouring cash into trying to get them just so your social media profile looks "better" with 10,000 followers instead of 100.
@ralic @michaelflux Great overview, thanks! And I agree, many legacy businesses still make decisions based on ego.
@ralic @michaelflux That's helpful and relatable, thank you for taking time to write this.