You have a great idea for a startup and you want to test it with a minimum viable product (MVP). But how do you measure the success of your MVP? How do you know if you are solving a real problem for your customers, validating your assumptions, and learning from your experiments? You need to pick the right MVP metrics.
MVP metrics are the key indicators that help you evaluate the performance and progress of your MVP. They are not the same as the metrics you would use for a fully developed product, because your goal is not to optimize for revenue, growth, or retention, but to learn from your customers and validate your problem-solution fit. MVP metrics should be specific, measurable, actionable, relevant, and timely (SMART).
Key to this is ensuring you don't overcomplicate the narrative or the MVP. Ultimately you need to solve the customer's issues at its core - additional features are great, but are unnecessary in a finite resource environment. Reduce down the issue to a simple metric. i.e. "Saved x amount of time completing y process", "Increased donations by x %", or similar. People are often less eager to engage with a new product/service because they have to adopt new behaviors. If you can find a metric that resonates closely with the customer's issues, they will be more likely to engage with you on the MVP. Ruthlessly prioritize solving the core issue and customers, investors, and stakeholders will flock to you.
When selecting MVP metrics, there is no one-size-fits-all formula since it depends on the hypothesis, customer segment, value proposition, and development stage. To narrow down the options and focus on the most important ones, consider these questions: what is the problem you are trying to solve and how do you know if you are solving it? Who are your target customers and how do you reach them? What is the value proposition of your MVP and how do you deliver it? What are the assumptions you need to validate and how do you test them? Lastly, what actions do you want your customers to take and how do you measure them?
Metrics can vary quite a lot from market to market, but the commonality among all of them is the goal, the reason why one should measure anything at all. And the key goal to measure anything with an MVP is to test an hypothesis. And you need to pay attention to the words: test does not mean validate. You do not choose a metric aiming to validate an hypothesis, you choose one to test if your assumptions are false. Thus, choose metrics that are meaningful for you to test your hypothesis.
Picking the right MVP metrics is about maintaining a laser-focus on your business goals while staying adaptable to new insights. As you move forward, remember: It's not just about numbers, but about the story they tell and the actions they inspire. - Align with Business Goals: Base metrics on overarching objectives. - Customer-Centricity: Pinpoint the problem you're solving for users. - Prioritize Actionable Insights: Metrics should guide next steps. - Seek Clarity: Avoid vanity metrics; choose clear, meaningful ones. - Stay Focused: Embrace the "One Metric That Matters" mindset. - Stay Adaptable: Adjust metrics as the landscape shifts.
I like to align metrics at 4 levels of analysis: 1) Demonstrate that people like the product 2) Show that people understand the product's purpose and when they'd use it 3) Show that people can use the product in its intended way 4) Demonstrate results that the product is able to achieve.
To illustrate how to apply these questions, let's look at some examples of MVP metrics for different types of MVPs. A landing page MVP is a simple website that describes your value proposition and collects email addresses or sign-ups from interested customers. Possible metrics for this type of MVP include number of visitors, bounce rate, conversion rate, sign-up rate, email open rate, and feedback. Concierge MVPs are services delivered manually to a small number of customers without building a full product; metrics for these include number of customers, customer satisfaction, retention rate, referral rate, and revenue. Wizard of Oz MVPs appear automated but are actually operated by humans; metrics for these include number of users, usage frequency, engagement rate, churn rate, and feedback. Prototype MVPs have the core features and functionality but are not fully polished or scalable; metrics for these include number of users, usage frequency, engagement rate, retention rate, feedback, and bug reports.
One of the most widely used MVP metrics is AARRR metrics: Acquisition: How users find and visit your website or product. It's about understanding where your users come from: search engines, social media, paid advertising, referrals, etc. Activation is about the user's first experience with your product or service. Measured by signing up, using a feature, or making an initial purchase. Retention: How many users continue to use the product after the initial experience. High retention rates indicate that users find sustained value in your product. Referral: How often your existing users refer others to your product or service. A high referral rate indicates product-market fit and user satisfaction. Revenue: How you monetize your users.
Once you have chosen your MVP metrics, you need to track and analyze them regularly and systematically. You can use various tools and methods to collect and visualize your data, such as Google Analytics, Mixpanel, SurveyMonkey, Hotjar, or Excel. The most important thing is to keep your data organized, consistent, and accurate. You should also define your baseline, your target, and your margin of error for each metric, so you can compare your results and draw conclusions.
Remember, the objective of an MVP is to learn. And deploying the MVP with instrumentation is critical. - Select Tools: Use Google Analytics for web stats, Mixpanel for user actions, SurveyMonkey for feedback, and Excel for data visualization. - Setup: Ensure tracking tools are seamlessly integrated into your MVP, from tracking codes to event triggers. - Determine Baselines and Targets: Know your starting point and define clear success metrics. Set a reasonable margin of error for each. - Regular Monitoring: Schedule consistent check-ins on your metrics, be it daily or weekly. - Data Visualization: Use charts and graphs to spot trends and anomalies.
The ultimate purpose of tracking and analyzing your MVP metrics is to use them to improve your MVP and learn from your customers. You should review your data frequently and look for patterns, trends, outliers, and insights. You should also validate or invalidate your assumptions and hypotheses based on your data. Based on your findings, you should decide whether to pivot, persevere, or iterate on your MVP. You should also communicate your results and learnings to your team and stakeholders, and solicit feedback and suggestions.
Metrics are more than numbers; they're feedback. Listen closely, and they'll guide your MVP towards success. - Frequent Data Review: Make regular metric check-ins a part of your routine. Dig into patterns, trends, and anything that stands out. - Test Assumptions: Validate whether your initial hypotheses hold water with the actual user data. It's okay to be wrong; it's crucial to realize it quickly. - Decide Your Next Move: Metrics might suggest you need to pivot (change the fundamental idea), persevere (stay the course), or iterate (make small adjustments). - Act, Iterate, Improve: Don’t get stuck in analysis paralysis. Use the insights to make iterative changes, testing the MVP's reception after each.