KR8: ?? MVP ?? KPIs in the MVP!
Welcome to the next KR8 newsletter!
In this issue, we'll tell you more about what KPIs are in MVP and how to measure them. However, this knowledge will be useful for any marketer ;).?If you want to know more about KPI check out our e-book?- it is a must-see if you want to become an MVP master!
What KPIs are
What exactly are KPI metrics and why are they important in a growing digital product?
Key performance indicators (KPIs) are measurable values that show how effectively a company or a product is meeting its most important goals. They make it possible to evaluate the effectiveness of business activities and reduce large amounts of information to the most necessary data. KPIs depend on the characteristics of the company, the industry, the size of the company, and the operating strategy.?
Common to all KPIs is that they are linked to long-term strategic goals and monthly progress.
Types of KPI:
We can define several types of KPIs, taking into account their function in the organization or product strategy.
Strategic:?Strategic KPIs are used to monitor organizational goals at a given time, such as return on investment or revenue and market share.
Operational:?Used to measure performance over a shorter time. Often focus on organizational processes and efficiencies?e.g. cost per acquisition.
Functional Unit:?This type of KPI is tied to specific functions. These functions can be different for different departments in a company and allow for tracking various activities at a time?e.g. gross profit margin in the finance department or time to resolution for IT.
Leading vs. Lagging:??When defining KPIs, you should know the difference between leading and lagging ones. Leading indicators will be the indicators that help you predict the future. Lagging gives an overview of the past, from which you can conclude the future.
Leading indicators?will be indicators that help you predict the future,?e.g. the percentage of customers who subscribe to an annual package.
Lag indicators?give you a snapshot of the past from which you can infer the future,?e.g. website traffic or revenue.
Using a mix of both types will give you the most confidence that your organization is monitoring the most meaningful metrics.
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Why do we need KPIs?
We believe that no one starts working with an MVP without the best possible preparation. Therefore, even before the scope of the MVP is defined, during the planning stage, it is necessary to determine precisely what should be measured and what indicator values will be considered a success. With KPIs, you are able to monitor the current situation and assess whether your MVP is heading for success or still needs some adjustments.
Useful metrics when measuring MVP progress.
Customer engagement?– by analyzing the number of downloads and interactions on social media. An engaged customer is one deeply connected with the product – its ambassador. Commitment is expressed in product recommendations on social media, active participation in surveys, and discussions on product improvement.
Registrations?– the number of people registering to use the product. A high number of registrations can indicate high interest in a product, illustrate a trend and provide information about a market need, but does not yet indicate the success of a product.
Customer activity?– this indicator reflects the number of customers actively using MVP. These are customers from a group of people who are engaged or interested in our product. There is a chance that they will use it longer. By comparing the number of active customers with the number of registrations, you can deduce what percentage of people eventually use the product.
Customer acquisition costs?– it is an important indicator that will allow you to optimize your marketing and sales activities. When implementing a new product in the MVP version, we should bear in mind that our product will initially reach a relatively small number of customers. One of the ideas for acquiring new customers is advertising on social networks. Unfortunately, it is often quite an expensive investment. The correctly calculated unit cost of user acquisition may be the basis for a decision to start or end marketing or sales campaigns.
Paying users?– these are particularly valuable customers who, despite the lack of additional product functionality, decided to pay for the MVP.?
Their numerous presence testifies to the product’s consumer potential.
Average Revenue per user – monthly revenue calculated based on the total value of purchases made, divided by the total number of active users. Based on this metric and the cost of customer acquisition, the decision on a potential investment area is much easier.
Monthly Recurring Revenue?– a financial metric that shows predicted revenue that a company expects to receive monthly from customers.?
Lifetime customer value?– an indicator by which we can calculate the revenue expected from one customer (account created) over the life cycle of the product. By comparing this metric with the cost of customer acquisition, number of registrations, and engagement, we can decide whether it is better to build relationships with existing customers in the long term, or whether it is better to continuously acquire new customers. At the MVP stage, it can still be quite difficult to calculate lifetime customer value, as this is only the testing phase of the business model, so the data collected may be insufficient.
Dropouts?– for software developers, a bitter parameter to swallow, illustrating how many users have given up on continuing to use/pay for the MVP. A dropout rate that is too high suggests a need to change the product or a lack of market need.
Let us know, which KPIs are the most important for your work!
We are waiting for your feedback and see you in a week! ??
Team Kreatik
CEO and founder of multiple startups. KPI Karta helps you visualize your strategy and informs what needs to get done.
1 年Yes, KPIs are great but they can cause a great deal of consternation for companies and their teams. Numbers are being asked of people that don’t seem to make much sense. That’s because they are reused from the past, or chosen from someone’s top-10 list. But they don’t then align with overall goals, resulting in KPIs that encourage behaviour inconsistent with what the organization is trying to accomplish. And so KPIs cause frustration. Try using our new tool, KPI Karta, which builds hierarchical, color-coded maps showing how work is directly connected to your goal, producing more effective KPIs and then lets you track them in real time.